An Ominous Prediction For American Utilities

A recent article from businessinsider.com describes a very real threat to the future of American utilities.

This prediction comes by way of a team from England’s Barclays Bank. The team has concluded that solar power will be ultimately responsible for decline and eventual disintegration of the powerful energy companies in America.

So how could the currently very small solar energy industry take down the large utilities?

The final knockout punch will come by way of a one-two combination; solar pv and battery storage. In recent years, the combined cost of a solar power system with a back up battery system was cost prohibitive. This is beginning to change. In fact, in states where electricity costs are relatively high, payback periods for complete solar power systems can be less than ten years. Many homeowners will obviously choose ten years of energy payments rather than pay their local utility forever.

It’s estimated that solar energy production increased 30 fold in the U.S. from 1,000 MW in 2005 to 30,000 MW in 2013. While this is still just a fraction of the total energy needs of the country, prices for solar panels are starting to be on par with conventional energy costs.

Affordable batteries has been one of the main things holding back the mass adoption of solar power. Prices for solar power batteries have been falling drastically, along with prices for solar panels. Grid Parity – the term for when the price of an alternative energy source like solar costs the same as conventional energy is what this all boils down to.

The Barclays team predicts that solar pv plus battery storage will see grid parity for the first few states in the next two to four years. Most of the rest of America will save money by ditching their utilities for solar by the end of the next ten year period.
grid parity prediction
Initial solar installations are actually speeding up the demise of the big power providers. Every new solar customer is one less customer for the utilities. This decrease in revenue gets passed along as increased costs to their current customers, forcing even more people to consider switching to solar power.

Of course, this analysis from Barclays does not touch upon the considerable power and influence that the large electric utilities have in America. They surely will not easily let go of their grasp on an industry that has proven very profitable for many decades. It’s safe to say that the financial experts from Barclays have also considered the fact that free enterprise should trump all. Technological advancements have changed many industries. The energy industry is simply becoming the latest example….a long overdue one.

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