A changing marketplace and new technologies are driving fundamental changes in utility business models, “as the century-old model of centralized, fossil fuel-burning electricity generation moves towards obsolescence,” writes energy consultant James Wrathall.
“Rates are increasing for electricity delivered from large, centralized utility power plants,” Wrathall notes. “Meanwhile, advancements in ‘distributed’ onsite energy resources—solar energy, combined heat and power, biomass, advanced engines, fuel cells, energy storage, efficiency, demand management, microgrids and advanced information technologies—are driving down costs, fundamentally shifting the economics.”
In addition to cost savings, he says distributed energy promises “reduced vulnerability to power interruptions caused by extreme weather events; improved physical security and cybersecurity; deferred utility capital investment requirements; grid optimization; reduction of climate threats and harmful air pollution; and economic growth and job creation.”
But utilities aren’t giving up without a fight, Wrathall reports. For instance, in a recent speech to the U.S. Chamber of Commerce, FirstEnergy CEO Anthony Alexander “positioned distributed energy as a ‘war on coal,’ saying onsite resources such as solar, wind and energy storage ‘sound good’ but ‘don’t do anything to maintain electric service.’”