P2P Solar Energy will create a value crisis for the electricity providers

Will P2P do to the utilities, what it has already done to the proprietary software and porn industry, i.e. substantially weaken it?

Robert X. Cringely thinks so:

The result of this relentless application of Moore’s Law to the solar industry is that we can see a time in that near future when the cost of producing a watt of electricity from a solar cell on your roof will be approximately the same as the cost of delivering that same watt over a power line from an electric utility. And of course that means that 18 months after that point the solar watt will cost HALF of what the same power would cost from the electric company, which will completely change the game.

The time when that electricity cost parity will be reached, I’m told, is seven years from now. Just think of the impact that will have on electric utilities! Why would any of us continue to buy our power from them? We might use them as a giant storage battery and possibly for backup on cloudy days, but why would we use them at all for power if we can generate it cheaper at home? You can bet that’s a question the electric power generating industry is asking itself.

The whammy for the power companies is two-fold, because not only will power be cheaper but, by definition, the cost of building and installing solar panels will be substantially cheaper, too, than it is today. If it costs $40,000 on average to refit your house today, a lot of homeowners can’t afford that, but what if it becomes $10,000? That’s what worries electric companies that are used to having easier access to capital than do their customers. But once installing solar power costs relative chump change (the cost of a nice Ski-Doo or remodeling a bathroom), we’ll see massive conversion and the power companies know that.

So what can they do? They can find ways to get us to use more power than can possibly be generated from the roof of a typical American home. And that’s why this week the Electric Power Research Institute proposed that we all get plug-in hybrid cars. It would save billions of barrels of oil, they say, lower greenhouse gas emissions, clean the air, oh and by the way require more electricity than your solar cells can produce, thanks.

And it will work — for a while. But Moore’s Law is relentless, you know, and the role of electric utilities will change dramatically over the next decade as a result. As far as I can see, this is all for the better.”

4 Comments P2P Solar Energy will create a value crisis for the electricity providers

  1. AvatarNick

    I work as a mechanical engineer for an electric utility and I’ve been considering the effects of P2P produced power for a while. Right now we are near crisis in terms of transmission and generation availability. Recent environmental rulings have also pushed large amounts of capital into emissions cleanup equipment on the coal units which generate 60% of our electricty. This coupled with the credit crises will take away many options for utilities as they go to choose future generation projects.

    This really opens up big doors for the P2P movement to undercut conventional utility produced power. Part of the fundamental problem with utilities right now is the rigid heirarchal structure that large centralized power plants create. Make no mistake we will need the utilities dearly ove rthe next decade to transition but once we do distributed power produced locally will be a quantum leap forward.

  2. Avatarsolar-cost-solar-homes-solar-panels

    With P2P solar energy, traditional power companies will be pushed into a forced transitional period as they attempt to re-invent themselves. The P2P movement reflects a fundamental component in our global, modern social business structure: Change. If these utilities survive the inevitable fall-out, they will be leaner and meaner, and will have found niche areas in which to remain solvent and relevant. If they don’t, they will become irrelevant and die. It’s really up to them.

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  4. AvatarCarl Lail

    I hope I will see the time when everyone will have own solar panel at roof. I like idea of solar power because It’s free 😉

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