Clean renewable energy is comprehensive, cheap, and dynamic. The cost of wind power, solar energy and other renewable resources has continued to decline over the years, thereby allowing many consumers to tap into the ever-present renewable resource. Renewable energy is also increasingly gaining acceptance because it is environmentally friendly and tailored to the needs of today’s consumers who demand response services that are efficient. This is unlike the services provided by the available alternative conventional energy resources.
Eric Rosenbaum of CNBC reports that some of the compelling reasons as to why utility companies are reluctant to welcome renewable energy; include the dispute over the net-metering. There is a growing argument among states about whether utilities should be repaid by rooftop solar energy owners, who are generating their own power off the electric grid. Traditionally, the electricity generating business model created in the 20th century has always been design in such a manner that places the levels of earnings to the rates of invested infrastructure capital. In other words; the greater the production plant, the larger the rate base guarantees.
The growth of private alternative energy controls and ownership rules means that the utility companies have to change their modus operandi. This is because as energy distributed generation technologies change to become affordable and widely adoptable, so are regulated utilities required to adapt to the reality that customers are becoming owners. The growth of customer friendly residential natural gas turbines, solar energy and energy storage technologies have given a new meaning to the phrase “power to the people.”
Among the companies appreciating the new dynamics in energy consumption, is Dominion Virginia Power. When the company recently released its new Integrated Resource Plan (IRP) the company consequently released a pronouncement to the effect that; it did not include specifications of “behind the meter” generation as part of its overall IRP because it did not control or own the distributed generation. These sentiments are shared by many industry players; however, there are those players who look at it as a punishment to the utility companies for their inability to tap into the innovative distributed generation that requires appropriate and effective demand response services.
Recently, NextEra Energy (NRG) has placed too much emphasis on solar plant constructions as opposed to distributed generation under the regulation of private consumers and businesses. However, this is unlikely to stop the constant clamor for more choices according to the Rosenbaum report. The report additionally, demonstrates that there is no investor owned utility companies that have ever made a business plan that is entirely compatible with the demands of the livable planet.
Rosenbaum reports that, despite the fact that utility companies are playing catch-up; the advances in technology only mean that consumers will become more powerful. This feature will significantly change the operations of the utility companies. Already pension funds are beginning to divest their shares from the utilities because they believe that the companies have stagnated and are non-reliable. This is for thye most part, due to the growth in the efficient solar energy over the rooftops, among other distributed generation development resources.
The onslaught on the future survival of utilities is particularly depressing because the business model that is currently widespread among utility companies is not designed to accommodate capitalizing change. This is in complete contrast to the growth in the consumer oriented demand response services, such as those offered by renewable energy. Already hedge fund managers are looking to short the utilities, in what utility analyst believe, will be the strategy over the coming years.