Road to NanoGrid: Week 11 - Utility Death Spiral
Not gonna happen ...
Will take years to happen ...
Think twice ...
Two of the largest Las Vegas resorts and casinos, MGM and Wynn, filed to leave Nevada Power, choosing to aggressively pursue renewable energy sources and buy wholesale electricity on their own. This will account for a 5% loss in revenue for Nevada Power.
Utilities are challenged by the “death spiral”. Revenues diminish as former clients generate their own power and either abandon the grid completely or use it only as a back‑up source, no longer paying their fair share of the fixed costs and jumping unpredictably on and off grid. This results in Utilities being forced to increase rates, leading even more clients to disconnect as they realize that they can produce cost competitive energy on their own.
And the way Utilities react in the past by requiring more regulation will not work this time (except perhaps in Quebec with Hydro-Quebec) because they are facing the wills of the people. It is not important why people want to distributed power on their houses or if they are right. The fact is that more than 1 million households in North America already go solar and now regulators (read : elected government) and public utilities commission are afraid to block this trend. Do I have to say that in many juridictions they even subsidized installation of distributed energy systems!
So, despite flat or diminishing revenues, electrical utilities now face large investments to upgrade their aging networks and handle technical challenges such as bi-directional flows, active grid management, much more “peakiness” (requiring additional and expensive stand-by generation), voltage and frequency stabilization, and network overloads brought on by the growth of distributed energy resources in their networks.
As more large corporations make similar moves, what will this mean for utilities? How can they continue to retain customers without reporting giant net losses?
Commercial Director, Chairman & Co-Founder
8yUtilities can no longer avoid the big death spiral discussion, until now some large ones just watched others. Those thinking out of the box will find ways to embrace new techs and leverage new business models. If we have learned communities how to recycle in less than a decade, we can manage an hybrid grid. Start will less conversation, and more action!
Technopreneur
8yIt is a losing battle between electric utilities with Smarter Grids (.. high investments at the expense of ratepayers and the public!..) with diminishing ROI vs Smarter Customers with innovative foresights. Money spent on grid modernizations has only provided incremental $ benefit to customers while the total cost of customer maintenance and retention have increased. There can be no doubt that the Smarter Customers will continue to opt out of utility services, and accelerate the utilities business model to a new destiny of unsustainability whether they operate in regulated or unregulated markets.
Researcher, Writer, Speaker: sustainable alternative fuels and climate; consultant
8yNo argument, Dan. Maybe my words were a little flippant. But the onus is on the utility. It's not good enough to say, "You have to keep us in business; you own us."
Researcher, Writer, Speaker: sustainable alternative fuels and climate; consultant
8yI think this asks the wrong questions. There is no inherent public interest in the viability of utility companies. People need:Reliable electric power. They need that power to be socially and environmentally benign. They need it to be priced reasonably. Utilities, and all other players, must fit into that picture. If a utility fails to ensure that it has a role ... it has no role.
Market Development l Energy & Decarbonisation
8yMarket forces beyond regulator control are taking shape. This disruption may not change overnight the utility industry, but it's already changing the way utilities look at new technology (even in Quebec ;)