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Five years ago, an electric-utility think tank issued a dire warning to its members: Your century-old business model is ending.

The continually falling costs of renewable energy generation, especially solar panels, would begin to erode utilities’ business from its most profitable customers, the study said.

Now, in Germany—hardly known for its continual, blazing sunshine—utilities are starting to see the impact.

DON’T MISS: Will Solar Destroy Electric Utilities’ Business Model? Yes, They Say (May 2013)

There, a network of about 20,000 homes with solar panels and energy-storage batteries lets its members buy and sell excess energy to each other.

They do so, moreover, at rates below those charged by their utility, according to a recent report in the British business outlet Financial Times.

That network is run by Sonnen, the largest maker of energy-storage packs in Europe, launched in 2010.

Tesla Powerwall 2.0

At launch, the FT reports, those home-storage battery packs cost €25,000 ($29,700)—a cost that has since fallen to €5,000 ($5,900).

Systems like Sonnen’s are called mini-grids, essentially small, self-contained generation and distribution grids that sit within the larger electric such system operated by the local utility.

And it’s precisely this kind of system that utilities fear will end their usual practice of huge, centralized electricity generation and one-way distribution over a wholly-owned electric grid.

READ THIS: Renewable Energy Won’t Cause Electric Utility ‘Death Spiral’: Study (Jun 2014)

Mini-grids like the one in Germany—another is being pioneered in Brooklyn, New York—allow customers to generate a majority of their own energy, selling any excess to their utility.

That process is known as “reverse metering,” but it raises the specter for utilities of having to accommodate thousands of small, unpredictable generation sources and two-way flows of electricity within grids never designed for that.

The ultimate concern, utilities suggest, is that some of them—especially those in the sunniest or windiest areas—could lose their best customers to such systems.

 Estimated costs of utility-scale solar farms, not including battery storage [Green Tech Media]

They fear the fate the landline telephone companies have suffered over a mere 20 years since the launch of affordable, widespread mobile telephony.

Now, those phone companies operate cellular networks and many engage in aggressive efforts to trim the sparsest, least profitable parts of their networks to cut the cost of maintaining them.

Electricity is, if anything, even more vital to life and health than the ability to make a telephone call, and electric utilities know they must figure out a way to adapt to the rapidly changing surge in renewable energy.

CHECK OUT: As Solar Soars, Utilities Confront Distributed Renewable Power (Jan 2015)

Already, some utilities face the reality that the most efficient large-scale solar concentrators are now cost-competitive with adding new generation capacity from combined-cycle natural gas plants.

For an industry used to amortizing its capital investments over decades, the rapid fall in renewable-energy costs poses a scary challenge.

Germany today may be considered a pioneer in the growth of renewable energy on several fronts.

Power lines (Photo by Flickr user vladeb)

The country now has some of the highest electric rates among European nations, largely to pay for its pledges to eliminate both coal from its fossil-fueled grid and nuclear power from its generation capacity altogether.

Germany consumers support those goals, but they’re far from happy about monthly electric bills that can run from $0.26 to $0.33 per kilowatt-hour—against a U.S. national average of about 12 cents per kwh.

Meanwhile, the FT quotes Jens Heuson, who lives outside Munich and put solar panels on his shed and a Sonnen storage battery in his basement.

“Mr Heuson no longer dreads the monthly letter from his power company,” writes the FT, “because it now contains a check rather than a bill.”

EDITOR’S NOTE: An earlier version of this article suggested that German residential electricity consumers pay rates “that can approach $0.50 per kilowatt-hour,” whereas a German reader informs us the actual rates are $0.26 to $0.33. We have corrected the piece accordingly.

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Source: https://www.greencarreports.com/news/1114468_in-germany-neighborhood-solar-starts-to-eat-away-at-utility-revenue

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