Utilities’ profits are under threat as never before says The Economist – bible of the financial community in London and New York.
“Who needs the power grid when you can generate and store your own electricity cheaply and reliably?”
General Electric has recently opened an off-grid division bringing together parts of its transport, aviation and engines divisions, to meet what it calls a “$100 billion opportunity”. GE recently installed 24 lorry-engine power generators in Algeria, providing 30MW of power. It took six months, “but we could have done it in ten days,” claimed Lorraine Bolsinger, the corporate bullshit artist who heads GE’s new division.
Morgan Stanley predicts that ever-cheaper solar and other renewable-energy sources, combined with better and more plentiful batteries, will allow businesses and homes to cut out the middle man — the electricity providers.
As reported here often and earlier this week – Tesla Motors, an American electric car maker, said it will build a “gigafactory”, which by 2020 will turn out as many lithium-ion batteries as the whole world produced last year. These batteries can do more than power cars; they can also store electricity which is produced when it is not needed, and discharge it when it is.
Their huge output of efficient batteries will boost the idea of distributed generation—producing electricity in small quantities near the point of use, rather than in large amounts in a few places.
Wesleyan University in Connecticut has installed an engine running on natural gas (fracking has made cheap in America). It generates 95% of the university power, and captures engine waste heat to cut net energy consumption by 30%.
By far the most disruptive new power source is solar panels. Morgan Stanley reckons that if Tesla’s factory provides the cheap batteries it promises, Californian households will be able to run off a solar-plus-storage system costing just $350 a year. Buying electricity off the grid may cost them around $750 a year by then.
Though off-grid generation represents only 1 percent of America’s installed capacity now (compared with TWENTY percent in Germany), it could make up a third by 2017 and could “kill” utilities in their current form. Small-scale producers will dump their surplus power on the market at prices below those at which the utilities can recoup their cost of capital—and thus pay to maintain the grid.
America’s Electric Power Research Institute last month produced a paper highlighting the dangers of an unplanned move to distributed generation, using Germany as an example. The dash for renewables there has strained the power network and made life hard for utilities. This week one of the country’s largest, RWE, announced that it made a net loss of €2.8 billion ($3.8 billion) in 2013, its first annual loss in more than 60 years, as the rising supply of electricity from (subsidised) renewable sources undercut its prices.
In America two organisations more accustomed to scrapping with each other—the Edison Electric Institute, a trade body, and the Natural Resources Defence Council, a green group—have jointly urged regulators to revamp their rules, among other things to encourage utilities to keep investing in upgrading the grid. That way, they say, both large- and small-scale power producers will flourish in an age in which “power flows in two directions”.
One Response
There is going to be a new source of backup power for off-grid homes. When EV batteries get less than prime, such as a Tesla getting less than 200 miles instead of 265 miles. They should be still be able to hold 50-60 KWH. Repurposing batteries like that could power homes for a week or 2-3 days…. For nighttime or dark days. It would get off girders a cheaper source of backup, and would reduce the cost of replacement batteries for EV owners… A win-win situation.