The Utility Death Spiral Scenario Is Realistic

May 27, 2015 3:47 PM ETEIX, PCG, PEG, PNW, SO38 Comments


  • The centralized electric utilities are doing everything in their power to impede the growth of decentralized energy generation, which ironically should only accelerate the utilities' eventual collapse.
  • A confluence of factors, including the aforementioned utility resistance to decentralized energy generation, and the rapid technological progress of energy storage should make the utility death spiral a probable outcome.
  • The long-term outlook for the centralized electric utility industry looks bleak in light of the industry's general resistance to change.

While it may not appear so from the surface, the centralized electric utilities are in an extremely uncertain time. Despite the fact that major centralized utilities such as Southern Company (SO), Pinnacle West Capital (PNW), Public Service Enterprise Group (PEG), Edison International (EIX), etc, still generate the vast majority of electricity, their futures are looking bleaker by the day. With the rise decentralized electricity generation, namely in the form of solar PV, these centralized electric utilities are facing an existential threat. While the utility "death spiral" scenario has been written off by many industry experts as ludicrous, the electric utility industry looks to be headed down this road.

With the unprecedented progression of solar PV and energy storage technology, centralized electric utilities are being threatened in a big way. While the leading rooftop solar companies have always hoped for a mutually beneficial relationship with the centralized electric utilities, this hope seems to be rapidly fading as utility resistance seems to be growing. Ironically, the electric utility pushback against decentralized forms of energy generation may prove to be the utilities ultimate undoing. This utility pushback will likely accelerate energy storage and solar PV innovation, therefore ensuring that a utility death spiral scenario occurs.

Futile Attempts At Cooperation

Leading rooftop solar companies have made numerous public attempts to work with centralized utilities over the years, although these attempts have yielded little results. While it is clear to the leading rooftop solar companies that it would be in the best interest of both the rooftop solar and utility industries to work together, the utilities do not seem to be on the same page. While the reason for this is unclear, what is clear is that most utilities think fighting against rooftop solar is the best strategy.

Given that the economics of rooftop solar

This article was written by

AWS Certified Solutions Architect, AWS Certified SysOps Admin, AWS Certified Cloud PractitionerTop ~5% performer on Tipranks among all analysts and experts.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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