Utilities Face Billions In Losses From Distributed Renewables

← Back to Stories (view on slashdot.org)

Utilities Face Billions In Losses From Distributed Renewables

Posted by Soulskill on Tuesday December 9, 2014 @12:09PM from the reacting-slowly-to-new-technology-is-not-a-business-plan dept.

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.

20 of 280 comments (clear)

Min score:

Reason:

Sort:

The study... by hcs_$reboot · 2014-12-09 12:12 · Score: 5, Insightful

...by Accenture
Stopped there.

--
Slashdot, fix the reply notifications... You won't get away with it...
Reduced revenues != lost profit by BarbaraHudson · 2014-12-09 12:12 · Score: 3, Informative

reduce revenues to grid utilities
And there are costs associated with generating those revenues (pun intended). Will it tip the utilities into loss? Certainly not to the extent the summary implies.

--
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
1. Re:Reduced revenues != lost profit by jythie · 2014-12-09 12:17 · Score: 4, Insightful
  
  Keep in mind that while they might reduce their costs in terms of fuel, the infrastructure they are responsible for maintaining will keep growing. When this topic comes up people often forget about that rather massive recurring cost and most consumers just sorta take it for granted that someone will fix/upgrade things.
2. Re:Reduced revenues != lost profit by rahvin112 · 2014-12-09 12:34 · Score: 4, Informative
  
  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.
3. Re:Reduced revenues != lost profit by fluffy99 · 2014-12-09 12:35 · Score: 3, Informative
  
  The graphs in the study are not scaled properly and are misleading. The middle US case, which even has some dubious assumptions, only represents a 5% drop in total demand. It doesn't include important things such as costs to increase capacity if demand actually continues to rise. Most predictions show a continued overall energy demand far greater than predicted to be generated by wind or solar. Status quo of a non-increasing demand is actually good for their profits as they just need to maintain what they have. Solar power which produces during the peak energy hours helps them as well since the peak surges are covered using gas turbines which are very expensive to run (hence the reason for tiered pricing based on time of usage)
4. Re:Reduced revenues != lost profit by Facegarden · 2014-12-09 12:58 · Score: 4, Interesting
  
  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.
  
  --
  Worldwide Military budgets: $2100 billion. Worldwide Space Exploration budgets: $38 billion. Really, world? Really?
5. Re:Reduced revenues != lost profit by K.+S.+Kyosuke · 2014-12-09 13:05 · Score: 3, Informative
  
  20%. Not 50%. 50% cost reduction for twice the installed capacity would mean a solar panel singularity or something like that. :-)
  
  --
  Ezekiel 23:20
6. Re:Reduced revenues != lost profit by K.+S.+Kyosuke · 2014-12-09 13:14 · Score: 3, Informative
  
  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.
  Assuming there will be many base load generators at that point in time... Much has been made of the fact the Germans started building new coal plants like crazy, but what gets ignored by conservatives (in the general meaning of the word) is that these are "flex-load" plants, with the old base-load coal plants are being closed down.
  
  --
  Ezekiel 23:20
7. Re:Reduced revenues != lost profit by Wycliffe · 2014-12-09 13:19 · Score: 4, Insightful
  
  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.
  Even IF green energy becomes cheaper, this doesn't mean distributed power is going away anytime soon,
  it just means that large power companies will have to move to green energy sooner.
  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.
  There is a potential saving by being able to eliminate distribution costs so it's possible that local generation could
  bet out economy of scale if distribution costs are a significant part. So the question really becomes
  what percentage of your electricity price is generation and what percentage is distribution?
  The other way that local generation wins is if people start installing solar for reasons other that cost of generation.
8. Re: Reduced revenues != lost profit by jklovanc · 2014-12-09 18:24 · Score: 3, Informative
  
  Do you watch use your computer after dark? There is 400 watts. Watch TV? Do laundry? cook? Run your refrigerator? Have a shower? You numbers are very far off.
9. Re:Reduced revenues != lost profit by jklovanc · 2014-12-09 18:32 · Score: 3, Insightful
  
  Twenty four hours may not be enough. During a big storm solar will be degraded for much longer than that. Also at higher latitudes winter solar output can be as little as 1-% of summer output. One can either massively over produce in summer or rely on grid power in the winter. If one is relying on winter grid power then the equipment generating that power will only be used a fraction of the year.
  
  but storage costs are on the same downward trajectory as the renewable generation costs.
  The problem with local storage is that it is mainly batteries. Batteries are not environmentally friendly.
They have good reason to be nervous by DerekLyons · 2014-12-09 12:39 · Score: 4, Insightful

They have good reason to be nervous... They'll still be on the hook to provide full power when solar is producing less than peak capability or isn't producing at all, but there's little chance they'll be allowed to significantly raise their rates. This works out to being required to maintain full generating and transmission capacity with sharply reduced revenue.

Not to mention that very few people installing subsidized and/or cheap solar panels will spend the money to install unsubsidized and expensive battery capacity. That's long been a deep flaw in the thinking of solar power supporters - that they can have their cake and eat it too, the unspoken assumption that the utilities will always be there and will always have the capacity to make up any lack. You get what you pay for folks, TANSTAAFL.
1. Re:They have good reason to be nervous by LordLucless · 2014-12-09 14:17 · Score: 3, Insightful
  
  It is like the owner of corner grocery charging everyone a dollar extra because he was robbed the previous evening.
  Pretty sure grocery stores do pay for repairs/stock loss/insurance through increasing the price of their goods. How else would they do it?
  
  --
  Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
Don't forget batteries for storage by koan · 2014-12-09 12:52 · Score: 3, Insightful

http://disinfo.com/2014/12/elo...
Yet Musk’s so-called gigafactory may soon become an existential threat to the 100-year-old utility business model. The facility will also churn out stationary battery packs that can be paired with rooftop solar panels to store power. Already, a second company led by Musk, SolarCity Corp. (SCTY), is packaging solar panels and batteries to power California homes and companies including Wal-Mart Stores Inc. (WMT) - See more at: http://disinfo.com/2014/12/elo...

--
"If any question why we died, Tell them because our fathers lied."
Re:Predictions by Anonymous Coward · 2014-12-09 12:52 · Score: 5, Funny

A LOT will happen in 10 years; especially in renewable energy.
Is that a prediction?
Re:That day by Waffle+Iron · 2014-12-09 13:36 · Score: 3

You may like living in the stone age, but most of us would rather be comfortable.
One o the best ways to stay comfortable is to not get your home destroyed by the crazy weather created by your cheap electricity rates.
Re: Predictions by Anonymous Coward · 2014-12-09 13:50 · Score: 5, Insightful

It should not matter anyways. Utilities such as these should be there to serve the people. They should only worry about covering costs, not making a profit.
Re:Predictions by Darinbob · 2014-12-09 14:20 · Score: 4, Funny

I predict that consulting companies face billions in losses as the markets continue to lose faith in their predictions.
Re: Predictions by dinfinity · 2014-12-09 20:52 · Score: 5, Insightful

Why the hell is that unfortunate? Utilities should be nationalized. Their existence and proper functioning is essential to society and shouldn't be subject to the whims of shareholders and career tigers or 'operating at a profit'. Even though I believe nationalized industries do not necessarily have to be less 'efficient' than private ones (the efforts to make them efficient have been meager and successes underreported), I'd rather have inefficient organizations operating at a net loss than ones that will fuck me over left and right to extract every penny they can and don't give a flying fuck about the service they should be there to provide.
This 'socialism bad, free market good'-crap really needs to stop.
Re: Predictions by Code+Herder · 2014-12-10 03:38 · Score: 5, Informative

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!