Note to electricity generators: Maybe it’s time to sell

Executives in the electricity sector are under a lot of strain these days, but it’s not from increasing demand on their gold plated networks. They are facing, instead, a barrage of stranded assets from falling demand, new technologies and customer revolts over increasing fixed charges levied to counter their falling profits.

…Oops.

The one thing they can’t say is that they haven’t been warned. Electricity demand has been receding for a while. But it looks like they are simply refusing to see the tsunami of change that is about to drown their business plans.

Surely, they must realise that more than one million households get at least a portion of their electricity from a rooftop array of solar cells? What happens when that figure triples, as it will in the next decade or sooner?

Perhaps the old model of generator, distributor and retailer is having it’s own ‘Kodak moment’ – a “death spiral” realisation that the business model is doomed. Have execs done the math? It’s pretty simple: increase network charges + energy efficiency + domestic generation = less demand + fewer customers.

As with their mobile phones, customers may be increasingly willing and able to enjoy a reliable electricity service “without the wire”. What happens when 5 per cent of customers opt out? How about 30 per cent? Ask Telstra how a fixed-line business fares when someone can offer the same or better service wirelessly.

At what point does that model simply collapse under the weight of its own unproductive assets? Perhaps a spiraling financial dive has already begun. It’s a shallow diver for now, but the end point could be rapidly approaching as renewable energy and energy storage costs continue to recede past ‘grid parity’. At that point, and among their smashed up plans and debt debris, ignoring the unstoppable wave of wasted potential may be seen as the sector’s greatest failure.

But maybe something else is going on. Perhaps the sector is just playing dumb.

Maybe they’ve done all the studies and can clearly see the future, but are milking their assets for all they are worth because they can… for now. Perhaps it’s a well thought out plan to keep the wolf at bay a little longer if they are not too greedy.

When that stops working, they can follow Campbell Newman and blame solar.

After that, it’s time to sell.

Yesss, maybe it’s a really clever plan and the conspiracy theorists are right.

…Nahh.

Peter Fries is a writer and broadcaster who built Australia’s first grid connected solar PV system in 1994