How to survive the death spiral? Become an Ebay for electricity (or a leasing company)

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By Jesse Berst

 

More and more observers and beginning to believe in the possibility of a utility "death spiral," starting in sunny states and spreading from there. A pair of recent articles suggests two ways around the conundrum. Now all that's needed is for utilities to have the courage to convince their regulators to let them pilot one or both concepts.

 

If its customers generate most of their own electricity via rooftop solar, the utility loses the revenue from selling them power. Yet it still is saddled with the full cost of maintaining the grid as a backup. And the full cost of "making a market" in electricity -- in taking excess power from rooftops and shuttling it where needed.

 

All utilities should be concerned about that possible future. Especially those in sunny states with high solar incentives. Writing in Green Car Reports, John Voelker makes the case that the cost of distributed solar energy may fall so low that it will render fossil fuel obsolete by 2030. In defense, he cites the work of Stanford lecturer Tony Serba.

 

He says markets will be redesigned, and there will be huge opportunities for companies that can aggregate and trade distributed generation. He dubs them "Ebays of electricity." He predicts new companies will capture this market opportunity. I believe utilities are best positioned to play this role... if they will step up to the challenges. (The first of which is convincing their regulators to let them experiment.)