The Cost Per kWh to Go Off-Grid
How much would you pay to tell your utility to shove it?
It’s a near-tautology to say an electric utility has no competition. After all, we’re regulated monopolies with exclusive authority to maintain transmission or distribution lines within our respective service territories. Short of a public power organization getting bought out by an investor-owned utility, there’s no way for an electric utility to lose their monopoly on delivering electricity to customers, right?
…Wrong.
Let’s Build a Model House
I didn’t want to steal customer data or redownload BEopt to do in-depth modeling for a blog post. So I’m going to make some industry-insider swags instead.
A good estimate for a New England single-family home with fossil-fuel heating, kinda-crappy air-conditioning, a middling building envelope, and no plug-in vehicles at home is 800 kWh/mo, or 9,600 kWh/yr.1 Assuming a 2024 all-in electric rate of $0.30/kWh, that’s a $200-300/mo electric bill, which sounds about right.
If this was your house, and you installed a 12kW photovoltaic system2 and four 13.5kWh Tesla PowerWall units, you could probably cover your total electric load for 95% of the time. I didn’t say 95% of energy production, I said 95% of the time you need the lights to turn on. In that last 5%, the solar system would not be able to charge the battery enough to sustain total load. Think seven days of rain, or an extended cold snap akin to the last week and a half of January 2025. This isn’t as bad as you think—you would simply have to ramp down load. For example, in the winter, you might choose to break out a wood stove for a bit, or in the summer, you might leave the A/C at 80 degrees and deal.
Effectively, you would sacrifice a bit of peak-load capacity for a solar-storage system that you could actually afford.
…afford would be a relative term, though.
Assuming a solar system cost of $3.5 per Watt and a battery storage cost of $13,000 per PowerWall, your all-in cost for this system would be $94,000, or $65,800 after a 30% Inflation Reduction Act tax credit.3
To simplify the math, I’m going to linearly depreciate this system over 15 years and call that expense the annual cost of electricity. I’ll then divide that cost of electricity by 9600 kWh to get an ersatz cost per kWh because 95% of hours does not mean 95% of electricity consumed.
With that math in mind, this system would cost $6,267/yr ($4,387/yr after tax credit), or $522/mo ($365/mo after tax credit), or $0.65/kWh ($0.46/kWh after tax credit).
…In January 2023, the electric rate in Boston almost hit $0.40/kWh. And that was driven by natural gas prices cracking “only” $7/MMBTU. In January 2025, wholesale gas prices at Algonquin Citygate jumped between $12/MMBTU and $20/MMBTU.
Look at your renewables contracts. Sixty-dollar solar? Eighty-dollar wind? You really think the new offshore wind projects are going to cost less than $90/MWh? Ultimately, ratepayers pay the $35-40/MWh of MA Class I RECs, and oh wait, the price of the RECs alone gets you to $0.35/kWh.4
Are You Ready?
These numbers, by the way, are worse in California, where panels generate more energy, the electric rate is higher, and the provider is Pacific Gas & Electric.
And the numbers will worsen for us utilities, as we reckon with the horrible reality that natural gas is dirt cheap, utility-scale wind and solar are stupidly expensive, and residential-scale solar-storage is getting cheaper by the year.
Trump’s new tariffs won’t change this, because the cost bump to a PowerWall will come for your utility-scale generation (and storage, and transformers, and metering) too.
In a few years, a customer will ask themself much they would pay to tell their utility to shove it. They’ll get a quote. And they’ll sign the contract.
If you shut them down and mandate a meter, the Boston Globe will call you a tyrant.
If you let them be, more people will ask themselves the same question and sign the same answer.
A revolt is coming.
Are you ready?
This post and the information presented are intended for informational purposes only. The views expressed herein are the author’s alone and do not reflect those of their current or previous employers or any elected officials. The author makes no recommendations toward any electric utility, regulatory body, or other organization. While certain information contained herein has been obtained from sources believed to be reliable, the author has not independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author assumes no liability for this information and no obligation to update the information or analysis contained herein in the future.
There are, of course, seasonal variations in electricity that I will ignore for now.
Installed properly, you door-to-door charlatans…
That tax credit might be under threat, though.
By the way, if you assume a 25% heat rate and $3.75/gallon diesel, you’re getting $0.37/kWh electricity out of an “emergency” generator. It doesn’t matter because these generators are only rated for 3,000 hours, but it’s damning that a Texas-style real-time consumer electric rate, a diesel home genset, and a Raspberry Pi could take a real haircut off your winter and summer electric bills.