Generations to come

Utilities Unbundled - Issue 15

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How will utilities adapt if the generation business erodes?

“In some advanced markets where distributed sources are viable … the generation market already looks very different.”

— Alison Kay, EY

Does the growth of distributed generation – that is, power generated where it is used, rather than supplied from a central source – represent a potential threat to the traditional utility business model?

The Edison Electric Institute (EEI), which represents US investor-owned utilities, has suggested that utilities could be overvalued on the stock market because investors haven’t fully understood the impact of decentralized generation.

The conservative position is that while the sector can expect disruption, utilities and the grid will remain important for a long time, with a timeline of 20-30 years to see wholesale transformation.

But if, for example, solar grid parity becomes a widespread reality and some modern-day Edison invents a low-cost energy storage solution that addresses its intermittency, change could be upon us faster than we imagine. In some advanced markets where distributed sources are viable, including southern California, the generation market already looks very different.

Historically, utilities have been slow to respond to change – will this be different in the generations to come? We explore this and a variety of topics in this issue. Take a closer look:

We welcome your views on all the subjects covered in this issue; contact details for our authors are listed throughout. I’d also like to thank our many contributors – utility leaders, regulators, industry commentators, and politicians – who have generously given us their time and insight to create this issue, my first as lead editor.

EY-Alison Kay

Alison Kay
Global Sector Leader, Power & Utilities

London, UK
+44 20 7951 1786
Follow Alison on Twitter