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The IOU's Dilemma: We're Just Backup!

03/02/13

  01:31:00 pm, by Jim Jenal - Founder & CEO   , 380 words  
Categories: Solar Economics, Solar News, Climate Change, Commercial Solar, Residential Solar, Ranting, Energy Storage

The IOU's Dilemma: We're Just Backup!

Amidst the continuing sturm und drang between the solar industry and the Investor-Owned Utilities (IOUs), we came across this interesting piece over at REWorld documenting some revealing observations by Duke Energy’s CEO, Jim Rogers. Duke - the nation’s largest utility owner, sees the writing on the wall and is not sanguine about what it portends:

“It is obviously a potential threat to us over the long term and an opportunity in the short term… If the cost of solar panels keeps coming down, installation costs come down and if they combine solar with battery technology and a power management system, then we have someone just using us for backup,” Rogers said.

Rogers’ observation comes at a time when the conventional energy industry is facing “anemic” growth in power demand - due to increased efforts at energy efficiency and the growing impact of consumer-owned generation.  Since IOUs make a guaranteed return on investment in building, mostly, added power generation capacity, if there is no need for additional capacity, there is no basis for future returns.  Not a promising prognosis for an industry that has grown accustomed to those sweet, sweet guaranteed returns.

And that, in a nutshell, is the IOUs’ dilemma - as renewables become ever more cost-effective, and particularly once intelligent storage solutions become a part of standard solar offerings, the justification for the guaranteed existence of IOUs becomes weaker and weaker.  Contrast this with the municipal utility model which is owned by the city in which it is based and which exists for the benefit of its residents.  If their preference is for distributed generation, then the muni’s goal should be to facilitate the adoption of such systems.  Since its customers are also its owners, the interests are aligned.

But not so with IOUs who exist to make a profit for their shareholders and those interests are not necessarily aligned with those of the monopoly-provided customers they “serve".  Not surprisingly, it is the IOUs leading the charge against net metering and questioning the “fairness” of local solar power.

Which raises the question: Can we as a society afford to have IOUs anymore?  In an era of carbon-driven climate change, are IOUs a dinosaur determined to fight their extinction to the bitter end, even if they take th rest of us with them?

1 comment

Comment from: phatherphoton [Member]  
phatherphotonI’ve wondered why some utilities don’t get more involved in leasing. It you cant beat them join them and I would think with their economies of scale they could give SolarCity et al a run for their money.
03/03/13 @ 09:08
Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
In addition, Run on Sun offers solar consulting services, working with consumers, utilities and municipalities to help them make solar power affordable and reliable.

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