Will Electric Utilities Become the Next Dinosaurs?

We ran a piece a week ago about Barclay’s downgrade of the utility industry. The move cited fears of rooftop solar undermining the industry profitability the way that internet downloading has disrupted the music business. Once people have solar on their rooftops, they will buy considerably less electricity from their utilities, using it only as a dynamic storage mechanism, providing power when none is available from the sun. Solar panels are most effective at mid-day when air conditioning needs are highest, which is also the time that utilities can charge the highest rates to their commercial customers.

As the cost of battery storage system continues to fall, more customers will disconnect from the grid altogether, a phenomenon known as “grid defection.” Some analysts have raised the specter of a “death spiral” for the industry, where, as more customers defect from the grid, utilities will be forced to raise prices, encouraging even more customers to defect.

But according to Leia Guccione of Rocky Mountain Institute, You don’t want to defect because the greatest value comes from staying connected. When you’re off the grid, you need to invest in redundancy and into oversizing the system, so you end up taking a penalty that ranges from 10 to 50 percent of the cost of the system.”

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Image credit: Randy Robertson: Flickr Cretive 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.