The utility death spiral is a constant topic among energy wonks. The argument is that cheap solar + batteries will lead to declining revenues and grid defection, putting the electric utility on a one-way trip to bankruptcy.
Environmentalists sometimes celebrate this potential, given how many electric utilities have stood in the way of clean technology advances.
But Michael Murray raises the equity question in his inaugural edition of the “Murray Telegraph,” after seeing a presentation from Danna Bailey of Chattanooga’s publicly owned Electric Power Board:
When public commons such as public schools are neglected, then the rich can afford to make their own private schools, and by pulling out their children (and sometimes their money, through vouchers) the public schools grow weaker, encouraging more parents to explore private schools, which begins, perhaps, the educational analog of the utility death spiral.
I found the collectivism of Danna Bailey’s entreaty quite compelling. I want clean energy, but I want the grid to serve the less fortunate, too. The grid provides me with electricity, but in return for my monthly expenditure, I receive much more than electrons: I receive the benefits of an electrified society because my neighbors have power, too. Where is the collectivism of solar plus storage, when rich liberals buy solar panels and PowerWall batteries from Tesla, effectively islanding themselves from the community?
And this future may be coming sooner than many of us realize. As David Roberts summarizes in Vox, solar+storage is getting cheaper and more inevitable:
Grid parity, the moment when solar+storage is as cheap or cheaper than utility power, will arrive on different schedules to different places. But in some places, it’s coming soon — and no place escapes it for more than a few decades.
A few decades may seem like a long time, but it’s much shorter than the life of a power plant. It is well within the time frame in which utilities and regulators need to start planning for it.
Count me among those who celebrate these trends, given the importance of decarbonizing and decentralizing our energy supply. But if it leads to greater inequality and less access to energy for America’s poor, it will be both an economic and moral failure. And an environmental one, to boot.
What’s the answer? Ideally, the technologies become cheap enough that the vast majority of residents can afford to go “off grid.” Then society will have to subsidize access to clean electricity only for the very poor, much like it subsidizes bus transit for those who cannot afford an automobile. And if the technology is truly cheaper, the subsidies shouldn’t be too onerous.
But there may be an awkward transition time in the middle, and it behooves policy makers to figure out how to address it before it’s too late. Otherwise, it will be low-income ratepayers who may be left holding the bag of a deflated electric utility industry.