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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.
...by Accenture
Stopped there.
Slashdot, fix the reply notifications... You won't get away with it...
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.
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.
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.
Is that a prediction?
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?
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.
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.
I predict that consulting companies face billions in losses as the markets continue to lose faith in their predictions.
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.
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!