Clean Power US electric utility industry disrupted by solar

Published on May 24th, 2014 | by Tina Casey


Solar Showdown Looms As Barclays Downgrades Electric Utility Industry (updated)

May 24th, 2014 by  

Why does this not surprise us? Just two weeks after the US Navy announced a major research partnership to ramp up its solar power and other clean energy programs, the Barclays credit strategy team has warned that the solar market is likely to “disrupt the status quo” for the electric utility industry sooner rather than later.

We’re not surprised because the Navy and the other branches of the armed services have played a key role in advancing clean tech R&D and putting it into action — in some cases literally, in war zones. The US military has also served as a critical test bed and demonstration model for mainstreaming new energy technology and new systems, encompassing some of the very factors that Barclays warns about.

We also heard similar warnings from industry insiders at the Ceres investor conference at U.N. headquarters in New York, all the way back in January.

US electric utility industry disrupted by solar

Solar panels (cropped) courtesy of US Navy.

A Big Barclays Stinkeye For The Electric Utility Industry

Michael Aneiro over at Barrons blog tipped us to the Barclays warning. In his post on the electric utility industry downgrade, Aneiro notes that in Barclays’s view, the US electric sector has not yet priced in the challenges posed by the emerging solar market, resulting in a downgrade to “underweight.”

Here’s part of the Barclays reasoning cited by Aneiro:

Over the next few years…we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo.

…We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade.

So, the kernel of the disruption is not solar energy alone. It’s the killer combination of distributed solar energy with advanced storage solutions.

To pile on, let’s also add the emergence of multiple clean energy options for a single site (say, for example, biogas + solar + fuel cells), new energy efficiency technologies, “smart” microgrids, advanced energy management systems, and mobile energy storage units (aka EV batteries) that enable individual owners to stock up on additional supplies of stored electricity while they’re at work or elsewhere.

Put it all together and you have a rapidly growing number of electricity consumers, large and small, who can get off grid clean energy service 24/7, rain or shine, just like a full scale utility, but without the burden of freighting the bill for peaking plants and long transmission lines.

As for cost competitiveness with grid electricity, that could happen sooner than you think. By Barclays’s analysis, Hawaii is already a competitive market in the residential solar + storage sector.  California could be next, by 2017 (possibly with a little help from Ford, speaking of the BEV/solar market).

Barclays also sees New York and Arizona turning over in 2018, with a number of other states following close on their heels.

US Military And Clean Energy

The anti-clean tech rhetoric from the Republican side of the aisle has toned down recently (remember the light bulb wars?), but early on in President Obama’s first term, when the mudslinging was much more intense, the US military was already stepping up to use its facilities for clean energy generation and storage.

Some recent examples now include a massive $1 billion distributed rooftop solar program for military housing and the Army’s Energy Initiatives Task Force for streamlining utility-scale renewable energy projects.

Military facilities have also been pushing the renewable energy storage angle, including solar energy storage and electric vehicle-to-grid systems incorporating solar power.

As for that aforementioned Navy research project, that’s a new clean tech partnership with Purdue University aimed at ensuring that half of the total energy requirement of the Navy and Marine Corps comes from alternative sources by 2020.

All this activity is by way of transitioning our national defense out of a potentially crippling dependency on petroleum, so before we sign off for the Memorial Day weekend here’s a tip: keep your eyes peeled for a new documentary on the consequences of petroleum dependency called The Burden.


We first heard about The Burden, which is under the umbrella of The Truman Project and Operation Free, during the 2012 election cycle. Back then there was an awful lot of whining from the Republican side of the aisle about the role of the federal government in picking “energy winners and losers,” which missed the obvious point that one key factor in national defense is exactly that: picking out the energy winners and discarding the losers.

The Burden has just achieved its initial Kickstarter funding goal for completing the film but the”stretch goal” for marketing, film festival showcasing, and distribution is still open through today, so if you’d like to pitch in (and get a free, signed copy of the original soundtrack by John Caban) visit The Burden on Kickstarter.

UPDATE: As for Republican attempts to block clean energy legislation, the lightbulb wars have faded out but the Republican party still has a few more tricks up its sleeve. Here’s a little nugget on a House vote last week that we got from the Al Jazeera America blog (emphasis mine):

On Thursday, 227 Republicans and four Democrats voted for an amendment to the National Defense Authorization Act (NDAA) proposed by Rep. David McKinley, R-W.Va., that would prevent the Pentagon from spending money to carry out the policy recommendations from the National Climate Assessment or several United Nations reports on climate change and sustainability.

Hey, whatever happened to that thing about supporting our troops?

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About the Author

specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.

  • Thinking that going off grid will be the prevalent and smart decision is silly in my opinion. As energy becomes an information technology, the interconnectedness of energy sources, energy storage, and the ability to carry out energy trades will be increasingly valuable. Going off grid will be like arguing that pulling your computer, phone, and tablet off the internet will make it more powerful. If you are off grid and your charge controllers or inverter goes down, good luck getting power back within a week. Utilities do need to transform themselves and embrace what customers want and where technology is headed. Their greatest value will be in distribution control though they can also embrace and facilitate DG by being DG installers and owners if that is what customers are demanding. The fact remains that utilities are the best equipped to facilitate and place a value on energy trades, they are also the most familiar with what it takes to keep energy flows reliable.

    • I agree that being connected to the grid is advantageous since it provides good service levels in the developed countries. The grid in India however, is not very different from a badly managed off-grid setup. Rolling blackouts are prevalent and you cannot take electricity for granted. Off-grid homes in India will not differ heavily from grid-connected ones (in fact electricity-availability will become much easier to calculate and you can plan your own load)

      Certain amount of redundancy may be planned into current off-grid PV systems as well for a reasonable cost-increase. For example, if you have a bigger system (like 8-12KW), you can sensibly partition it to two parts with two inverters. This is often required anyways (when you use two roof segments with different orientation). So, if you have an electrical failure in one segment, you still have half of the generating capacity.

      Also, when home solar systems become really numerous and widespread, the supply chain will be much better and faster. In a competitive and well supplied environment, you may get a replacement inverter from your family-electrician or system-installer in hours instead of days/weeks.

      Still, I would be happier with a grid connection if it comes at a reasonable price.

      • Good points. Inverters and charge controllers may in fact become a standard stocked part even at Home Depot and Lowes and with improved design can become a plug and play part that a typical do it yourselfer can quickly install. I agree that in nations without much of a grid currently, Off grid DG will become more widespread. The cost of creating a grid infrastructure is much higher than a battery backed PV system with redundancy. Just as developing countries skipped wired land lines for telecommunication and went straight to wireless cell based comm, energy may too skip right to off grid PV and community microgrids.

        • Calamity_Jean

          You are absolutely right on this point: “Just as developing countries skipped wired land lines for telecommunication and went straight to wireless cell based comm, energy may too skip right to off grid PV and community microgrids.” If humanity is lucky, in 100 years all nations will have roughly equal degrees of development, but it will still be possible to tell which nations were “developed” and which were “developing” at the turn of the 21st century by which ones have electrical grids and which don’t.

      • Calamity_Jean

        Of course, if rooftop solar with grid connection becomes really common in India, the grid itself will become more reliable and rolling blackouts less frequent.

  • TCFlood

    The military is not only interested in diminished reliance on petroleum. It also wants to insulate itself from homeland dependence on a grid that is highly vulnerable to both physical and cyber attack.

  • Joshua

    As long as the Koch brothers fund their elections, conservatives and Republicans will not cease to fight any progress on renewables. ALEC is regularly promoting anti-net metering bills across multiple states.

    As much as the military is supposed to be apolitical, they need to speak regularly on the damage to national security fossil fuel companies are causing.

    It shouldn’t be hard to sell the idea that renewable solar is the best defense against any attack on our grid, whether climate or human caused.

    • The Kochs are figthing an uphill battle (and the hill is getting steeper all the time). At one point they will realize that they cannot stop renewables and there is no point in wasting money trying to block them.

      The forces behind renewables are gathering quickly and they are simply becoming way stronger than what the Kochs can handle. The military is only one of them but there are several others (e.g. those huge Chinese solar producers, and even American renewable companies like First Solar are getting in the income / company-size-range where their lobbying power gets firm beeps on the radar).

  • jburt56

    It’s Memorial Day and I remember that almost all of the wars of the last generation were about an energy source that is getting burned up while there is another source–the sun–that will be around for at least 1 billion more years!!

  • mike_dyke

    Could Net Metering be described as a form of solar+storage? The spare electricity goes into the grid and comes back at no extra cost to the provider, which is what will happen when storage is involved.

    • Calamity_Jean

      “Could Net Metering be described as a form of solar+storage? “

      No, not at all. When your solar array generates more electricity than you are using at that exact moment, and the extra is fed to the grid, that power is picked up and used by a neighbor that happens to need it right then. When you need more power, like at night or if you have a bunch of electricity-using things running at once, the power company sends you electricity that has just that moment been created in their nuclear, coal- or natural-gas-burning generators.

      IMO, there’s two ways the electrical system could go: One is that net metering is strongly discouraged by electric companies. The price of electricity goes up and up as coal and natgas become more expensive. People that are prosperous enough to own their own house and pay for a solar array and batteries have them installed and cut themselves off from the grid. The people who can’t have their own solar power systems are driven into poverty by increasing price of electricity. Increasing numbers of poorer people have their electricity cut off for nonpayment of bills. The electric utilities have a steadily shrinking customer base, and fossil fuel burning generators are retired because there’s fewer people buying the power they produce. Eventually the utilities’ customer base is so small that the power companies go out of business. Society is divided into electrical “haves” and “have nots”.

      The other way that things could go is that electric utilities embrace renewables and promote net metering or similar plans that buy power from small private producers. The power companies install wind turbines or other renewable systems to provide nighttime power along with whatever nuclear plants that can still be operated safely. The difference between day and night demand is covered by millions of relatively small solar arrays, mounted on just about every sunny roof, including apartment & office buildings, stores, factories and other businesses. Electric companies maintain a few natural gas burning generators to cover emergencies, but they are mostly turned off. Utilities also have batteries or other short-term power storage that hold enough to cover the power demand for an hour or two, just long enough to get the gas generators up and running. They don’t take in much money, but wind power is cheap so they don’t pay out a lot either, meaning they still make a reasonable profit. Everyone has electric power at prices close to what they pay now.

      • Now, the only question is whether the utilities have enough brainpower to come to the same inevitable conclusion.

        • hljmesa

          The utilities have lots of brainpower, do not kid yourself, and they have come to this same conclusion, and they are fighting it:

          • The “inevitable” part is that there is no way they can win this fight. If they raise prices or create other road-blocks to make solar more expensive, than solar+storage+oversizing will spread and customers will simply leave the grid at the end.

            With the current rate of cost cutting, it may become possible to oversize your PV system in a way that even seasonal variations may not affect you. In certain parts of the world (e.g. Australia), seasonal variations are not that big so you can handle it with oversizing and simply dumping the excess.

      • hljmesa

        The latter scenario is correct and will occur, except for the “profit” part. And e rates will be small, $20/month, since everyone hooked into the grid will pay a small fee to be attached, as roof top solar home owners do now. The nighttime base-load will be provided by present combustible fuels. Battery backup will occur far, far down the road just as the transition to electric cars will take another 30 years. Just my thoughts, as we are on the same page, just different predictions.

        • I don’t think that cheap stationary battery storage is very far.

      • Technology tends to democratize and lower the cost of basic needs over time. I expect energy, water, and food to eventually be close to free for most people. Your latter scenario is more likely but still a bit pessimistic on the cost.

  • spec9

    They have got good reason to downgrade the utilities. I self-installed solar and now I am a net electricity producer. And I drive an electric car. (Feels good not paying for electricity OR gasoline.

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