In Germany, neighborhood solar starts to eat away at utility revenue
Five years ago, an electric-utility think tank issued a dire warning to its members: Your century-old business model is ending.
The continually falling costs of renewable energy generation, especially solar panels, would begin to erode utilities’ business from its most profitable customers, the study said.
Now, in Germany—hardly known for its continual, blazing sunshine—utilities are starting to see the impact.
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There, a network of about 20,000 homes with solar panels and energy-storage batteries lets its members buy and sell excess energy to each other.
They do so, moreover, at rates below those charged by their utility, according to a recent report in the British business outlet Financial Times.
That network is run by Sonnen, the largest maker of energy-storage packs in Europe, launched in 2010.
At launch, the FT reports, those home-storage battery packs cost €25,000 ($29,700)—a cost that has since fallen to €5,000 ($5,900).
Systems like Sonnen’s are called mini-grids, essentially small, self-contained generation and distribution grids that sit within the larger electric such system operated by the local utility.
And it’s precisely this kind of system that utilities fear will end their usual practice of huge, centralized electricity generation and one-way distribution over a wholly-owned electric grid.
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Mini-grids like the one in Germany—another is being pioneered in Brooklyn, New York—allow customers to generate a majority of their own energy, selling any excess to their utility.
That process is known as “reverse metering,” but it raises the specter for utilities of having to accommodate thousands of small, unpredictable generation sources and two-way flows of electricity within grids never designed for that.
The ultimate concern, utilities suggest, is that some of them—especially those in the sunniest or windiest areas—could lose their best customers to such systems.
