Utilities Should Worry; Rooftop Solar Could Soon Cut Their Profit

Lucas123 writes A study by the Lawrence Berkeley National Laboratory predicts that distributed rooftop solar panel installations will grow from 0.2% market penetration today to 10% by 2022, during which time they're likely to cut utility profits from 8% to 41%. Using those same metrics, electricity rates for utility customers will grow only by as much as 2.7% over the next eight years. By comparison, the cost of electricity on average rose 3.1% from 2013 to 2014. The study was performed for the Office of Energy Efficiency and Renewable Energy under the U.S. Department of Energy. One of the main purposes of the study was to evaluate measures that could be pursued by utilities and regulators to reduce the financial impacts of distributed photovoltaics.

Comments

Really?

[Barny]

And you think the utilities will suffer because of this? Here in Australia power companies have just started bringing in (opt-in for now) billing at different rates for different times of the day for all a house's power. They will simply make day-time power prices stay the same and increase prices for night-time usage, passing the loss on to customers as they always have.

Quite naive to think a company would accept the losses themselves.

Re:Really?

[PopeRatzo]

the whole thing may either turn around or at least shift toward day-time electricity being cheaper simply because of basic economy principles, not because of some malicious intent.

We should stop pretending that there is anything like a "Law of Supply and Demand" when it comes to energy.

And if you want proof of "malicious intent"...

http://thinkprogress.org/clima...

http://www.tulsaworld.com/news...

http://www.deseretnews.com/art...

The Koch Brothers (and others) are pushing these "solar tariff", sun tax and surcharge laws all across the country. The rationale in their advertisements has varied from place to place, but generally it's "Solar energy is costing us money so people who use solar energy should pay double, one way or the other, because screw you, that's why". And yes, it even applies to solar which is not on the grid. So if you want to set up some solar panels to augment your daytime energy use and maybe a battery for night time, be prepared to pay this new tariff because of the Koch Brothers and their representatives at Americans For Prosperity

They're determined to send a message: "If you think you can leave us and go back to your mother, think again sweetie, or maybe you'll run into another door."

Oh dear - money grows on trees...

[Bruce66423]

Utilities are boring because they do a simple job which generates small but predictable profits. Therefore investors put their money into them in the expectation that they will remain boring.

When a new development comes along that destroys their business model, one of two things will happen; they will increase their prices, or they will go out of business. Note that 'the government taking them over' is a subset of 'they will increase their prices'. The service that they provide; a reliable baseload supply and a safe network to distribute electricity HAVE TO BE PAID FOR. At the moment those costs are hidden in the average cost of a kWh. If private solar power reduces the average demand some of the time, the average cost of a kWh will have to be increased, or the other features be recognised and paid for.

Ladies and gentlemen, there is no such thing as a free lunch, despite politicians pretending otherwise for several thousand years.

Generation and distribution

[jbeaupre]

Utilities actually have two businesses: Generation and distribution. We pay one bill and conflate the two. Solar just makes it clear they are different.

With home solar increasing, utilities will just invest less and less in generation. The transition is pretty gradual, so they can adapt just fine. Profits from generation will decline ... life will go on. But only if we accept that distribution also needs to be paid for.

If and until home power storage also becomes economical, homes are still going to need to connect to the grid. That infrastructure will need to be paid for. It's going to be tacked onto the utility bill. In the past, we subsidized small users by paying by the kwh. Now we have to decide if connection fees are more appropriate. That's what the debate is going to turn into.