03-01-2019, 11:21 AM
For essentially all of their history, Utilities have been the quintessential widows/orphans DGI stocks--regulated monopolies with reliable rate/dividend increases matching or slightly exceeding inflation. With the LCOE (Levelized Cost of Energy) cost of wind and (especially) solar dropping below that of gas generation, it seems this traditional business model that has worked for over a century is increasingly in doubt. Anecdotally, I have noticed a number of recent commercial developments using solar as a power generation source. That's certainly consistent with the rapidly decreasing price of the technology (it just makes good business sense):
https://www.businessinsider.com/solar-po...ase-2018-5
I am increasingly concerned that we are going to see major disruption in the traditional utility space in the coming decade. Sure, major industrial applications will continue to require large amounts of traditionally-generated grid power, but the trend in commercial (and I suspect soon for single-family residential) is going to follow the lowest LCOE. Developers who don't follow that trend will be at a competitive disadvantage.
What happens to the traditional utility model, with its huge capital costs and multi-year (or decade) planning, when a massive chunk of their customer base has its own grid that supplies all or part of its electricity requirements. Why bother with costly, wide-ranging power distribution networks that are a maintenance and liability hassle (just look at PCG's issues). Are utilities shaping up to be the electrical equivalent of CenturyLink, keeping a costly, inefficient network running for a shrinking customer base?
https://www.businessinsider.com/solar-po...ase-2018-5
I am increasingly concerned that we are going to see major disruption in the traditional utility space in the coming decade. Sure, major industrial applications will continue to require large amounts of traditionally-generated grid power, but the trend in commercial (and I suspect soon for single-family residential) is going to follow the lowest LCOE. Developers who don't follow that trend will be at a competitive disadvantage.
What happens to the traditional utility model, with its huge capital costs and multi-year (or decade) planning, when a massive chunk of their customer base has its own grid that supplies all or part of its electricity requirements. Why bother with costly, wide-ranging power distribution networks that are a maintenance and liability hassle (just look at PCG's issues). Are utilities shaping up to be the electrical equivalent of CenturyLink, keeping a costly, inefficient network running for a shrinking customer base?