(03-01-2019, 11:21 AM)Otter Wrote: For essentially all of their history, Utilities have been the quintessential widows/orphans DGI stocks--regulated monopolies with reliable rate/dividend increases matching or slightly exceeding inflation. With the LCOE (Levelized Cost of Energy) cost of wind and (especially) solar dropping below that of gas generation, it seems this traditional business model that has worked for over a century is increasingly in doubt. Anecdotally, I have noticed a number of recent commercial developments using solar as a power generation source. That's certainly consistent with the rapidly decreasing price of the technology (it just makes good business sense):
https://www.businessinsider.com/solar-po...ase-2018-5
I am increasingly concerned that we are going to see major disruption in the traditional utility space in the coming decade. Sure, major industrial applications will continue to require large amounts of traditionally-generated grid power, but the trend in commercial (and I suspect soon for single-family residential) is going to follow the lowest LCOE. Developers who don't follow that trend will be at a competitive disadvantage.
What happens to the traditional utility model, with its huge capital costs and multi-year (or decade) planning, when a massive chunk of their customer base has its own grid that supplies all or part of its electricity requirements. Why bother with costly, wide-ranging power distribution networks that are a maintenance and liability hassle (just look at PCG's issues). Are utilities shaping up to be the electrical equivalent of CenturyLink, keeping a costly, inefficient network running for a shrinking customer base?
Thanks for posting my favorite sector thread. On the surface that article sounds very logical. I agree with the premise in a macro national view. I am all about green, and it's irresponsible to not pursue it. Here are few comments for discussion.
-Ever spent any time in Minneapolis? You won't see too much solar yet and there is a reason for that. What happens when it's -30F for a few weeks and the sun hasn't been seen lately? A fair amount of wind, which has to be distributed on the grid. Solar dependence is still "pie in the sky" up north. We need to develop solar that works when it's cloudy, cold and snowing. AZ and MN are a whole different world that will never be addressed with the same solution.
-Coal is gonna die, we don't disagree on that. Natty gas is much, much cleaner and it has a role for the rest of my lifetime IMO. It requires a distribution network.
-And BTW most of my utility holding are way up north, and they are investing heavily in clean energy or I wouldn't own them. At the very least it's a good hedge.
-I don't rule out the possibility we'll pass a Green New Deal act, and they will force rich folks from Phoenix to subsidize my home heating during winter because it's the right thing to do.
