The challenges may vary by region, market and utility model, but four major issues loom large for electric utilities right now: a changing resource mix, the rise of distributed generation such as solar, the shift toward energy efficiency and weak — in some cases, negative — demand growth. That’s a full plate of problems confronting the industry.
Electricity consumption plunged when the recession hit in 2008. While the economy has largely recovered, demand growth remains anemic in most parts of the U.S. Meanwhile, many utilities have been tackling energy efficiency with gusto because it is less expensive than building power plants, and the widespread adoption of solar generating capacity by communities and individual homeowners has undermined the utilities’ monopoly on power generation. Finally, the the mandated switch from coal to LP gas means higher capital improvement costs — all of which undermine the viability of their traditional business model.