A Path to Energy Savings and Electric Security
We never think about electricity until the lights go out and the air conditioning goes off.
Electricity is something we expect to have and therefore take for granted.
All we know is that we pay a utility to send us electricity through a bunch of wires.
Well, those wires symbolize a large electric grid,” which has been around since Edison.
For the last 150 yeas this large central grid has controlled the distribution of electricity.
But today, that business model is being challenged by many in the renewable energy community.
Homeowners and businesses can now produce their own electricity less expensively with solar panels instead of buying it from a utility.
And as energy storage capabilities improve, reliance on a central grid, operated by a large utility, will further diminish.
Big investor owned utilities are supported by powerful political lobbies and have chummy relationships with public regulation commissions.
These associations enable utilities to provide good profits for their shareholders and operate risk free.
As regulated monopolies, they don’t have to compete, so they have little incentive to be efficient with their capital.
Why bother “sharpening your pencil” and saving money, when ratepayers are going to pay for energy investments anyway.
For a long time this business model was accepted, because utilities performed a public service that nobody else could.
But not so much these days.
The investor owned utility business model is one big “moral hazard” allowing utilities to make bad investment decisions without having to bear the cost of any miscalculation, since the risk is underwritten by their customers.
What if shareholders had to bear the cost of power plant upgrades and risky energy production methods?
If that were the case, we might see a different business model emerge.
In addition, a big utility dominated centralized grid is prone to adverse weather and security breaches, while a “decentralized model” creates “electric security."
For example, a large centralized grid is an easy target for mother nature.
Over the past year alone, weather events in Texas, (the freeze back in March), Louisiana (Hurricane Ida) and California (forest fires everywhere) have shown how non resilient a centralized grid is.
And in terms of security...
Remember the Colonial Gas Pipeline hack that cut off gas to the east coast causing panic buying and price increases for drivers and airlines.
It’s not electricity, but it’s an example of how a centralized approach to energy distribution can expose a large segment of the population to a disruptive event caused by a criminal act.
Decentralization would protect people from these types of catastrophes.
It’s just common sense. The less you rely on a large, monopolized, entity for your needs, the more secure and safe you’ll be.
But that will entail a “mindset shift.” Regulated monopolies have provided electricity to Americans for generations through a centralized grid, and it will take time for people to adjust.
People resist change until they understand the merits of a new approach.
Remember the “second hand smoke” debate a few years back. Non-smokers put up with cigarette smokers for years until they realized smoke was bad for their health as well as the smokers.
Then things changed.
As more people recognize the drawbacks of a centralized grid, the push for decentralization will ensue.
It's already underway because so many people are producing electricity through their own rooftop solar systems.
And public regulation commissions, who have worked "hand in hand" with utilities in the past, are starting to feel public pressure.
All of this is good news for consumers who will benefit from lower energy costs and electric security because of a decentralized grid.
Joe Collins is a solar consultant and the owner of CIE Solar Energy, LLC.