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Why is progress in renewables a bad thing for utilities? Just in the past 10 years or so, coal prices have increased by ~50% while natural gas prices have dropp

by jsight 7y ago

Why is progress in renewables a bad thing for utilities? Just in the past 10 years or so, coal prices have increased by ~50% while natural gas prices have dropped at an even greater rate. Churn in the prices of underlying energy generation technologies seems both inevitable and 100% normal for the industry. I don't see any reason why this can't be profitable just because the churn might be renewable during the next cycle.

toomuchtodo 7y ago
Stranded assets, distributed solar, that sort of thing. Investor utilities are no longer the gatekeepers they once were to electrons. You can put solar on your roof, and depending where you are, payback period is low single digit years.
- jsight 7y ago
  I'm a fan of rooftop solar for quite a few reasons. One of those is that it is effectively the only competitive choice that a consumer has for cases where the utility charges excessive rates. But lets not kid ourselves here. Utility rates in much of the country hover around ~.12/KWh (less in many places, much more in some places). The levelized cost of solar, inclusive of its initial outlay is often very close to this in the best of circumstances. For example, with a well placed (facing south) 5KW system in the southeast, I can expect to produce ~7000 Kwh per year. At an initial system cost of $7000 (assuming a tax incentive of 50% and unincentivized cost of $3/KW), that system will pay for itself in about 8 years. If your rates are exhorbitant or your incentives are much higher then this all changes. But higher rates also mean that the utility has a lot of room to lower rates economically.
  - toomuchtodo 7y ago
    We’re not kidding ourselves. California now mandates solar for new construction on residential roofs. The cost of solar will continue its decline. It’s even easier if you wrap your system cost into a mortgage or finance with home equity on a long amortization schedule at historically low rates. I don’t think utilities are going away, but I also don’t think they’ll be so profitable as to invest in them as a retail investor (which was the initial discussion above).
    - jsight 7y ago
      I mean, in a sense they really haven't been a big money-maker as an investment in the past either, barring some exceptions. They are stable dividend stocks and I don't really see that changing.
      - toomuchtodo 7y ago
        Keep in mind GE used to be a reliable dividend stock until they bet incorrectly on natural gas instead of renewables (and lost hundreds of millions of dollars in the process).

by jsight 7y ago

toomuchtodo 7y ago

Stranded assets, distributed solar, that sort of thing. Investor utilities are no longer the gatekeepers they once were to electrons. You can put solar on your roof, and depending where you are, payback period is low single digit years.

jsight 7y ago
I'm a fan of rooftop solar for quite a few reasons. One of those is that it is effectively the only competitive choice that a consumer has for cases where the utility charges excessive rates. But lets not kid ourselves here. Utility rates in much of the country hover around ~.12/KWh (less in many places, much more in some places). The levelized cost of solar, inclusive of its initial outlay is often very close to this in the best of circumstances. For example, with a well placed (facing south) 5KW system in the southeast, I can expect to produce ~7000 Kwh per year. At an initial system cost of $7000 (assuming a tax incentive of 50% and unincentivized cost of $3/KW), that system will pay for itself in about 8 years. If your rates are exhorbitant or your incentives are much higher then this all changes. But higher rates also mean that the utility has a lot of room to lower rates economically.
- toomuchtodo 7y ago
  We’re not kidding ourselves. California now mandates solar for new construction on residential roofs. The cost of solar will continue its decline. It’s even easier if you wrap your system cost into a mortgage or finance with home equity on a long amortization schedule at historically low rates. I don’t think utilities are going away, but I also don’t think they’ll be so profitable as to invest in them as a retail investor (which was the initial discussion above).
  - jsight 7y ago
    I mean, in a sense they really haven't been a big money-maker as an investment in the past either, barring some exceptions. They are stable dividend stocks and I don't really see that changing.
    - toomuchtodo 7y ago
      Keep in mind GE used to be a reliable dividend stock until they bet incorrectly on natural gas instead of renewables (and lost hundreds of millions of dollars in the process).