We fully expect utilities and regulators to make a good faith effort to preserve the status quo “regulatory compact,” whereby the monopoly utility provides a safe and reliable service and regulators allow it to earn a reasonable low-risk return. However, we also expect them to be playing a constant game of catch-up as solar develops. The costs of solar and storage technologies are falling quickly and may fall even faster as higher demand builds additional scale. But the cost of distribution grids and thermally generated power are more likely to rise than to fall, in our view. As a result, regulators and utilities will be constantly trying to respond to a moving target, which is precisely the environment where slow-moving incumbents can fall behind.
This is from Barclays, not exactly a bastion of left-wing environmental progressivism. It means, Investors: Pay Attention.
It’s a nice companion to Bloomberg’s Why the U.S. Power Grid’s Days Are Numbered, subtitled “Homegrown green energy is making power utilities irrelevant”. Sure, green energy has a long way to go. But this is exponential growth we’re talkin’. Nothing withstands that kind of onslaught.
(Click on image to see larger one.)
Even though solar and wind growth in the USA is impressive, China is still beating us, by a big margin. Original data