Innovation Killing Power Companies in Europe

Here is what we are missing in the US: innovation and accelerating economic democracy.

Keryn dug up this great story from Reuters:

In Germany, where 22 percent of its electricity came from renewable sources in 2012, the big four utilities – E.ON, RWE, EnBW and Vattenfall Europe – are nearly absent in this new sector.

Of the 71 gigawatts of renewable energy capacity installed at the end of 2011, the four owned just 7 percent, environment ministry data show. A gigawatt roughly corresponds to the capacity of one nuclear plant.

Individuals owned 40 percent of renewables capacity, energy niche players 14 percent, farmers 11 percent, various energy-intensive industrial companies 9 percent, and financial companies 11 percent. Small regional utilities and international utilities owned another 7 percent.

And:

Peter Terium, CEO of RWE, acknowledges that the move from large conventional power stations towards decentralized plants and renewables is a fundamental change that is hurting the economic viability of RWE’s power plant fleet.

“We have to adjust to the fact that, in the longer term, earning capacity in conventional electricity generation will be markedly below what we’ve seen in recent years,” he said, adding that this put strains on RWE’s business model.

The renewables wave could not have come at a worse time.

The liberalization of Europe’s energy markets has sparked a rush for consolidation among utilities, leaving the continent with about a dozen big but highly indebted behemoths.

Worse, electricity demand, already hit by the drive for energy efficiency, has shrunk since the eurozone crisis began.

As a result, utilities shares have been the worst performers among 19 major sectors since early 2008.

You can see from this story why the centralized power industry in the US is so desperate to hang onto its subsidies and to crush decentralized power innovation.  They see their future in Europe.

Or, as the concluding quote from the Reuters story says:

“In the long term, competitive, non-subsidized renewables could be a big win for society. And a big loss for utilities.”

3 thoughts on “Innovation Killing Power Companies in Europe

    • Typical of what? Germany is the example. Germany is the future. As Amory Lovins has pointed out many times, centralized power systems don’t work in many countries in Africa and Asia. They are finding their own way to electrification, and are moving directly to decentralized renewable power systems. Each country finds it own way. The German situation shows what happens when a country chooses innovation and democracy over autocracy and oligarchy.

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