(3Bl Media/Justmeans) - We have, over the past couple of weeks, written about the impact of the rapid growth of renewables, particularly, rooftop solar, on the economic outlook for electric utilities. First we described the downgrade, by Barclay’s investment bank of the entire sector based on fears of a downward spiral, precipitated by massive grid defection among residential customers.
A follow-up piece described a report by the American Council for an Energy Efficient Economy, which had a considerably less dire tone, suggesting that the changes in electricity sales would likely be relatively modest over the next twenty years.
Both of these reports were focused specifically on rooftop residential solar, or what the utilities call distributed generation. Utility scale renewables projects are another important piece of the puzzle and one that, according to a press release by the World Resources Institute (WRI), will have a beneficial impact on both utilities and consumers.
WRI evaluated reports issued by reports four major utility companies including New York Independent System Operator(NYISO), Midcontinent ISO (MISO), serving the Midwest, PJM Interconnect, serving the mid-Atlantic region, and Western Interconnection, serving 14 states west of the Rockies.
In a world where the vast majority of new generation capacity is either coming from renewable or natural gas, and where demand growth has been stagnant, utilities are now finding the opportunity to retire, older, inefficient plants that are more costly to operate. This will reduce operational cost, which is good for everyone involved. These lower wholesale prices for electricity will far outweigh the infrastructure investments needed to incorporating these new renewable sources into the grid. Depending on whether the utility is structured as a regulated monopoly, or investor-owned, which varies by state, will determine how much of those savings will be passed along to consumers.