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.

Comments

Re:Reduced revenues != lost profit

[ShanghaiBill]

That's why most utility bills have a "minimum charge for being connected to the grid", and then a consumption component.

Three problems:
1. The connection charge and consumption charges are do not always reflect the actual costs.
2. Another big cost is base load generating capacity. Base load is priced assuming it will run 24/7. But if solar can supply 100% of power on a sunny day, then the base load generator will be sitting idle.
3. Another big cost is dealing with intermittent supplies from renewables. If solar is providing much of the load during peak hours (mid-afternoon), and suddenly some clouds roll in, the power company has to react and rapidly scale up their generator. That is expensive, yet the capacity to do so will sit idle 99% of the time. Who will pay for that? One solution is on-demand pricing, so with the clouds roll in, prices jump, and marginal users scale back their consumption.

Re:Reduced revenues != lost profit

[Facegarden]

Well, they're kind of in a losing position - raise rates to pay for losses, and people just move to renewables sooner.

It seems pretty clear that generating electricity from free sunlight is going to be cheaper than mining and transporting fossil fuels to a complex facility to burn them. Solar has it's own "moore's law" equivalent that says the price of the panels goes down by 50% every time we double installed capacity. We're currently only powering less than 1% of the world from solar, so there is a lot more room for doubling. You can find a study that goes either way, but supposedly solar is already at parity with coal power in certain regions, and fossil fuels only get more expensive, not less.

Regulated or not, if you're selling the horse and buggy and someone else is selling the automobile, your industry will die.

Re:Reduced revenues != lost profit

[taiwanjohn]

Economy of scale still applies to solar energy. It's still going to be cheaper for a utility company to set up hundreds
of solar panels and sell the electricity to consumers than it will be for everyone to buy/maintain their own system.

That pretty well describes Elon Musk's business plan with Solar City. From what I've seen, it looks like they've already passed the tipping point into self-sustaining progress. Their main problems seem to be keeping up with demand and managing the "growing pains" of such rapid business expansion.