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Grist was a participant or observer in the following events:
A report by the Edison Electric Institute (EEI) finds that within a decade or so, solar energy and other renewable distributed energy resources (DER) could lay waste to the utility business model and to American power utilities. The utility business model, which has remained relatively unchanged since the early 20th century, is not capable of coping with the “disruptive challenges” posed to it by solar and other renewable energy power generation. David Roberts, a staff writer for the environmental news publication Grist, will write of the EEI report in April 2013: “It is one of the most prescient and brutally frank things I’ve ever read about the power sector. It is a rare thing to hear an industry tell the tale of its own incipient obsolescence.” Standard power utilities are “regulated monopolies,” which means they are the sole providers of power in their service areas. The business model relies on the utilities selling power as “overseen” by public utility commissions (PUCs), which control what utilities can charge for their power. Inexpensive solar (photovoltaic, or PV) power “eats away at [that business model] like acid,” Roberts writes. Solar power is not regulated for the benefit of the utility companies. In simplistic terms, a kilowatt-hour (kwh) of solar energy generated by, say, a rooftop solar array is a kilowatt-hour of reduced demand for the utility. Solar power peaks each day at noon, usually the time of most intense sunlight, which is one of the power utilities’ “peak load” times. Power utilities make much of their profits from peak load electricity, as they charge more per kwh for peak load electricity. Roberts writes, “[W]hen solar panels provide peak power, they aren’t just reducing demand, they’re reducing demand for the utilities’ most valuable product.” The EEI report also challenges the myth that power consumers must rely on grid power and not solar power because solar power is not available when the sun is not shining. Battery storage, micro turbine, and other developing technologies are making it possible for many consumers to go entirely “grid free,” to opt out of grid-generated electricity entirely. Duke Energy CEO Jim Rogers says, “If the cost of solar panels keeps coming down, installation costs come down and if they combine solar with battery technology and a power management system, then we have someone just using [the grid] for backup.” If a large number of consumers begin generating their own power and using the grid for backup alone, the EEI report says, the utilities face “irreparable damage to [their] revenues and growth prospects.” Utilities generally anticipate revenues that allow them to invest heavily in fossil fuel plants that will not recoup costs for 30 years. Those investments could be more difficult to recoup if consumers begin generating their own power via solar and other DER power sources, leading the utility companies to contemplate raising the rates of those consumers who do not opt out of grid-based power. The EEI report states: “The financial implications of these threats are fairly evident. Start with the increased cost of supporting a network capable of managing and integrating distributed generation sources. Next, under most rate structures, add the decline in revenues attributed to revenues lost from sales foregone. These forces lead to increased revenues required from remaining customers… and sought through rate increases. The result of higher electricity prices and competitive threats will encourage a higher rate of DER additions, or will promote greater use of efficiency or demand-side solutions. Increased 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. Ultimately, capital availability will be reduced, and this will affect future investment plans. The cycle of decline has been previously witnessed in technology-disrupted sectors (such as telecommunications) and other deregulated industries (airlines).” In other words, as consumers begin to opt out of grid-based power consumption, and utilities raise their rates to compensate for the loss of revenue, more and more consumers will opt out, further shrinking the number of consumers paying the utilities to generate their electricity. Even small numbers of consumers using rooftop solar strikes at the utilities’ main profit centers (one reason why German utilities are already feeling the pinch). Currently, less than 1 percent of US electricity is generated by solar arrays. But a projection by Bloomberg Energy Finance forecasts that in some areas of the nation, up to 10 percent of power load will be generated by solar arrays. The EEI report speculates that utility consumers in those areas will see massive increases in their rates as the utilities compensate for the lost revenues. [Kind, 1/2013 ; Grist Magazine, 4/10/2013]
Grist reports new data that shows America is using substantially less energy than in previous years, because of gains in energy efficiency as well as shifting market conditions and pollution regulations. CO2 emissions have dropped from 1.6 billion tons in 2007 (a record peak) to 1.4 billion tons in 2011, an 11 percent drop. Emily E. Adams of Earth Policy writes that both vehicle fuel efficiency and the number of miles driven by vehicles are improving, adding: “Average fuel efficiency, which had been deteriorating for years in the United States, started to increase in 2005 and keeps getting better. Americans are traveling farther on each gallon of gas than ever before. Furthermore, people are driving less. For many years Americans as a group drove billions more miles each year than the previous one. But in 2007 this changed. Now more cars stay parked because more people live in urban areas, opt for public transit, work remotely, or retire and thus no longer commute to work.” Coal, the dirtiest fossil fuel, is shrinking in usage, though it continues to dominate conventional energy generation structures. Utilities are steadily shifting from coal to natural gas, and some are retiring old, inefficient coal plants instead of paying for expensive retrofits to bring them in line with current pollution regulations. US carbon emissions from coal have fallen 20 percent from their peak in 2005. Natural gas usage has risen sharply, and even though it produces only half the CO2 emissions that coal produces, natural gas added 373 million tons of carbon to the atmosphere in 2012. Solar and wind energy have no carbon emissions whatsoever; solar usage has increased 1,400 percent since 2007, and wind usage over 300 percent. Adams writes, “This is just the beginning of reductions in carbon dioxide emissions as the explosive growth of wind and solar power cuts down the use of dirty fossil fuels.” President Obama has set a goal for the nation to reduce its greenhouse gas emissions by 17 percent by 2020, and the decrease in energy usage and improvements in fuel efficiency are helping to reach that goal. [Grist Magazine, 10/2/2013; Grist Magazine, 10/11/2013]
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