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US Utilities Fear Obsolescence as Off-Grid Solar Power Rises
Posted By Charley Cameron On April 11, 2013 @ 10:07 am In Environment,News,Renewable Energy,Solar Power | 2 Comments
Photo  via Shutterstock
There’s a common belief that even as solar power  takes off, utility companies will retain their hold on energy markets as the need for standard electrical grids remain. But a report  from the Edison Electrical Institute  (EEI), a trade group of US utilities, doesn’t have a particularly optimistic outlook for their own long-established business model. They predict  solar-based off-grid power usage to take off, which could cause rates for conventional utilities to skyrocket. Ostensibly, they fear the demise of their industry.
Photo  via Shutterstock
The report , written about in Grist , outlines the “disruptive challenges” facing US utilities, including several major impacts that solar power could have on their business model, and straight-forwardly their ability to sell power. At present, as Grist outlines , solar already has a notable effect on conventional power—with solar panels at their most effective around noon (obviously), even those solar users who are still on the grid, are not using utility-based power during peak hours, and these are the hours during which utilities charge the most for their power.
Furthermore, the report states that “[w]hile we would expect customers to remain on the grid until a fully viable and economic distributed non-variable resource is available, one can imagine a day when battery storage  technology or micro turbines could allow customers to be electric grid independent.” The fossil-fuel dependent utilities  really do believe in renewables, and they see part of the attraction to solar and wind coming from rate increases that will result from the gradual adoption of rewnewable energy.
As revenues decline—as people use solar during peak hours or go completely off grid—then “[i]ncreased uncertainty and risk will not be welcomed by investors, who will seek a higher return on investment and force defensive-minded investors to reduce exposure to the sector. These competitive and financial risks would likely erode credit quality. The decline in credit quality will lead to a higher cost of capital, putting further pressure on customer rates.” And as these rates go up, demand for solar could increase, pushing the cost of solar down.
It’s certainly refreshing to see this level of frankness—or well-phrased panic, depending on ones interpretation—from the EEI, and there does appears to be a small trend of increasing awareness among some utilities of the need to adapt. New Jersey-based NRG Energy has substantially bolstered it’s solar projects (including some very high-profile ones) while continuing to provide conventional fossil fuel-derived power. NRG’s CEO David Crane  has become a vocal proponent  for renewables from an environmental standpoint, and a business survival one. Jim Rogers, CEO of Duke Energy has been very frank about the threat that alternative energy poses to his industry, and similarly encourages investments in solar and wind. These two are, admittedly, among all-too few, but the EEI report suggests that maybe soon we might just see more adaption from US utilities in coming years.
Via Grist 
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URL to article: http://inhabitat.com/us-utilities-fear-solar-power-inflicted-obsolescence/
URLs in this post:
 Image: http://inhabitat.com/wp-content/blogs.dir/1/files/2013/04/solar-us-utilities-1.jpg
 Photo: http://www.shutterstock.com/pic-104076974/stock-photo-view-of-solar-panels-in-the-mojave-desert.html?src=3qn7Ud4uxghxlfh1Az7JJg-1-35
 solar power: http://inhabitat.com/solar-power
 report: http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf
 Edison Electrical Institute: http://eei.org
 predict: http://grist.org/article/solar-panels-could-destroy-u-s-utilities-according-to-u-s-utilities/
 Image: http://inhabitat.com/wp-content/blogs.dir/1/files/2013/04/solar-us-utilities-2.jpg
 Photo: http://www.shutterstock.com/cat.mhtml?lang=en&search_source=search_form&version=llv1&anyorall=all&safesearch=1&searchterm=solar+array&search_group=#id=50564104&src=3qn7Ud4uxghxlfh1Az7JJg-1-79
 battery storage: http://inhabitat.com/tag/solar-battery
 fossil-fuel dependent utilities: http://inhabitat.com/environmental-destruction
 David Crane: http://thinkprogress.org/climate/2011/11/13/366764/utility-ceo-solar-cheaper-grid/?mobile=nc
 vocal proponent: http://www.nytimes.com/2012/12/13/opinion/solar-panels-for-every-home.html?_r=0
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