Prediction: Some utilities will adapt, many will perish

We have a lot to thank the electricity industry for, let’s be clear about that. Energy has transformed our life and brought wealth and health to billions of people.

But as time has passed we have learned (well many of us have) that the way things were done in the past aren’t necessarily the way things should be done in the future. Burning trillions of tonnes of coal makes cheap electricity but the consequences are enormous – just ask the residents of Beijing or Morwell.

There are alternatives and right now we are facing a revolution in the way the world generates and distributes its electricity. Some electricity companies are getting board, but sadly the majority are moving very, very slowly. This is clearly going to cost them their business in the near term.

As if to prove the point, almost every day new announcements are made demonstrating the rate of change.

One major player in the solar industry recently announced that they had agreed to build a solar project in the US and would deliver energy at a staggering cost of $0.05c kWh. At that price, coal and gas fired generation is simply unable to compete.

Australia’s Government forecasting body (BREE) who are notoriously conservative, upgraded their projections for solar energy costs in late 2013, citing solar as the cheapest form of energy (bar none)

in the near future. That’s a huge turnaround.

Just when (not if, but when) utilities will embrace solar energy remains unclear. For now, they are up to their necks in old business plans and 100 year old models and assumptions. Transformative change doesn’t happen easily for this with vested interests and the fundamental core of their business is to sell as many kWh’s of electricity as possible (the more the better).

The reality of just how utilities are slowing the uptake of solar energy and storage was made abundantly clear to me in a chance conversation with my neighbour last week.

Like me, he loves to tinker in his shed and between us we have a vast array of machinery and electrically powered equipment. We talked about getting together to upgrade our small air compressors with a much larger one. A search revealed the fact that for the right price, we could get a much bigger and better unit, however it would use around 5,000 Watts of electricity to operate it.

“Gee, that sounds like a lot of electricity; do we have to get permission to connect something that big?” he said. The general answer is no, you don’t need permission as long as the load doesn’t exceed the rating of your circuit breakers.

This got me thinking.

It suddenly struck me that as long as I am within the ratings of the fuses I could actually connect as much as 80 Amps of load (almost 20,000 Watts), which is my total fuse board rating and I don’t even need to ask permission. Compressors, air conditions, hell, I could connect an electric kiln if I wanted to!

Now whilst there are technical rules and regulations around what you can connect consumers are generally unaware of the rules and the hardware shop just wants to sell stuff. I can trot off to the local hardware store on a Saturday afternoon, buy whatever I want and plug it in and the utility will just smile and say “here’s your (enormous) electricity bill”.

So if I can connect and increase loads on the network without asking, why is it that I have to get permission to connect devices that reduce load? I can’t connect a 500W solar system without permission. I can’t connect a battery system that stores and exports energy without permission.

I understand there are safety aspects but it seems to me that the ease by which I can consume energy and the difficulty in reducing energy with solar and storage are far more about profit than about safety.

These are just a few example of how the electricity industry we have today is out of date and desperately needs to evolve. Utilities who give consumers this freedom will, I predict, gain hoards of new, loyal customers in the near future and those who don’t will find them-self redundant very quickly.

Top image credit: Jim Donovan via wikipedia

© Solar Choice Pty Ltd 2014

Nigel Morris

Nigel is one of the foremost solar energy analysts in Australia, having worked in the industry for over two decades.
Nigel Morris

Comments

  1. If you want to connect the device it’s all about safety, ensuring the product meets safety criteria. Also is about the grid capability in your area, can the gird actually handle the extra input with out pushing voltage at other peoples houses above safety limits. And the account side of things, you want to sell that product, well you need a new meter etc to do that. It’s also advantageous to know what’s connected to the grid and where when it comes to organising network access when repairing, maintaining and upgrading the network.
    The networks where not designed for the way they are expected to be used as the technology either wasn’t there or not though to have an impact. Need to remember Rome wasn’t built in a day and neither where he electricity grids, if you want the grids redesigned and built to meet new standards it comes at a cost which I don’t think the average user is willing to pay.

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