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The first point is on cost, as renewables become a cheaper option than coal or gas; the other is on environmental impacts, as the world finally absorbs the impact of dirty coal generation; and the third is the arrival of new disruptive (and mostly renewable) technologies, such as rooftop solar and storage. But the most stunning piece of evidence is this: the industry spends only 0.3 per cent of its phenomenal revenues (in the trillions of dollars) on R&D. And even that money is spent by new players looking to bring new technologies to the market.

In an interview with RenewEconomy on the sidelines of the 2XEP energy efficiency conference in Sydney this week, Arvizu says he knows of no other incumbent industry that has spent so little on securing its future and on innovation, and was relying so much on the models of the past.

“The energy sector has the highest level of conservatism and the lowest level of risk taking,” Arvizu says. Change, via disruptive technologies such as solar and storage and other renewables, along with smart devices, is now upon it. But it will be fighting hard to resist change.

“We need to change the business model. We need new infrastructure, and brick by brick we will dismantle the old system and make a new one,” he says……….

“The future is much more promising than a lot of people expect,” Arvizu says, adding that even he is surprised at the pace of technological change and cost reduction.

He dismisses the protests of people who say that renewables are too expensive – in particular those like Bjorn Lomborg who insist that more research should take place (ironic given the industry’s low R&D commitment so far). “That’s just kicking the can down the road,” Arvizu says.

“If we are just talking about incremental changes to the existing system, we will never fully utilise the potential.”

It is, he says, a scary prospect for the incumbent utilities, who have enjoyed decades – nearly a century – of uninterrupted growth and extraordinary market power. And they are protected by layers and layers or regulation.

“We created this monster,” Arvizu says. “You often hear the words, ‘let the market decide’, but this is such a disingenuous argument in such a highly regulated market.

“The classic supply and demand equations do not work …. because what we’ve allowed the incumbents to create a set of highly regulated markets where they have tremendous market share, and there has been an alliance between public policy markets and incumbents, where reliable power supply has been exchanged for a high return on investment.

“But now we have other options in the market place, and in order to break into that market, they need to mature and they need an ecosystem around them.”

The key to change, he says, will come in power for the consumers, and the key to that will come in storage.

“If we had storage that was cost effective – you would very quickly be able to encourage the utilities to get on to the program. Once you have got the opportunity to say, I don’t need your electrons any more, that is when consumers will have the (market) power.”………

he notes, it is important that the new model be integrated with the old, in other words, the best of distributed generation must be merged with the best bits of the old centralized model.

This will be difficult, considering the regulatory hurdles, but it is important. And in the same way he dismissed the idea of “energy independence” for a country (focusing more on energy security), he’s also not sure why individuals would want to do the same.

“I don’t think we need to go to 100 per cent renewables, although I think we can,” he says. “And I don’t know why you would want to pay to be autonomous (off grid). The extra cost that it entails … to be isolated as an act of bravado is absurd, it is an interconnected world.” http://reneweconomy.com.au/2014/arvizu-why-the-current-energy-system-is-unsustainable-76176