Barney, stranded costs ... are to be written off, as in any business.
The "utility compact" appears dead to me. There is no "right" to stranded cost recovery. When barriers to entry are low, and natural monopoly dead, assets will lose value.
Market forces are inexorable. The telecom business did not claim any stranded costs when their wireline infrastructure was rendered obsolete by wireless. Should cellular mobile carriers claim stranded costs from ... anyone ... when VoIP / Skype take minutes of use away from them?
William Fitch, I appreciate your comment about "demarcation points" and agree that privacy is important. Yet value added services may require that electricity usage in a home or business be monitored and controlled. Could we have local area control? With no visibility - beyond connectivity - to the wide area, external network? Can we have a "firewall" at the demarcation point? I would like to debate this issue to increase my understanding.
I agree with the thrust of the argument. The future topology of the grid is a "federation of microgrids" both for reasons of security as here mentioned, and also in order to decrease the emissions from the electricity industry. How to get "there" is the question. The more the "edge" generation increases, the more the pressure on today's business model, and more the incentive to transform the network architecture. "If you are falling," said Joseph Campbell, "dive." The electricity industry is falling ... what would they do? What constitutes the "tipping point" for such transformation?
Grid-tied solar reminds me of the poem, “Futility”, by Wilfred Owen, a World War I poet. He says, about a soldier just dead, that the sun toiled mightily and “Woke, once, the clays of a cold star.”
Move him into the sun—
Gently its touch awoke him once,
If anything might rouse him now
The kind old sun will know.
Think how it wakes the seeds,—
Woke, once, the clays of a cold star.
Are limbs, so dear-achieved, are sides,
Full-nerved—still warm—too hard to stir?
Was it for this the clay grew tall?
—O what made fatuous sunbeams toil
To break earth’s sleep at all?
And then to waste it while routing through a grid? “The horror! The horror!”
At the recently concluded RE INVEST conference in New Delhi, February 2015, the India Energy Minister mentioned at least 20 GW for off grid and microgrid solutions. This is encouraging. Elsewhere I recall his saying that distributed generation will be about 40GW. Please see minute 25 onwards. https://www.youtube.com/watch?v=PP5g5_R-7aU
I think microgrids will also be deployed in places that have the conventional, robust grid in ways similar to the emergence of Competitive Local Exchange Carriers in telecom. Thus, microgrids have broader applicability than emerging markets, and I will not be surprised to see them take off in the US, and not merely as backup or for emergencies.
In fact, while telecom is truly a wide area networking business with positive "network externalities," it is not strictly necessary to have the "grid" as a wide area network. There are no comparable network externalities with electricity.
Electricity can be an entirely local business. As Gerry Wootton said in his comment, "there are many ways to go." The grid as we know it need not be.
Scott, I agree with what you say. Indeed, program management plus solar panels will get basic lighting into everyone's hands - the Solar Home Systems. This is an immediate need, is being done. You are right: "distributed generation ... is essential, particularly for low-power and critical infrastructure. Dedicated distributed generation (DG), not linked and thus not susceptible to cybersecurity problems, is also an essential tool." But what I'm saying here is: This is not enough.
We need to create microgrids, which is DG, and largely operating in "island" mode, or cooperating with neighboring microgrids, more than with the macro-grid. Only such microgrids will ensure 24*7 supply for cooking and refrigeration in addition to lighting and phone charging, with local control and accountability, economically.
Such optimized, automated microgrids also have urban uses, even in electrified areas, in all markets, and similar to Competitive Local Exchange in telecom. They are the basis for competitive electricity supply. On that topic, I will write separately.
Folks, the following three recent references might interest you. a) Clean Power, Off the Grid in New York Times, July 17, 2014, b) Solar Hybrid with Fuel Cells - South Africa, thanks to PJ Van Staden, and c) Greenpeace India's microgrid.
This is brilliant, people-centric public policy. The nation will be rid of "domestic content" oriented ideological nonsense.
On the same subject, this article describes a landmark struggle - Berliners still fighting to pull the plug on coal fired utility.
Hi Brian, appreciate your observations. At least three issues prompted this article
a) price drop do not automatically lead to more demand; demand also depends on market segments and their distinctive behaviors, especially for technological products new to the market.
b) While comparisons with telecom industry structural changes are worthwhile, and much here for the electric utilities to learn from, nevertheless going off-grid may not be compared to cutting off the landline connection.
c) Even when solar panels with batteries make for (electric) grid independence, the monitoring of power generated from the panels is very much networking, and thus we maintain the "telecom grid."
I am a big believer in distributed generation. The utilities will get into that in a big way. No doom and gloom - cannot think of a more thrilling industry to watch and participate in.