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kristopher

(29,798 posts)
Thu Apr 11, 2013, 12:07 AM Apr 2013

Can the Utility Industry Survive the Energy Transition?

Probably not. At least, not as we presently think of utilities. - k

Can the Utility Industry Survive the Energy Transition?

A new policy paper from the Edison Electric Institute (EEI), an association of shareholder-owned U.S. electric companies, details the "disruptive challenges" the sector faces. These private, for-profit companies, also known as investor-owned utilities or IOUs, serve about 70 percent of the U.S. population. They are usually subject to different regulations than publicly owned utilities or co-ops, and must turn enough profit to retain their investors in a difficult, constrained, low-margin business.

...

The cost of power generation from solar PV, wind, geothermal, micro-hydro, and fuel cells running on natural gas has been dropping dramatically. Residential and commercial utility customers can now generate some or all of their own power economically instead of drawing it from the grid. The cost of such distributed generation is set to continue falling as more of it is deployed around the world, and "could directly threaten the centralized utility model," the report acknowledges.

Distributed generation costs are falling too rapidly for lumbering utilities to adapt to these new business realities. In Germany, which has deployed renewable power aggressively for the past decade, solar power has nearly reached grid parity and may now be "unstoppable" even without subsidies, according to Macquarie Group, a global investment bank. Germany's coal-fired and nuclear power generators are now struggling to remain profitable as their share of the market shrinks as higher-priced peak hours of the day are increasingly met by solar.

Worse, being able to generate your own power means that you might eventually decide you don't need the grid at all. The EEI raises concerns that "the longer-term threat of fully exiting from the grid (or customers solely using the electric grid for backup purposes) raises the potential for irreparable damages to revenues and growth prospects," observing that it may become difficult to recover investment costs over a 30-year period, as it has done in the past.

Increasing use of demand-side management...


http://www.greentechmedia.com/articles/read/can-the-utility-industry-survive-the-energy-transition?utm_source=Daily&utm_medium=Headline&utm_campaign=GTMDaily
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Can the Utility Industry Survive the Energy Transition? (Original Post) kristopher Apr 2013 OP
Can the energy transition survive the utility industry? caraher Apr 2013 #1
That opposition is certainly an important factor kristopher Apr 2013 #2
Resistance is still something to behold caraher Apr 2013 #3

kristopher

(29,798 posts)
2. That opposition is certainly an important factor
Thu Apr 11, 2013, 01:33 PM
Apr 2013

The issue at hand is economic and the transition is creating a great deal of inertia because it is creating an increasing number of economic winners globally. The picture we hold from looking at the opening days of the transition is skewed by the need for the initial stages to grow roots in advanced economies where the losers in the transition (in this case utilities) hold the reins most tightly.
However, as the technology matures, its applicability widens to the point where the developing and latent economies are able to access it. This rebounds to the advanced economies that originated the effort by creating domestic economic opportunities that the utilities et al cannot control. The can drag things out, but the writing is on the wall.

I'm personally pretty sure we've created enough new winners globally that this transition has now become inevitable here, barring a new game changing technology that isn't now on the radar.

caraher

(6,276 posts)
3. Resistance is still something to behold
Thu Apr 11, 2013, 01:43 PM
Apr 2013

I think you're right that the process will likely involve the sort of "rebound" you mention. People are less likely to get hung up about whether something is readily tied to "the grid" in areas where power distribution is notoriously unreliable in the first place, or even not available at all. And it's the need (real and perceived) to tie into all that utility-owned infrastructure that inhibits a lot of potential development.

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