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Utilities, Making a Power Play?

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Nevelyn Black's picture
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Nevelyn Black is an independent writer with a background in broadcast and a keen interest in renewable energy.  In the last few years, she transitioned from celebrity interviews and film shoots...

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Florida Power & Light utility is being accused of dismantling rooftop solar for their own gain. Residential solar has grown in the area and allows customers to sell excess energy back to the grid.  The utility argues that rooftop solar could cost Florida utilities about $700 million between 2019 and 2025, according to documents submitted to the Florida Public Service Commission.  Are power company profits threatened by the rise of distributed renewable energy?  Or is it time for utilities to make a power play?  The share of renewables in the power mix is on the rise.  The costs of installation and operations are decreasing.  In fact, once the initial capital cost of a renewable energy installation is covered, the cost to continue operations is lower than with traditional hydrocarbon sources.  The current market remains unpredictable and puts investors of edge.  Bulb, one of U.K.’s largest energy suppliers reached its end and has been placed into a special bailout process.  Duncan Dale, Statkraft vice president, Origination UK and Ireland, told S&P Global Platts, ”If you look at all the big players who have made their results public, they've all said that their earnings have decreased…”  Was weak wind to blame?  Or in this case the lack of wind?  The weak wind dilemma is widely known as "global stilling”.  Analysts will have to account for constant fluctuations and steep declines due to extreme weather.  "We've gone through a very strange period of trading where the prices have got so high that the markets are illiquid and have also moved away from the fundamentals, so it's been difficult to hedge risk when our customers have asked for their wind generated prices to be fixed," Statkraft's Dale said.  Another factor in the company’s collapse is the recent energy price volatility coupled with the price cap that limits suppliers’ from passing costs on to consumers.

As for the average consumers, the electricity burden increased by 5 percent in 2020.  Some claim the growth of clean energy will continue to increase the electricity burden for U.S. customers.  However, COVID-related issues were the cause for many of those increases.  In some countries, electricity demand fell by as much as 20–30 percent in a month during periods of lockdown. In the United States, overall electricity consumption decreased by 4 percent from 2019 to 2020, while residential consumption grew by 2 percent. Whatever the reason, clean energy faces many hurdles. Are energy providers in danger of failing or do utility companies hold the key to fully integrating clean energy?

Now utilities are taking a more profitable approach regarding renewables, that is ’if you can’t beat them, join them.’  Of the $10.9 billion invested in zero-carbon resources, regulated utilities invested $7.8 billion in 4.5 GW of wind and 1.8 GW of solar, bringing the total wind and solar owned by regulated utilities to 25 GW.  It’s been said, ‘power and utility companies are uniquely positioned to capitalize on and play a significant role in facilitating the energy transition.’ Can utilities reduce carbon emissions while taking full advantage of their unique position?  

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