Background

Most utility companies deliver power and water in a very reliable way and at a very low dollar cost, although in many instances there are significant environmental costs that aren't reflected in the utility cost.  Water and sewer systems are generally only available in relatively densely populated areas, while electric is available virtually everywhere due to government support for rural electrification.  As a result (at least until recently), the majority of people generating their own electric were not connected to the electric grid ("off grid") either by choice or due to a remote location.  Although many people living in rural areas provide their own water and sewer (via a well and septic), urban dwellers rarely have enough land to do this and not much motivation to do it either.  There are only two possible environmental advantages to doing so: avoiding chlorination and in climates with season rainfall (like the west coast), avoiding having to build additional reservoir capacity.

Many people express a great sense of independence from acting as their own utility, the elation is as much about freeing themselves from the control of some huge faceless electric company as it is actually generating their own power.  While this rebellion against large corporations who are often slow or unwilling to move toward renewable energy sources creates positive pressure for change, it also avoids the question of what scale would be best for utilities to actually operate on.  For example, if suddenly everyone starting generating solar electric, power companies would have to convert from generating power at a somewhat continuous rate (varied only by the daily fluctuation in load), to generating no power on sunny days, which their current equipment isn't designed to do.

From the environmental perspective, the best thing a person can do is to install PV (solar) and/or wind generators to help create a market that will both drive the cost of PV down and force utilities to look toward a renewable energy future.  Once there is a significant amount of renewable generation connected to the grid, all involved parties will be forced to find a solution to the fluctuating nature of wind and solar.  At least one country (Denmark) generates 20% or so of their electric by wind, so clearly there is a solution at that level, but  to reach higher percentages of renewables will undoubtedly involve a significant redesign of how our power grid works.

Anyone considering living "off grid" for environmental reasons should also consider the environmental impact of the battery bank, whose lifetime is only in the 5-10 year range.  Because PV panels generate a relatively small amount of energy, "off grid" homes typically rely on propane and/or wood to supply energy for heat, hot water, cooking, clothes drying and sometimes even refrigeration.  Using current technology it is more likely that one could create a zero energy/zero carbon home using the grid as backup than someone living off grid because being connected to a grid allows for neighborhood and utility scale solutions what are not either efficient or economically possible on the single home scale.  This isn't to say that the grid is necessarily a better solution, only that it appears to be.

At the present time it is very difficult to compete with any local utility on price alone, so the burden of creating a market falls on those who can afford it.  Some states and some utilities have rebate programs that either significantly reduce the up-front cost of installing the system or give rebates for power generated.  There is currently (2006/2007) a $2000 federal tax rebate available also.  On a strictly dollar basis, the general rule is that conservation is cheaper, and often much cheaper than generation, and so this is the place that homeowners should look first:  every year there are more and better energy efficient appliances as well as water efficient appliances and fixtures.

Heat & Hot Water

From both a greenhouse gas perspective and total energy use, heat and cooling are typically larger contributors than electric usage, so they're the first place to look. The simplest, and most cost effective technique to generate energy is to use passive solar design to replace heat by electric, gas or oil.  Following this, the next most effective is to use an active solar collector to generate hot water.  Since these are discussed elsewhere, they will not be covered here.

Electric

Installing Photovoltaic (PV) panels on your roof is actually quite easy once you know how, although most municipalities will require that they be hooked up by a licensed electrician.  PV panels generate DC electric, and so it must be converted via a device called an inverter to match the standard 120 volt AC power that all appliances are designed to use. PV panels are specified by the peak (maximum) power they will generate, which happens only when they are in full sunshine and not shaded by anything. The current cost (2007) is around $7 per peak watt (installed system).  Smaller systems tend to cost more per watt, because there is a fixed amount of wiring that must be done and inverters are relatively expensive.

There are a number of different kinds of PV panels, the three main ones being single crystal, polysilicon, and thin film (which includes amorphous Silicon)  as well as a number of variations within each type.  Single crystal is the dominant technology for the moment, but because it requires ultra-pure single-crystal silicon, it is expensive to produce.  Because this form of silicon is the exact same used for computer chips, the rapid growth in PV production has caused a worldwide shortage of this type of silicon, which has caused prices to rise since 2005.  In the past the main difference between the various types of PV cells was their efficiency, which is how many watts of electric they produce for a given amount of surface area.  As manufactures find novel ways to coax more power out of each technology, the lines between them are getting more blurred. Wikipedia (http://en.wikipedia.org/wiki/Solar_cell) contains a more detailed description of the various technologies. 

In spite of the limited public funding for research, the efficiency and  manufacturing cost continue to improve.  No matter which technology is used, the price per peak watt is currently(2007) about the same, so the only real consideration is that less efficient panels will take up more roof space.  This concern is mostly an issue for people with larger systems (3kw and up), and/or limited roof space, for example due to shading, roof shape, or small footprint.

In the past, inverters were not that efficient and as a result people sometimes installed 12VDC appliances in their homes (typically the same ones used in RVs).  This is no longer the case, and so PV panels are now wired to produce a high DC voltage that is converted to the 120VAC to match the power company.  Most of these "grid tied" inverters have no battery backup, and by law must shut themselves off when the grid power goes down, so even if the sun is shining brightly, you will still lose power.  This is to protect power company workers from being electrocuted when they are trying to fix a downed line that they think has no power in it. (Note: I have no idea how real this is, since I see power company employees working on lives lines.  PV panels aren't good for power companies bottom line, so there is reason to be suspicious of all roadblocks.  If there are any linemen reading this, I'd like to hear your take on this).

The major consideration in placing the PV panels is to avoid shading, even just a little of it.  If one cell of a panel (which typically contains 33 cells), is half shaded, the entire panel output is reduced in half!  The problem is due to the mismatch in power output of the sunny cells with the shaded one.  Because  the cells in the panel are wired together in series (like a string of Christmas lights), the shaded cell  affect the whole string like a burnt-out light does.  The issue is that the shaded cell becomes a consumer of energy instead of a generator, and in fact would actually burn up due to having power now being forced thru it.  To avoid this the panels are designed to throw away the excess power from the non-shaded cells until all cells are outputting the same amount of power.  What this means, is that it doesn't matter whether shade falls on just a couple of square inches of the panel or half of it, the power output will go down by half or more either way.  So even a tree branch with no leaves on it can reduce the power output significantly.  (Note: I admit I don't fully understand this technical reasons for this problem, so the previous description is probably lacking in some way.  The best description I found was at http://www.sandia.gov/pv/docs/PVmodules.html)

In addition, there are many other factors that effect the output of PV panels, including temperature, dust, wiring and age, each of which can sap a few percent of your output.  In addition, systems with battery backup are less efficient because some of the energy is always going to the batteries, even when their fully charged.  For a more detailed description, see http://www.xantrex.com/web/id/227/docserve.asp)

The final thing affecting output is what angle from the ground the panels are tilted toward the sun and  how close to true south the panels point (north in the southern hemisphere).  To get the maximum output the panels have to be mounted on a tracking device that is adjusted seasonally as the sun angle changed and daily as the sun moves across the sky.  Luckily pointing the panels within 10- 20 degrees of true south (not magnetic) and at an angle from the ground equal to your latitude (again with 10-20 degrees), then you'll still get most of the output.  Angle matters much less on cloudy days than sunny ones since the light is already being scattered all over by the clouds.  Note that in areas with morning cloudiness it would be better to point the panels slightly west since there is more evening energy than morning and likewise in climates with cloudy winters, it would be best to orient the panels to point more toward the summer sun.  As with many other situations like this, it is easy to draw sweeping generalizations, but hard to account for anyone's specific situation.

Thanks to "net metering" laws that make utility companies "buy back" any excess electric you generate, the majority of new PV system installations are now grid connected.  Under net-metering your meter will now run backwards if you generate excess electric.  Any excess is typically carried over for up to a year, at which point they zero it out.  The bottom line is that most utilities are not going to send you a check, but they also don't account for the fact that they lose power every time it is shipped somewhere.  Some utilities even offer peak power pricing, where you get a bigger credit when the grid load it high--which often happens to be sunny summer days when your PV panels are churning out power at their top rate.

 Water

While there is often little environmental motivation to supply your own water, the one common situation that comes up is in areas that have a dry summer.  In this case the utilities reservoir capacity is determined mostly by the dry season demand, and so techniques to reduce this keeps the utility from having to flood more river valleys to increase reservoir capacity.  In addition many people have noted that using chlorinated water to flush your toilet and water your lawn (as well as possibly many other activities where a small amount of bacteria poses no health risk) doesn't make any sense.

The common solution to this has been to build a cistern which is then used for yard water, and possibly flushing toilets and maybe washing clothes.  City dwellers on small lots will generally be limited to either small above ground tanks or putting their tank below ground somehow.  While above ground storage is typically cheaper than below ground (if for no other reason than you avoid having to dig a very big hole), it can occupy a lot of space and the top of the tank must be low enough that water from the roof will flow down into it.  Typical tanks are plastic, fiberglass, metal and concrete, although there are other materials that can be used also.

A complete water system is a non-trivial thing, and it will typically require some yearly maintenance to clean and/or replace filters.  In addition to a tank, a complete system includes one or more filters to keep debris out of the tank, another filter in the tank to protect the pump from debris that does get in, a pump and its pressure regulation equipment, and finally a filter to remove dissolved sediment.  If the rainwater is to be used for drinking, much more sophisticated filtering is needed to remove any chemical, bacteria and viruses as well.

In almost all case the urban dweller will not be able to rely on their cistern to supply 100% of their needs (unless they have room to build a very large cistern!), so some method of reverting to using city water will be necessary.

The cost of rainwater systems is not cheap.  Tanks range in typical price anywhere from fifty cents a gallon to more than a dollar a gallon, while the rest of the system can easily cost a couple of thousand dollars.  A person with knowledge undoubtedly can do it for much less. One of the biggest limitation for the city dweller is the lack of people skilled in designing and installing rainwater systems.