Solar panels could crash utilities retail business

The moment that utility companies start sending out electricity invoices stating that one actually will receive money instead of paying money, like they did with me, one knows that something is seriously wrong with the utilities bottom line. And no, it’s no mistake it’s supposed to be like this.

end_of_contract_invoice

 

Utilities are supposed to receive money from their customers, not paying them. Paying customers is for utilities bad business, businesses who do so have a tendency to go bankrupt. Don’t worry, it won’t happen tomorrow… but no guarantees for the day after that…

I’m not the standard utilities retail customer, having 50m2 of solarpanels on my rooftop. However if I were, there wouldn’t be any electricity retail business left at all. Not yet at least, since last year (2013) the total installed solarpanel power in The Netherlands just tripled! To put this in perspective, on a sunny day these panels produce more electric energy then the big power plant just miles away from my home! In one year more new solar power was put into place in The Netherlands than this power plant... On sunny days the big power plant isn’t needed anymore, and since it’s a coal plant it can’t switch power that fast up and down and will eventually become unprofitable and therefor obsolete. Disruptive enough yet?

60% of your total energybill is gas/heat, 40% is electricity. So, although the energy companies might lose their electricity business they still have their gas business right? Wrong, foreseable is that when electricity prices take a nosedive, more and more heatpump’s will be used. The electricity retail business will start eating into the retail gas/heat business, simply because it’s cheaper.

So… utilities are doomed? Not really…

Electricity usage total

Electricity usage total

The retail business only accounts for roughly 1/3 of the total electricity business for any utility. So, even when the retail business goes completely down the drain, the B2B services will still survive. For most businesses it’s not an option to install solar panels on their roof, they either use too much electricity to compensate fully or don’t own the roof of the building. Also for most corporations, the electricity bill is only a small portion of their total costs. So corporations don’t want to invest large sums of money to only lower their operations costs by only a few percent.

With 1/3 of the total electricity business gone, being the retail market, are the power plants then not needed for the remaining 2/3 of the business market? With more and more windmills being placed today, and retail customers not needing them, power generated by windmills is used more and more by businesses.  Already the utilities own most of the windmills which produce most of the alternative energy needed by corporations, and it’s foreseeable that this will also be the case in the near future. Operating large power plants for either retail or b2b customers will likely disappear. What may survive is  maintaining (flexible) power plants as reserve. Large windmill farms will replace the big power plants, stretching out for miles.

For the energycompanies these changes, in Germany called the ‘EnergieWende’, isn’t good news. For society at large it is, although expensive, since it has some major benefits. First of all, much less dependency on countries like Russia or Iran for sending us their oil and gas. Second, it bring us employment instead of sending shiploads of money and employment to other parts of the world. Third, it reduces CO2 emissions, whether you believe in climate change or not, it’s always better to be on the safe side.

All of this this won’t happen overnight, it might take years or maybe it will not happen at all. For energy companies there will still be a role in this future, even in the retail business, invoicing for the network transport, power reserve maintenance/operations and power delivery for each connection are tasks that are done today and need to be done also in the future.

 

 

 

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