Six Perspectives on the Fate of Utilities
- Oct 5, 2013 6:00 am GMT
- 330 views
By Stephen Lacey and Andrew Mulherkar
Over the last year, Greentech Media’s coverage of the future of utilities has ramped up significantly. The coverage comes not because we’re obsessed with the demise of utilities, but because the utility industry itself is grappling with how to manage the ongoing surge in distributed energy.
Expect a lot more on this topic as higher penetrations of efficiency and distributed energy start creating more conflict — and enormous opportunities for those positioned to take advantage. For now, here are some of our best recent pieces on the fate of utilities. The range of views represented is very diverse.
1. Energy analyst Chris Nelder asked whether utilities can survive the energy transition. After the Edison Electric Institute (EEI) published its landmark report on the future of the utility industry, Nelder wrote a piece questioning the survival of many power companies. Pointing to the falling costs of distributed generation and rising rates of demand response and efficiency participation, he concluded, “Some utilities will navigate the transformation successfully, while others will fight it tooth and nail until they die.”
2. Peter Kind, author of the EEI report, responded to Nelder’s analysis by countering that the utility industry will survive the energy transition with better regulatory policy. “They recognize the value that some of these resources can bring and, therefore, are leaders in deploying them and in adapting the electric grid to better integrate them,” wrote Kind. “What needs fixing is not the utility business model, but rather the regulatory model.”
3. Haresh Patel, CEO of Mercatus, illustrated why some believe the “utility is dead” because of distributed solar. Although those comments seem a little premature, Patel explained that “the majority of utilities we’ve spoken with seem to be in denial, akin to deer caught in the headlights” when it comes to solar — a statement that directly contradicts analysis from EEI.
4. Does recent history provide any indication of the utility industry’s fate? Richard Caperton, managing director of energy at the Center for American Progress, believes so. In a recent episode of the Energy Gang, Caperton describes how a “death spiral” in the telecom industry may repeat itself in the electric system. We also covered his report on the telecom-utility connection here.
5. Greentech Media CEO Scott Clavenna also explored the utility-telecom comparison. He doesn’t believe that there’s as much to learn from the telecom experience as some claim. “It’s hard for me to imagine, despite plenty of writing on the topic, that consumers actually want more from an energy service provider other than the basics — lower prices and reliability.”
6. As dire as the warnings sound, utilities aren’t out of options — and they’re certainly not at a point where they need to pull down their infrastructure. A brand-new coalition, America’s Power Plan, offered three ways to revise the “social compact between utilities, regulators and the public” and prepare the industry for when that does happen. With built-in flexibility, argued the authors, utilities can begin to reimagine their role in delivering electricity services.
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