The Bleak Future for the Power Utilities

MarcoPolo, a politically conservative reader from Australia, writes:

Solar power will continue to grow in importance as part of every developed nation’s energy dynamic. With growing popularity, it will provide problems for the older distribution power utilities, that must not only generate electricity, but maintain very expensive distribution infrastructure.

Solar will also present a problem for local and national governments, that tax energy production and consumption, as a source of tax revenue. All governments are facing increasing demands for government services, and falling revenues. Just as electric vehicles pose a problem for government bodies dependent on gasoline-diesel tax, and the massive taxation paid by the oil industry, governments will start to seek tax revenue from solar installations.

He goes on to note:

It’s always difficult when analysis becomes advocacy.

I agree with every bit of this.  It’s certainly true that advocacy/ideology can cloud one’s objectivity.  I have to be careful not to let that happen; I think we all do.

You’re most certainly right about the dilemma facing utilities and government re: getting paid to provide services given the rapid migration to renewable energy.  I really don’t have any answers here.

Here’s an idea off the top of my head (though you’re not going to like it given your political views): maybe utilities become part of the public sector, supported by our tax base.  Obviously that’s going to reduce their efficiency; they’ll take on the same bloat that everything else in government has.  But think about it: the future of the utilities is to serve an ever-decreasing number of customers with power whose cost (and thus price) is also ever-decreasing.  That’s a recipe for disaster in the private sector.

Here in the U.S. we have a subsidized railroad system called Amtrak.  Tax-payers have to come out of pocket to keep it running, and they’re not thrilled about that.  But the alternative is to have no railroad, and that’s not an acceptable option for a developed country.  Similarly, we can’t simply stop providing electrical power to every American—even when it becomes impossible to do so profitably.