Is Solar Here to Disrupt the Utilities?

Smart Grid and Grid Integration is the Need of the Hour

The rapidly declining cost and improving efficiency of renewable energy sources like wind and solar have led to increasing adoption of these distributed energy technologies by people and third-party service providers. As global warming and climate change concerns increase,  a faster adoption of clean energy forms is inevitable. However, the existing electric utility business models are not adequate enough to tap the growing potential value of distributed energy generation. It is time for them to sit up and take notice and start adapting to the changing trends in the electricity sector. While Utility countries in the West are already investing in distributed energy resources to stay relevant, Indian utilities like NTPC, Reliance Power and Adani Group were the early adopters, making large-scale commitments.

The electricity sector in major countries is experiencing a paradigm shift owing to disrupting technologies like distributed energy, electric vehicles, advancement in communication and controls etc. These advancements have proven to be more pocket-friendly, efficient and sustainable. An increased investment by utility companies especially in the west in DER (distributed energy resources) shows that solar energy has grown to become too mainstream. A large number of customers are signing up for solar programs, which means lesser revenues for the utilities. As a result, distribution energy is constantly facing the heat from large utility companies to escape the fate similar to German utilities.

However, it should be understood that a proper balance between grid connectivity and distributed energy is required. For example, rooftop solar will be not efficient at night or during cloudy days. Similarly, local power services are vulnerable to a power outage, especially after storms or other natural disasters.

For centuries, utility companies have enjoyed the status of monopoly businesses when it came to power supply. However, the time has come for them to adapt and change their roles from being the “energy generators” to “energy distributors”. Therefore, grid management and integration, combined with innovative business models is the need of the current hour. A future regulated distribution utility has an important role to play in the faster and widespread deployment and integration of distributed energy. This entails a huge amount of investment in grid infrastructure. The utility business model should be designed to provide better, simpler, and more elegant customer-centric solutions. There are many advantages of adopting new utility business models.

a) The new business model will lead to reduced environmental impact.

b) Implementation of better net metering laws could encourage people to participate and become partners and strengthen the buyer-seller relationship.

c) Better monitoring could lead to more cost-saving options and value creation at the retail customer level.

d) A more stable electricity grid, greater economic efficiency, and lower costs are other benefits.

The utility monopoly will surely shrink. It’s time for them to adopt a natural transition as distributed generation, electricity storage, and energy management technologies make rapid advancements. Concepts of community solar and microgrids are also fast growing and running successfully in many parts of the world, especially places with no grid connection. It is high time that governments worldwide announce huge investments in strengthening the grid and developing a more smarter version.