Musk Pushes Utility Industry One Step Closer to Doomsday
Wednesday, 06 May 2015 07:00 AM
By Patrick Watson
No one likes utility companies. Most are monopolies and it shows in their customer service.
You pay a lot and you get whatever they feel like giving you.
I wrote back in February (see Clock Ticking Down for Electric Utilities) that serial entrepreneur Elon Musk had a plan to change all this.
Last week, he unveiled the last missing link.
In theory, solar energy is an ideal way to provide electricity for homes and businesses.
Prices for rooftop panels dropped sharply the last few years. Amortized over a decade or two, the price is considerably lower than what your regulated utility delivers over the grid.
Solar cells last a long time. Unlike wind, hydro, gas, coal, or nuclear, they don’t have any moving parts. There are no spinning turbine. They absorb sunlight and produce electricity.
The one drawback to solar is storage. You still need to power your home at night or on cloudy days. People with rooftop solar arrays usually stay connected to the grid. This complicates the systems. Many utilities impose extra fees to hook up this way, too.
Elon Musk just changed this. On April 30, he unveiled the Tesla Powerwall, a giant battery that can store enough juice to keep your home running all night.
With this device, it will be practical to disconnect homes from the grid completely. You can kiss your electric company good-bye. To use the current buzzword, they were just “disrupted.”
The Powerwall isn’t cheap. The home-size model will cost $3,500 at launch later this year. People in Hawaii, California and Arizona will probably be the first buyers. Musk expects big demand in Germany, too, since a high percentage of homes use solar there.
The potential market is really the whole planet, though. Solar isn’t quite as practical in far northern latitudes where winter days are short, but might still outperform the alternatives.
Imagine if you are in a remote area. Compare the cost of installing one or two Tesla Powerwalls with the cost of hauling in generator fuel or running utility wires for miles.
Solar will usually win.
I’m portraying all this as good news – and it will be good for many homeowners. For the electric utilities who currently serve those homes, the news isn’t so good. They are going to lose customers, lose revenue, and lose their comfortable monopolies. Some will not survive.
Notice, also, that I haven’t said anything about solar energy being environmentally friendlier. It certainly is “greener,” but solar now has a purely economic advantage. You don’t need government subsidies to make it cost effective. If solar energy saves us from global warming, great, but that’s a side benefit.
This is how free markets should work. Sadly for the utilities, the market now has a better solution than theirs. People will buy it because it makes sense.
Thanks, Mr. Musk.
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