Solar power and other renewable energy technologies may destroy U.S. investor-owned utilities.
Amazingly, that is the conclusion of a recent policy paper from the Edison Electric Institute (EEI), an association of U.S. investor-owned utilities. This has received virtually no notice in the mainstream media, according to an MIT program that tracks science journalism.
The report, entitled “Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business,” notes that the cost of power generation from solar panels, wind, geothermal, micro-hydro and fuel cells running on natural gas has been dropping dramatically. Residential and commercial utility customers can now generate some or all of their own power economically instead of drawing it from the grid. The cost of such distributed generation is set to continue falling as more of it is deployed around the world, and “could directly threaten the centralized utility model,” the report acknowledges.
David Roberts, writing in Grist, explains that “the power generated by solar panels on residential or commercial roofs is not utility-owned or utility-purchased. From the utility’s point of view, every kilowatt-hour of rooftop solar looks like a kilowatt-hour of reduced demand for the utility’s product. Not something any business enjoys. ... It’s worse than that, though. Solar power peaks at midday, which means it is strongest close to the point of highest electricity use — ‘peak load.’ Problem is, providing power to meet peak load is where utilities make a huge chunk of their money. Peak power is the most expensive power. So when solar panels provide peak power, they aren’t just reducing demand, they’re reducing demand for the utilities’ most valuable product.”
It has been assumed that renewable energy sources are limited by the fact they are intermittent. The sun doesn’t always shine and the wind isn’t always blowing. However, the EEI report says “one can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent. To put this into perspective, who would have believed 10 years ago that traditional wire line telephone customers could economically ‘cut the cord?’”
In Germany, which has been aggressively utilizing renewable power for the past decade, solar power has nearly reached grid parity and may now be “unstoppable” even without subsidies, according to Macquarie Group, a global investment bank. In fact, Deutsche Bank just released a report concluding that the global solar market will become sustainable on its own terms by the end of 2014 and will no longer need subsidies.
Germany already receives nearly 25 percent of its electricity from renewable sources, up from just under 7 percent 13 years ago. This is an impressive accomplishment, since Germany has the planet’s fifth-largest economy and is the third-largest exporter. Since 2004, cleanenergy investments in Germany grew by 122 percent. Jobs in the renewable energy sector have more than doubled, to around 380,000 jobs during the same period. Environmental activist and writer Bill McKibben praises the Germans, noting that there were days last summer when Germany “generated more than half its power from solar panels within its borders. Germany’s program isn’t perfect, but then, Germany doesn’t have Florida and Arizona and New Mexico and the California desert.”
A 2000 German federal law that let citizens produce their own clean power and compete with utilities inspired Boulderites who wanted to “decentralize, decarbonize and democratize energy” via municipalization, according to Boulder Deputy Mayor Liza Morzel.
Boulder City Council and environmentalists have prodded and goosed Xcel Energy (which has been heavily dependent on coal) into putting more clean energy into the grid, without much success. Finally, a movement for municipalization took off. It’s not a new idea. Today 15 percent of U.S. electrical generation is sold through publicly owned municipal power systems, and another 10 percent is sold through rural electrical cooperatives, according to the U.S. Energy Information Administration. There are 29 city-owned utilities in Colorado, including Fort Collins, Longmont and Colorado Springs.
Fossil fuels cannot remain the dominant energy source if the planet is to survive. We have to keep the coal, oil and gas in the ground.
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