Is the US power grid doomed?

The electric utility industry is facing a revolution. Rooftop solar cells, gas-powered micro-turbines, and software-based switching technology are allowing some electric utility customers to go off the grid and still keep the lights on. They just use traditional power lines as a backup.

Distributed generation is becoming more and more common. Rooftop installation is especially popular in the southwest, and it’s not just homes any more. Wal-Mart President Bill Simon recently remarked that solar is often cheaper than grid power, and Wal-Mart has a lot of roofs. And because there’s little advantage to having a large, centralized arrays, individual homes and businesses can generate their own power and feed their excess back into the grid.

But because line charges are built into the kilowatt-hour rate, these folks aren’t paying for the infrastructure that brings this power to their homes. Rate increases on non-generators can make up the difference, but only for a while. Eventually you get into a death spiral: higher rates kick more folks off the grid, which leads to higher rates for those remaining, and so on.

Technology costs fall; utility costs rise. Eventually, those lines cross. When that happens, watch out. And put on your sunglasses.

Douglas R. Tengdin, CFA

Chief Investment Officer

17 1/2 Lebanon Street

Hanover, NH 03755

direct: 603-252-6509

reception: 603-224-1350

fax: 866-351-8163




By |2017-07-17T12:34:37+00:00September 6th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment