(3Bl Media/Justmeans) - Will large capital-intensive power plants become the buggy whips of the 21st century, finding themselves in the undesirable position of no longer being needed?
Rob Wile of in Business Insider seems to think so. Â âItâs been a good run,â he says in the closing line of his assessment of the outlook for the electric utility industry. Citing the sector downgrade by investment bank Barclays from âmarket weightâ to âunderweight,â which refers to how much utility investment they are recommending for a typical portfolio, he sees trouble ahead.
That trouble comes in the form of residential solar, which is increasingly taking on the form of a perfect storm from the utilitiesâ perspective. First, the price of installed rooftop solar has plummeted, falling by half since the year 2000. That led to a rising number of installations, but the utilities could still count on continued sales since they continued to serve as the primary source of storage in the grid-connected systems that have been the predominant configuration. But now the cost of battery storage, helped along by the commercialization of electric vehicles, has also dropped. And if Elon Musk keeps his promise about a super-factory for batteries, the price will drop even further. In this case utilities will be the provider of last resort, only used when all else fails. Yet, even that requires the utilities to maintain roughly the same level of infrastructure as they do today, with little in the way of revenue to show for it.
It is somewhat reminiscent of the old saying, âwhy buy the cow, if you can get the milk for free?â
The problem is, we need to keep the utilities around, at least for the foreseeable future, because we need them to maintain the grid and to continue to deliver power those who canât generate their own and also to those who can during those long cloudy spells, when the solar panels are idle and the batteries drained.