Electricity consumers in The U.S received awesome news during December 2014 with the prospect of spending less money on electricity. A newly released report by Accenture indicated that potential revenue loss for U.S utilities of $48 billion annually by 2025 may be experienced due to the distribution of solar energy and energy efficiency on the whole.

The question arises from such statistics; where does all that money go to? If we were running a democratic system, outlined by the ILSR’s newly released report, all that money goes right back into the pockets of U.S electric customers.

Utilities profit drops as renewables garner larger market share

The U.S electricity utilities are facing major revenue losses due to the fact that their models, built during the 20th century centralized the command-and-control electric utility. Such a business model is completely out-dated in the modern world we live in today, where we are able to produce power on rooftops from free sunshine while managing energy individually using our smartphones.

There have already been three waves of change taking place concerning the electricity utility system during the past 50 years namely; Shock & Competition, Deregulation, and Transition. The third wave was powered by the renewable distributed energy and stagnant energy demand. This was helped along by the state regulation, which is not going to recede.

The Wall Street Journal has already taken note that the epoch of electricity sales are almost over. Demand is falling and competition by renewable energy sources are growing each year. During the past few years it’s been noted that such competition is not just generated by larger power producers but from utility clients themselves (see “U.S Power Plant Capacity Additions” graph; the growth of “small solar” in particular (and red), representing residential and commercial installations 1 megawatt and smaller).

The utilities big $48 billion question regarding a new business model

Utilities have obviously not taken such statistics lying down, they see it as a direct threat to their existence, and as such they are often actively campaigning against such predictions while at the same time investing in the infrastructure for the grid of old.

Such battles are the origin of “Utility 2.0”, which is a business model discussion both inside and outside of utilities that would have energy companies allow for flat energy demands and increasing client energy production. Such a policy sounds good, as it’s focused on moving principles to that of being low-carbon, adaptable and efficient.

There are incentives for utilities to actually set out and achieve such outcomes, though the Utility 2.0 project may prove unsustainable if it doesn’t change its attitude regarding the amount of dollars flowing out of those communities who use energy ($48 billion to be exact).

There are already 500,000 homes and counting sporting solar energy, as it becomes more affordable each year that passes. Smartphone solar, rooftop solar as well as energy storage will allow clients to control their energy usage while earning their share of the country’s energy dollars.

Solar’s cost incentives and environment benefits have changed the industry

States such as Vermont have identified, as well as implemented key strategies and policies from net metring and distribution and transmissions planning. The state also has an independent solar energy efficiency utility as well as a feed-in tariff in order to encourage better distributed renewable energy taking place.

Meanwhile, New York is aiming to make an open and transparent marketplace putting utility clients on par with those companies providing energy services, this is known as Reforming the Energy Vision.

Even though both states have not yet implemented a full on energy democracy system, At least they’re pursuing the correct principles, structures and policies to lead them in that direction.

The question arises: will these monopoly utilities survive this impending energy democracy? The answer to that stands on what your definition of survive means. Will they continue to receive massive profits as a monopoly over the electrical system? Perhaps not. Could they not put a little effort into designing and deploying a generation distribution system to enable energy distribution democracy? Of course! They just need a little will power and vision!

Photo by: MorBCN on Flickr