The electric utility industry has been buffeted by two recent trends that threaten to upend the profitability, and in some cases the future viability of, those companies that are slow to adapt to a new, rapidly changing landscape.
Specifically, in the past decade, the industry has had to grapple with both waning demand and the growth of distributed energy generation.
Electricity demand has been slowing as both commercial and residential customers construct buildings with better insulation and more energy efficient glass and install better heating and cooling systems. At the same time, there has been a faster than expected buildout of distributed energy generation systems, mainly rooftop solar, which are changing both supply and demand patterns. Both of these trends create meaningful challenges for an industry that has relied on steady, predictable growth in both supply and demand.
Power shifts to the consumer
Distributed energy generation creates significant challenges for an industry that has been built on steady baseload power generation from centrally located facilities sent over an established distribution grid. Predictable energy generation and usage are ideal so that voltage and volatility can be effectively managed in order to avoid power disruptions. Distributed generation, which is typically intermittent and volatile, causes instability and requires greater use of sensors and upgraded distribution equipment in order to prevent voltage spikes and other disturbances.
The electric utility industry has responded to the distributed energy threat with two primary tools: time-of-use charges and grid connection charges. But the effectiveness of these responses is being impacted by a third recent trend: behind-the-meter (BTM) energy storage. This rise in the installation of energy storage systems, especially in residences, has been happening much sooner than expected by the electric utility industry. Suddenly, the passive energy consumer has become an informed and active consumer that can both generate energy and manage its usage. BTM energy storage systems empower the customer while increasing costs and limiting the flexibility and revenue opportunities for the utilities. This is a significant threat to those utilities that are not prepared for the new landscape.
Read more: Renewable Energy World