Utilities: Will they run out of customers before coal?
The cost of solar panels has dropped quickly. Two years ago we eliminated our energy bills by installing 8.1kW of solar on our roof at a cost of about $7.00 per watt. Today, the same array would cost only $3.30 per watt. We paid our last utility bill in March 2011.
Homeowner's ability to own all of their own power production is making utility companies nervous. Some are now suggesting that monopolistic utility companies must radically adapt...or suffer the bottom line.
There was a time when phone companies were also regulated monopolies. They owned the telephone poles, the lines and your phone. The cell phone industry and deregulation dramatically altered that landscape. If utility companies were in charge of telephones we'd still be stuck with a landline and an avocado-colored phone with a squiggly cord attached to the wall.
Former U.S. Secretary of Energy Stephen Chu and others believe that utility companies can become more like cell phone companies and less like Ma Bell of the 1970s. They will have to get creative in the same way the cell phone industry forced old Bell companies to adapt.
Utilities could own and install solar panels and energy storage units on rooftops and in garages. The homeowners would have no up front costs and the utility company would charge for the energy produced just as they would from a coal plant. With time-of-day and demand-valued pricing, they may offer packages that would help lower bills for consumers. And when the power goes out, consumers could access backup energy from distributed storage banks.
For now, the good news for utility companies is that there's a only a small percentage of homeowners clever enough and with the ability to leverage capital to be able to eliminate their energy bills and own their own power production. But, the number of folks going net zero energy is on the rise. In 2020, all new homes in California will be required to be zero net energy. That will further increase the probably that non-Californians will be plugging into the sun and harvesting their own energy.
At some point, the scales tip and this becomes bad news for those still selling the equivalent of whale oil. It's worth noting that there were plenty of fat and happy whale ship captains in New England only a few short years before Drake struck oil in Titusville, Pennsylvania. Old school utility companies may too be startled to discover that they run out of customers long before they run out of whales.