Wind, solar, batteries, and now green hydrogen are disrupting incumbent grid technologies, especially coal, nuclear, and gas for electricity generation. Such technology disruptions became common since the 1980s, when personal computers started replacing mainframe computers, then cell phones obsoleted wireline phones, then the internet disrupted numerous industries, and smart phones–first introduced in 2007–upended phones, internet access, photography, maps, and spawned all kinds of new applications.
The cost of solar, wind, and batteries have plummeted 80%, 45%, and 90%, respectively, since 2010. And their production learning rates show no sign of slowing, meaning that these cost reductions will continue for at least another 5 years. There is no rationale for new investments in coal, nuclear, or gas generating assets.
The new cost structures will enable many new uses of renewable energy, such as microgrids for small communities, powering steel or cement production, direct CO2 capture, or other applications we haven’t yet invented because we keep thinking that energy is too expensive to waste. When energy becomes as cheap as terabytes of memory, we’ll use it ways we’ve never thought was affordable. And it will all be carbon-neutral or carbon-negative. (In 1990, nobody in semiconductors expected that memory would be so cheap that consumers would just buy more instead of sorting their digital videos.)
Utility business models, once the most stable investment available, will increasingly be threatened by the new, cheaper energy generation and storage–similar to Congress deregulating MaBell after everyone was building telephone technologies. Instead of resisting the new technologies, utilities of all sizes should be embracing distributed energy resources (DERs) and proposing how to coexist with (or invest in) an explosion of microgrids.
Rural PUDs tend to have higher transmission and distribution (T&D in utility-speak) costs because they are required to service small remote communities, with low electricity usage over long lines. In the foreseeable future, microgrids will be able to provide cheaper, more reliable power to remote communities or ranches than long distribution lines. And obviate the costs of vegetation removal and liabilities of triggering wildfires.