Is your job in jeopardy? Slowing demand and rising costs putting utilities at risk

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By Jesse Berst

 

With electricity use growing at less than 1% per year, power companies are "scrambling to trim spending or redirect capital investments to improve profits," the Wall Street Journal reported. Some have started building new high-voltage transmission lines, which offer a higher than average return.

 

At the same time demand is falling, costs are going up, according to Forbes Magazine. Contributor William Pentland talks about the perverse economics of the electric grid -- as generation gets cheaper, transmission costs soar.

 

"The electric grid may once have been an engine of economic efficiency, but these days it looks more like an albatross," Pentland says. He points out that the cost of generating electricity has plunged, in large part to the glut of cheap natural gas. Yet the decline of those prices has, in some places, been eclipsed entirely by escalating transmission and distribution costs.

 

As Pentland puts it "electrons are cheap to generate an expensive to deliver. And this gap is likely to widen… as utilities scramble to strengthen an aging… power delivery system… developed largely in the 1950s or earlier."

 

Let's see. Demand growing much more slowly than expected. Costs rising much more rapidly than expected. Mr. Rock, meet Mr. Hard Place.

 

You may also want to read…

Electronomics: Reinventing electricity

Forget smart grid. Think SUPER grid (hint: high-voltage transmission)

 

Jesse Berst is the founder and chief analyst of Smart Grid News.com, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.