How Solar Will Destroy The Power Companies, In 5 Easy Steps

[Live and Learn]

Business Insider
By Rob Wile 10 hours ago
http://finance.yahoo.com/news/solar-destroy-power-companies-5-194826472.html

Barclays recently downgraded the entire U.S. electric utilities sector to "underweight" on the threat posed by widespread adoption of solar-storage. These systems allow homeowners to use rooftop solar panels and a battery to cut all but the figurative emergency backup cord to their local electric grid, putting a severe strain on an industry that has been a defacto monopoly.

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1) Solar prices come down
For the past few years, we have been quietly living through a stunning drop in prices thanks to an unintended loop of massive European subsidies and capacity overexpansion in China. As a result, from 2006 to 2013, photovoltaic panel prices dropped nearly 70%.

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2) The defection spiral commences
Once the prices for everything get cheap enough, homeowners begin to leave the grid.

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3) Utilities flail around in their state capitols seeking relief
We've already seen this in Arizona, where the state's electric utility has spent more than $3 million on a campaign to discourage solar adoption in the state. California utilities also won new surcharges, and SolarCity recently charged them with slow-walking grid connections. Neither will prove more than speedbumps in the long-run, Barclays said. "W hile they may slow the penetration of solar, any relief they offer utilities is likely to be short lived. In Arizona, the fee increases the cost of a rooftop solar installation about 5%. With the costs of solar installations falling about 10% per year, we expect the pace of installations to recover before the end of 2014. While we need more months of data to confirm our view, this may prove to be an example of how quickly the technological/cost curve can overtake regulatory responses."