Will Renewable Energy Cause A Utility ‘Death Spiral’? No Need For That

June 24th, 2014 by Nicholas Brown

Last year, the Edison Electric Institute predicted that the widespread adoption of renewable energy (especially on-site electricity generation) is going to destroy the traditional utility business model that power companies have been using for all these years. New research says: not so much.

People do not want to have to pay electricity bills for eternity anymore. With net metering, incentives, and new solar panel technology which is cheaper than ever, they can now seriously cut if not eliminate their electricity bills. That doesn’t sound good to electricity/utility companies.

Fortunately (for utility companies), a report from the American Council for an Energy-Efficient Economy suggests that this ‘death spiral‘ won’t happen after all. It says that national electricity sales would decrease only 10% by 2040 (at most), translating to an annual decline of only 0.4%.

In addition to that, utility companies have been fighting tooth and nail to suppress on-site electricity generation, further reducing the probability of rapid decline.





According to Green Car Reports:

If sales remain flat, the report’s authors recommend that utilities offer optional energy-related services to customers–including technical help and financing for larger customers installing and operating high-efficiency combined heated and power systems. They also recommend that regulators adjust rates to allow companies to recover fixed costs more easily, incentivize increased energy efficiency, and modify the rules governing rates and services for added flexibility.

The report also advises utility companies to curtail the expansion of their infrastructure for now, unless they clearly foresee a rise in electricity demand.

Some utility companies may take their advice, although it is likely that many of them will continue business as usual and continue to fight rooftop solar and distributed energy storage (which helps people get off the grid altogether and drop utility companies for good).

Do you think the utility business model will be destroyed soon, or will it gradually transform as the American Council for an Energy-Efficient Economy said?

Sound off in the comment section below.









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