Utilities Face Perfect Storm

December 27, 2013 By William Opalka

Energy Manage Coal PlantThe traditional utility business model is facing a “perfect storm” of challenges that threaten its existence, according to a new report by UBS.

As reported by Oilprice.com, the declining cost of solar, energy efficiency and electric vehicle technologies threaten to upend centralized electricity generation.

Renewable energy is already having a financial impact on utilities. The average price for solar PV modules declined by 80 percent between 2008 and 2012. Net metering and innovative financing are making distributed generation more viable. Flat electricity sales is another threat.

The latest UBS report finds that solar PV is diminishing the customer base. Lesser demand at peak times leads to curtailed generation from large power plants along with lower peak electricity prices.

A January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer.” And the latest UBS report, which concludes that utilities will not be able to survive in their current form.

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