Barclays, Citing Solar Threat, Downgrades Electric Utilities

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Barclays, Citing Solar Threat, Downgrades Electric Utilities

by RP Siegel
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Residential #solar options threaten #electric utilities business models http://bit.ly/1hJJ7G2 via @Justmeans & @RPSiegel #energy

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Monday, June 9, 2014 - 4:00pm

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Will large capital-intensive power plants become the buggy whips of the 21st century, finding themselves in the undesirable position of no longer being needed?

Rob Wile of in Business Insider seems to think so.  “It’s been a good run,” he says in the closing line of his assessment of the outlook for the electric utility industry. Citing the sector downgrade by investment bank Barclays from “market weight” to “underweight,” which refers to how much utility investment they are recommending for a typical portfolio, he sees trouble ahead.

That trouble comes in the form of residential solar, which is increasingly taking on the form of a perfect storm from the utilities’ perspective. First, the price of installed rooftop solar has plummeted, falling by half since the year 2000. That led to a rising number of installations, but the utilities could still count on continued sales since they continued to serve as the primary source of storage in the grid-connected systems that have been the predominant configuration. But now the cost of battery storage, helped along by the commercialization of electric vehicles, has also dropped. And if Elon Musk keeps his promise about a super-factory for batteries, the price will drop even further. In this case utilities will be the provider of last resort, only used when all else fails. Yet, even that requires the utilities to maintain roughly the same level of infrastructure as they do today, with little in the way of revenue to show for it.

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Image Credit: Chasiti Moore: Flickr Creative Commons

RP Siegel, author and inventor, shines a powerful light on numerous environmental and technological topics. He has been published in business and technical journals and has written three books. His third, co-authored with Roger Saillant, is Vapor Trails, an eco-thriller that is being adapted for the big screen. RP is a professional engineer – and a prolific inventor, with 50 patents, numerous awards, and several commercial products. He is president of Rain Mountain LLC and is an active environmental advocate in his hometown of Rochester, N.Y. In addition to Justmeans, he writes for Triple Pundit, ThomasNet News, and Energy Viewpoints, occasionally contributing to Mechanical Engineering, Strategy + Business, and Huffington Post. You can follow RP on Twitter, @RPSiegel.

Keywords: Energy | Barclays | Business Insider | Disruptive Challenges | Edison Electric Institute | Elon Musk | Rob Wile | Rocky Mountain Institute | distribution edge | downgrade | eLab

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