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Solar Panels Will Soon Make Utilities Obsolete

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In a report released last January, the Edison Electric Institute heralds in relatively blatant terms a great success in renewable energy – and the impending death of utility companies.

The news comes as utilities face the risk of losing customers to renewables due to rate reductions and technological innovation.

Utilities have remained predominantly unchanged for the better part of a century, with no real competition. As such, the growing prosperity of renewable sources may find them ill-equipped to concoct a plan for battling their losses. Instead, it appears they’ll dedicate time to preserving the ‘integrity’ of their image and product.

Solar is an ideal source for electricity because its operations are in synch with consumer usage. Solar panels harness a majority of their energy during the peak hours of the day. This also happens to coincide with the household’s “peak load”, or the time of the day in which consumers use the most electricity. This is a clear inconvenience to utility companies, however, as it lowers the demand not only for utilities, but the product from which utilities make the bulk of their money, as they are in their highest demand during peak hours.

Furthermore, while utility rates increase, the cost of solar PV panels has gone down, with a reduction from $3.80 per watt in 2008 to just $0.80 per watt by mid-2012. And prices aren’t expected to rise by any considerable amounts in the future. If anything, they may continue to decrease as the scale of PV panel use is established.

Not only will this reduce consumer utility rates, it will soon enable them to become grid-independent altogether. Despite the intermittent nature of renewable resources like solar and wind energy, consumers who use solar or other renewables needn’t rely on the grid in the future. This independence can be achieved with the use of battery storage technologies and micro turbines. With such widespread grid-independence, we are likely to see the grid reduced to a mere power backup.

Beyond hurting utility companies, those who stick with them will be at a loss as well. As the majority of utility ratepayers reduce their demand and in effect, cut their costs, the minority that remains dependent on utilities will have greatly increased rates. All the while damaging the utility company’s credit rating.

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