The Tragedy of the Electrical Commons

Sometimes as a Tasmanian you might wonder whether the electrical grid is in fact “worth it”. For those who have the option—homeowners who have some savings, basically—the idea of investing in some solar panels and gleefully calling Aurora to sever your connection is pretty appealing.

There are several reasons why this may not be desirable. Some of them are the practical issues of building a system that enables the same lifestyle you can have on-grid. This includes both costs and the state of energy storage technology. The one I want to describe today is non-technical: it may even be immoral to leave the grid.

Why should anyone feel morally obliged to be connected to the grid? Consider the breakdown of costs in delivering electricity to the home: according to my latest bill less than 30% of it covers generation. The vast majority (60%) is for the network, the sprawling system of substations and poles and wires that delivers the power from the power stations to me and everyone else.

Suppose you have a house on a suburban street and you decide to disconnect. The utility immediately saves some money because they need to buy less power from the generators. Your neighbourhood’s assets have less load on them so they might last a little longer. So far so good. But the grid hasn’t gotten any smaller—in fact, the pole outside your house is still needed to carry electricity further along your street. The 60% of your bill that went to poles and wires now needs to be spread amongst all the people who are still connected.

In one sense this is completely fair. If you disconnect from the grid and you’re getting no benefit from it, why should you have to contribute to its upkeep? That cost should be borne by the people who are actually using it.

What this attitude fails to capture is that this harms our entire community. To demonstrate this imagine that 50% of households at random decide it’s better off-grid and disconnect. When they’ve finished you will find that the grid still needs to be about the same size. Almost every street still has a house that needs power; there are just gaps between them.

The problem is that now half as many people need to cover the same costs. Their power bills will nearly double. Those left will be forced to either go without electricity or go off-grid themselves. The problem self-perpetuates. The ultimate endpoint is the only people who are left on the grid are those who are unable to leave and they’re stuck paying very high prices—at least until so many people leave that we have entire neighbourhoods without centralised power, at which point it starts to get “better”.

The first issue is one of fairness. When grid power gets expensive relative to home-generated power, for some time the only people who will be able to make the jump are the affluent and lucky. You need to own your house; you need to be located somewhere with enough sunlight; you need to have enough capital on hand to invest in a bunch of large and expensive power-generating equipment. Renters or casual workers have no chance. Some enterprising landlords might install gear themselves but few will want to carry the upfront cost and ongoing risk of failures.

This kind of situation where it’s cheaper for the people who already have money is perverse. This is how we cement structural inequality in our society. If you believe in a fair go you need to do your bit not to contribute to the death spiral of the grid. You can do this two ways: either don’t disconnect, or convince the government that they should subsidise its operation with your taxes.

The second issue is the indirect benefits of the grid. Does your workplace have the money to invest in off-grid power? Do they even have enough roof space for the amount of power they’re using, especially if they have factory equipment? It’s likely that the answer is “no”. It might even be underground or a floor halfway up a high-rise building. The same things are going to be a problem for all manner of useful buildings like hospitals and police stations.

If grid availability becomes a problem, all of these businesses and public services are going to contract into centres where electricity is reliably available. This not only makes things difficult for poorer folk who live farther out, but reduces the services and amount of work available for everybody.

Assuming that we’re not going to redesign all our cities in the short-to-medium term, there are two ways to avoid this second problem. Either we keep the grid operating widely and affordably, or we come up with technical solutions where houses can affordably contribute energy to those around them who are unable to produce enough of their own. Out of those options, keeping the grid operating is by far the simpler.

The conclusion is that you’re not off the hook once you jump off-grid. Still, if there is a utopia waiting for us decades down the track where we produce all our energy locally and renewably, I don’t want to be held back. I think a taxpayer-subsidised grid is the best way to enable us to inch towards that future without hurting the people who can least afford it.