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As solar power grows, US energy utilities to face $48b revenue loss

As solar power grows, US energy utilities to face $48b revenue loss

LOS ANGELES: Energy utilities would lose between $18 billion and $48 billion a year in the US and up to €61 billion a year in Europe by 2025 as solar power and energy conservation initiatives grow, according to Accenture.

This year, 61% of utility executives surveyed by Accenture indicated they expect significant or moderate revenue reductions as a result of distributed electricity generation, such as solar photovoltaic (PVs), compared to 43% last year.

The Accenture analysis, based on extensive modeling and a survey of global utilities executives, estimates that energy demand could be reduced by more than 15% due to new energy technologies by 2025.

The average conversion ratio for solar cells is around 16% to 18%, according to Amit Ronen, director of George Washington University’s Solar Institute in Washington. The best solar cells are able to convert as much as 20% of the sunlight they absorb into electricity, he added.

Accenture’s “Digitally Enabled Grid” study found that utility executives are “notably more concerned” about the impact of renewable energy on their revenue streams than in the past.

One of the factors spurring growth is the expiration of the federal government’s solar investment tax credit (ITC). That measure, passed in 2008, offered a 30% tax credit for residential and business installations for solar energy. When it expires in 2016, the tax credit will drop to a more permanent 10%.

“Consequently, we expect to see a big rush of new installations ahead of the 2016 ITC expiration,” Shah stated in his research document.

Even adoption of energy efficiency and distributed generation “will become possible without subsidies, which will lead to greater market penetration as a result of shifting consumer sentiment, falling technology costs and a moderate rise in electricity prices, especially across Europe,” said Valentine de Miguel, global managing director of Accenture Smart Grid Services, in a statement.