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Report: Distributed-Renewables Disruption Will Reduce Utility Revenues By Up To $123 Billion A Year By 2025

The ongoing growth of distributed renewable energy generation throughout the US and Europe will see utility-company revenues reduced by as much as $123 billion a year by 2025, according to a new report from the consulting company Accenture.

That new report — titled the Digitally Enabled Grid report — clearly states that if the utilities wish to maintain a market share comparable to that of today, the companies will need to “fundamentally transform their business models.”




Interestingly, the report makes note of the fact that roughly 61% of utility-companies are clear on the reality that potential disruption is a possibility and are expecting “significant or moderate revenue reductions” to be a result of this change.

As per the scenarios outlined by Accenture, utility-company revenues could fall by $123 billion per year by 2025 (Europe and the US) at the top end of the spectrum, or $66 billion per year on the low end. So, significant changes no matter what — just a matter of how significant.

“Based on our research, Accenture believes that the most likely scenario in the next 10 years could lead to revenue losses at the lower end of our scale, $18 billion a year in the US and €39 billion (US$48 billion) in Europe, caused by a moderate reduction in load on the grid network,” stated Valentin de Miguel, global managing director of Accenture Smart Grid Services. “Falling technology costs, shifting consumer sentiment and moderate electricity price increases will drive to increased penetration of clean technologies and the reduced utility revenues.”

As noted by the report, solar PV is actually already at grid parity in some parts of the US, the EU, and Australia. The expectation is that Japan will follow in that direction as well in a few years.

While the utility companies certainly have their work cut out for them, they aren’t facing extinction like some have predicted — according to de Miguel anyways. “While the ‘death spiral’, as commonly defined, is a myth, the demand disruption caused by the growing adoption of energy demand-disrupting technologies is a very real threat to utilities’ business models. And in addition to the financial pressure, this will cause significant operational challenges for utilities, increase technical stress on the grid and open the market to new competition for energy products and services.”

Given the growing number of executives at the utility companies that seem to be aware of the issues (see graph below), it seems pretty likely that some of the companies will institute major changes of some sort in the relatively near future.


“As part of this transformation, (utility-companies) should focus on engaging with regulators to secure the long-term viability of the distribution business,” concluded de Miguel. “This includes the adoption of new tariff structures, opening up new markets and aligning subsidies; investing in grid optimisation, such as automation, sensing devices and real-time analytics; and developing new customer products and services.”

Those interested can find the full report here.

Image Credit: Accenture

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James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.


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