Stagnating Centralized Grid, But Rising Solar Capacity Continues in US

The disruption of centralized power companies and grid technologies is now the hot topic among power company executives.  The larges industry organization in the US has issued a report warning of the impacts of this disruption.

The most recent issue of Fortnightly Magazine, an industry publication, has a lead article titled “Utility CEOs Face Disruptive Trends.”  The article consists of interviews with power company CEOs, including AEP’s Nick Akins.  Fortnightly is subscription only, but the article’s initial paragraphs are available for free at the link above.  Here is how Mr. Akins starts off:

For our company and the industry in general, there are some major challenges. One is obviously how we deal with capital deployment, particularly given the denominator of kilowatt-hours of sales that are stagnant or maybe even decreasing in the future. That drives us to focus on optimizing [our operations], versus determining where the next central generating station will get built.
So the number one issue for AEP is how to deal with capacity deployment in the new world of stagnant demand growth.  Building new generating stations is off the table for the foreseeable future for AEP.
So what’s the story with small scale “deployment” of new solar generating capacity?  Is there a crisis there as well?
Here’s the story:

Big growth in residential solar demand, bucking broader market volatility and seasonal trends, set the pace for yet another record quarterly performance for U.S. solar installations during the first three months of 2013, according to just-released analysis from the Solar Energy Industries Association (SEIA) and GTM Research.

U.S. solar energy installations totaled 723 megawatts (MW) from January through March, a 33 percent increase from a year ago and the solar sector’s best-ever first-quarter performance. That’s a big dropoff from the whopping 1300 MW of installed PV in the fourth quarter of 2012, but it’s typical for this sector to see a late-year boom and subsequent early-year pause. (Similarly, a year ago U.S. solar installations surged in the final quarter of 2011 and then fell back in 1Q12.) The nation now exceeds 8.5 GW of cumulative installed solar electric capacity, of which 7.9 GW is PV. Solar nearly made up half (48 percent) of all new electric capacity installed in the U.S in 1Q13.

In other words, former electricity consumers are voting with their feet, leaving the grip of stagnating power companies to produce their own electricity.

Stop thinking like a consumer, start thinking like a disrupter, more and more Americans are.

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