Changing Landscape For Electric Utilities
The centralized electric utility industry is facing an unprecedented threat in the form of distributed generation. While utilities across the U.S. have aggressively campaigned against the distributed generation industry, this strategy may ultimately backfire. Despite the billions of dollars that the electric utilities possess, their attempts to suppress the distributed generation movement have been rather ineffective. In fact, distributed generation is still one of the fastest growing energy segments. Although the centralized and decentralized electricity generation business models seem incompatible, these two industries do have some large synergies.
While electric utilities like Edison International (NYSE:EIX), Pacific Gas & Electric (NYSE:PCG), Public Service Enterprise Group (NYSE:PEG), and so forth, have relentlessly launched attacks at the distributed generation movement, these efforts will likely end up being counterproductive. Not only is distributed generation’s survival largely inevitable at this point due to technological trends, but the distributed generation industry also offers invaluable assets to centralized utilities. Should the utilities continue to waste time fighting distributed generation rather than embracing it, these utilities could end up losing out.
Distributed-generation companies like SolarCity (NASDAQ:SCTY) are already exploring the idea of offering distributed energy resources ((DERs)) for the centralized utilities, which is something that should benefit both industries. As an aging grid infrastructure has been a major focal point for electric utilities, distributed generation could actually help the utilities alleviate this issue. As countless billions of dollars will be needed to address the problems associated with an aging grid, the electric utilities could save a lot of money by utilizing distributed generation assets. This would in turn reduce the animus between the two industries, which would be particularly beneficial to the distributed generation industry.