U.S. households producing their own electricity from solar aided with energy storage pose a threat to utilities, an emerging truth that could hurt utilities if they come unprepared.
A few months ago, Business Insider Singapore reported that Barclays gave a dismal “Underweight” rating to electric utilities. The financial services firm justified that the sector seem unprepared to take on solar’s threat and this could eventually put a dent on utilities’ credit profiles.
According to Barclays, the renewables sector including solar has been getting a lot of government support in the form of subsidies. This has contributed to large-scale production of solar PVs totaling 30,000 MW in 2013 from a mere 1,000 MW some 8 years ago. This tremendous growth has in turn led to leveling of prices of solar PVs.
With prices of solar already going down, the threat to utilities is even compounded by battery storage prices sliding to a level of $3,700, down from $17,000 level in just 5 years. Barclays says this could plunge further if Elon Musk goes full blast with its Li-ion gigafactory.
It is predicted that all those who have been using solar in tandem with energy storage systems will soon curtail their dependence on the grid, eventually hurting grid revenue. As demand for grid electricity declines, costs will shoot up and trigger a wave of shifts to solar. When this happens, utilities might find themselves getting the least share of the demand pie, losing out the bigger chunk to solar.
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