yes, it's collectively irrational behavior, just like warfare. but it's often individually rational behavior (like defending your country when it's invaded, in some cases) because electric power utilities commonly have monopolies, which causes two problems:

1. they become single points of failure, and their risk tolerance for outages may not match yours, so you may end up either paying excessive costs for reliability you don't need, or experiencing an outage risk you can't tolerate. or they may have outage risks which you can't solve by dumping money on them, such as corruption

2. they sometimes try to extract monopoly rents

there are also coordination problems around things like time-of-usage billing. solar power is free during the day, but your utility provider may not be willing to deliver it to you for the extremely low marginal price of transmission and distribution; they may be legally obligated to charge you the same price as at midnight, for example