Continued growth of distributed energy resources and energy-efficiency measures could cause significant demand disruption and drive down utilities' revenues by up to $48 billion a year in the U.S. and EUR 61 billion a year in Europe by 2025, according to research from New York-based market research firm Accenture.
Utility executives are notably more concerned about the impact of these technologies on future revenue streams, with 61% saying that they expect significant or moderate revenue reductions as a result of distributed generation – such as solar photovoltaic power -Â compared to 43% last year, the Accenture report says.
Nevertheless, despite popular reports of a looming utility ‘death spiral,’ in which consumers migrate off the grid or use it only as backup, Accenture research shows it to be unlikely and uneconomic for a large number of consumers due to natural limitations on viability and cost constraints.
Accenture found that a significant majority (79%) of utility executives believe that it won't be cost-effective for consumers to go off-grid without any subsidies until 2030 or beyond. In addition, by 2035, just 12% of customers in North America are expected to become energy self-sufficient, compared to 11% in Europe.
Solar PV is already at grid parity in many states in the U.S. Accenture's analysis suggests that by next year it will be at grid parity across Australia and most EU member states, except less sunny ones, such as Sweden and Poland, as well as those with regulatory barriers to solar PV deployment, such as Spain. Japan is forecast to reach parity in the next few years, followed by the rest of North America – with the exception of Canada and some U.S. states with the lowest electricity prices.
Approximately 61% of utility executives expect grid faults to increase by 2020 as a result of low-voltage connected distributed renewable generation – up from 41% last year – while 53% also expect an increase in grid faults from deployments of large-scale renewables, up from 33% last year.
"In order to navigate through this demand disruption, utilities will need to fundamentally transform their business models, including the creation of distribution system operations services to manage a more complex and distributed grid," says Valentin de Miguel, global managing director of Accenture Smart Grid Services.
As part of this transformation, utilities should focus on engaging with regulators to secure the long-term viability of the distribution business, de Miguel says. Possible changes include the adoption of new tariff structures; opening up new markets and aligning subsidies; investing in grid optimization, such as automation, sensing devices and real-time analytics; and developing new customer products and services.
For more information on how solar, storage and new energy business models will transform electricity distribution, visit the Hybrid Energy Innovations event site here.
