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Utilities Face Billions In Losses From Distributed Renewables
Lucas123 writes: Over the next 10 years, adoption of distributed power in the form of renewables such as solar power has the potential to reduce revenues to grid utilities by as much as $48 billion in the U.S. and by $75 billion in Europe, according to a new study. The study, by Accenture, revealed that utility executives are more nervous (PDF) about the impact of distributed — or locally generated renewable power — than ever before. 61% of those surveyed this year indicated they expect significant or moderate revenue reductions compared to only 43% last year. The cost of rooftop solar-powered electricity will be on par with prices for common coal or oil-powered generation in two years, and the technology to produce it will only get cheaper, according to a recent report from Deutsche Bank. New technologies, such as more efficient solar cells, are also threatening to increase efficiencies and drive adoption.
Utilities are regulated monopolies when selling to residential consumers. They are forced to sell at fixed power rates that don't vary with demand. Business power though is mostly unregulated. Companies pay for power at different rates every hour. Night time is very cheap but daytime power can be very expensive for a company. Utilities make the bulk of their profit on business power. Solar is going to be pushing power into the grid at peak amounts when peak commercial use is on. This is going to drive down peak power pricing dramatically and may actually flip it to nighttime. So rather than charging a business .30 kwh from 2-5pm with their 10% margin on top is going to get reduced significantly and could even go negative which will wipe out commercial profits almost entirely.
That's what they fear more than anything. If they end up as a company that only makes money on the grid maintenance and not power they won't be worth 10% of what they are today.
That's amusing, I assume you don't know much about your marxist neighbor in the north, that is Canada. For example Hydro Quebec, which has been nationalized since 1944 has been a great success: http://en.wikipedia.org/wiki/H.... We have some of the cheapest residential power in North America AND we're making a tidy profit selling our fairly important over capacity to our neighbors in the states: http://www.hydroquebec.com/pub...
On behalf of Canada, I apologize for destroying all your capitalists wet dreams with our mixed economy. Sorry, sorry!