Report: Solar Plus Batteries Means Tough Future For Utilities

Apr 8 - McClatchy-Tribune Content Agency, LLC - Brian Dowling The Hartford Courant

 

Rising competition from solar panels and battery storage could cut in half the amount of power that traditional utilities in the Northeast sell by 2030, according to a report released Tuesday by the Rocky Mountain Institute.

In what the report's authors have termed "load defection," residential and commercial customers will increasingly choose solar and solar-plus-battery systems to power their homes and businesses instead of relying on the electric grid.

"This load defection will essentially relegate the grid to a backup-power-only role for customers that adopt these systems," said the report.

In other words: The traditional business model for utilities could be deep underwater by the time they pay off the poles and wires they are installing today.

The nonprofit Rocky Mountain Institute, based in Snowmass, Colo., promotes energy efficiency with an emphasis on renewable energy sources. It wrote the report with a consultant, Homer Energy.

The report adds to the growing consensus that falling rooftop solar costs are a serious threat to the business models of large, investor-owned utilities that invest heavily in centralized power plants and transmission facilities to keep the lights on.

The report quotes a UBS analyst who, in August 2014, said: "Our view is that the 'we have done it like this for a century' value chain in developed electricity markets will be turned upside down within the next 10-20 years, driven by solar and batteries."

That shift carries major risks for traditional utilities.

In the Northeast, utilities including Eversource Energy collectively stand to lose about $35 billion in annual electricity sales by 2030, according to the report. Eversource did not respond to a request for comment on the report's findings.

Utilities, including ones in Connecticut, have turned to higher fixed monthly fees to balance the declines in kilowatt-hour sales from rooftop solar and energy efficiency efforts. These moves to save the industry's business model, the report said, will likely slow, although fail to stem, the migration away from the traditional grid model.

The report takes it as a foregone conclusion that solar panels and batteries to store unused energy will be adopted widely. It spends a good deal of time on the question of how regulators, policymakers and utilities can make the best of this "metaphorical fork in the road" for the electricity system.

In a counterintuitive way, the report said, utilities' status quo of their existing systems is what leads to high rates of "grid defection" and lost revenue. Grid power prices spiral upward as solar and battery costs decline, leading more customers to abandon traditional utility service.

The other path, which has been blazed by energy companies like NRG and states like New York and California, seeks to integrate the new technologies into the existing distribution grid.

"These two pathways are not set in stone. And there is some room to navigate within their boundaries," the report said. "But decisions made today will set us on a trajectory from which it will be more difficult to course correct in the future."

www.courant.com   

http://www.energycentral.com/functional/news/news_detail.cfm?did=35757804