It is certainly no secret that utilities are concerned about the possibility of revenue losses as solar and energy storage technology costs continue to drop and become more accessible to more utility customers and energy efficiency becomes more prominent.
New research from management consulting and technology services firm Accenture confirms, or re-confirms those fears, but also lightens the bad news a bit.
The company says the growth of distributed energy and energy efficiency could send utility revenues falling by $48 billion annually in the U.S. and the equivalent of US$75 billion in Europe. If there is good news, it is that Accenture anticipates the losses will probably be at the lower end of the range of possibilities.
Based on our research, Accenture believes the most likely scenario in the next 10 years could lead to revenue losses at the lower end of our scale, $18 billion a year in the U.S. and 39 billion (US$48 billion) in Europe, caused by a moderate reduction in load on the grid network, according to Valentin de Miguel, global managing director for Accenture Smart Grid Services. This is because adoption of energy efficiency and distributed generation will become possible without subsidies, which will lead to greater market penetration as a result of shifting consumer sentiment, falling technology costs and a moderate rise in electricity prices, especially across Europe.
Utility death spiral not likely, but
The research also found that the highly publicized utility death spiral caused by customers leaving the grid or using it only for backup power is unlikely and uneconomic for many consumers because of limitations on practicality and cost considerations.
Accentures research also included its second annual survey of global utilities executives. A few of the survey findings indicated:
The survey also indicated that the executives expect competition from new market entrants will continue in data-related services, distributed generation, energy efficiency, demand response and in new areas such as plug-in EVs.
De Miguel added that utilities will need to fundamentally transform their business models, and that includes developing the distribution system operations services needed to manage an increasingly complex and distributed electric grid.
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12 December 2017