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The death spiral of fossil fuel electricity: but the utilities are fighting back

“Distributed generation (DG) could be the end of utilities as we know them today,” U.S. investment research firm Morningstar said earlier this year. “Utilities’ centralized network monopolies break down when customers become self-sufficient competitors.”

Romero, the Spanish renewable energy expert, said: “Utility companies know that the future is in renewables, but they’re not going to go down without putting up a fight.”

From Sydney To Spain, Old Energy Is Doing Everything It Can To Hold Back The Rise Of Solar, Business Insider Australia TRACY RUCINSKI, BYRON KAYE MADRID/SYDNEY (REUTERS) 29 SEPT 14  

“The government wanted people to be afraid to generate their own energy, but they haven’t dared to actually pass the law,” Alonso said as he tightened screws on the panel on a sunny summer day this month. He had removed solar panels from the roof last year.

“We’re tired of being afraid,” he said.

Halfway across the globe, in the “sunshine state” of Queensland, Australia, electrical engineer David Smyth says the war waged by some governments and utilities against “distributed energy”, the term used for power generated by solar panels, is already lost.

“The utilities are in a death spiral,” he told Reuters by telephone while driving between a pub where he helped set up 120 solar panels to cut its $53,000 annual power bill and a galvanizing plant which was also adding solar panels to reduce costs.

In Australia, he said, solar panels have shifted from being a heavily subsidized indulgence for environmentally-conscious households to a pragmatic option for businesses wanting certainty about what their running costs will be next year.

“Not many people are doing it because of emissions or the environment,” Smyth said. “It’s about the cost.”

Solar photovoltaic (PV) panels constitute the fastest growing renewable energy technology in the world since 2000. Global capacity has exploded from 1.5 gigawatts at the turn of the century to 136 gigawatts currently, according to the Paris-based International Energy Agency. Meanwhile, the price of solar panels has plummeted 80 per cent since 2008 thanks to generous state subsidies aimed at promoting clean energy.

It’s still less than one per cent of energy capacity worldwide, but the surge in installations of rooftop solar panels is beginning to hit utilities and their business model of charging customers on the basis of consumption.

Joined by traditional energy companies, they are lobbying governments to reverse decades of subsidies to green, renewable energy such as solar and, in some cases, to tax them.

In Europe, Australia and in the United States, energy companies have powerful lobbies that argue that they form a cornerstone of the economy and provide jobs to tens of thousands. Governments are forced to pay heed and in some cases they have acted.

SLASHED REBATES

Local Australian governments have slashed rebates for households which feed spare solar energy back into the grid, and approved massive increases to set daily connection fees.

In Queensland, Australia’s most solar-powered state, one state-owned grid company just raised daily connection fees by 1,142 per cent while removing per-unit consumption charges – effectively removing the incentive to switch to solar……….

A HIT WHERE IT HURTS

Solar’s rapid rise – along with warmer weather, more energy efficient appliances and various geopolitical factors – has pushed down demand for traditional electricity and cut into utilities’ profits across the world…….

In Australia, Queensland state-owned power network company Ergon reported a 5 per cent slide in household energy consumption in the 2013 financial year. Last month, the country’s No. 1 and No. 2 energy retailers, Origin Energy <org.ax> and AGL Energy <agk.ax>, both blamed solar uptake for declines in underlying profit.

FIGHTING BACK

So old energy is fighting back.

Germany, the world’s largest solar market following years of generous state subsidies, imposed a levy in 2014 on small businesses which use self-generated solar power – referred to as the “sun tax”.

“Those who protect the climate get penalised, those who harm it get cleared,” said Carsten Koernig, managing director of German solar campaigner BSW.

“Instead of supporting solar power in its transition to become competitive, it is now artificially made more expensive.”

Australia’s Queensland has ruled out a solar tax but promised to re-jig energy pricing so that everyone – solar-reliant or otherwise – pays the same. But that removes the incentive to go solar, and leaves customers at the mercy of later price rises by the utilities.

“Distributed generation (DG) could be the end of utilities as we know them today,” U.S. investment research firm Morningstar said earlier this year. “Utilities’ centralized network monopolies break down when customers become self-sufficient competitors.”

Romero, the Spanish renewable energy expert, said: “Utility companies know that the future is in renewables, but they’re not going to go down without putting up a fight.”

(Additional reporting by Nichola Groom in Los Angeles, Christoph Steitz in Frankfurt, Rory Carroll in San Francisco and Jose Elias Rodriguez in Madrid; Editing by Raju Gopalakrishnan) http://www.businessinsider.com.au/r-taxes-fees-the-worldwide-battle-between-utilities-and-solar–2014-9

September 29, 2014 - Posted by Christina Macpherson | 2 WORLD, AUSTRALIA, renewable