It's not going to happen overnight. It'll be a slow corrosion. We're already starting to see the first tarnish. In my town, PG&E wanted to charge a new home (on an existing street with existing utilities) >$300k for an updated hookup (mandated to be underground), so the owner declined and went the self-generation route instead. An occupancy certificate (at least around here) requires functional utilities, but doesn't specify where they come from.
Folks who argue against the self-generation route tend to assume that solar and storage has to cover 100% of usage. That's unnecessary, and specifically why I called out fossil-fueled backup. For my own usage, a 14 kilowatt PV array, 20 KWh of battery storage, and a 2 kilowatt generator with remote start (controlled automatically) lets me fully disconnect forever.
I haven't yet, mostly because I have NEM 2.0 and the very-high fixed grid charge hasn't kicked in yet. Once it does, there's little reason for me to stay. My system paid itself off in <4 years of avoided costs, but I did it on the cheap by buying used hardware and doing the installation myself. When I set out on the build, I projected my payback time to be closer to 7 years. Rates went up faster than I expected and my usage also went up more than I expected once the electricity was free. I ended up getting an induction cooktop, a heat pump, and an electric car.
And I totally agree with you that this approach is wasteful from the perspective of global optimization of overall resource utilization. If this were Factorio and not the real world, the self-generation approach would be dumb. But in practice, the retail cost of electricity is rising fast while solar and battery costs have plummeted. That reduction in cost has really moved the needle on the microeconomics.