Power companies are presented with a number of opportunities as well as challenges as a result of the growth of customer-produced electricity, particularly power supplied by renewable sources such as solar and wind. On the one hand, it has the potential to assist lower overall carbon impact while also increasing energy efficiency. On the other side, it has the potential to disrupt the established business models of power companies and to put pressure on their distribution and operation strategies.

The potential for a drop in demand for conventional utility-scale power is one of the potential effects of customer-generated electricity. It is possible that power companies will see a reduction in revenue from the sale of energy as a greater number of their customers choose to generate their own electricity. According to a report published by the International Energy Agency, by the year 2040, distributed solar photovoltaics could be responsible for as much as 30 percent of the world's electricity generation. If this occurs, a considerable amount of conventional utility-scale power generation could be rendered obsolete.

To be able to adjust to this shifting environment, power companies may need to adopt new business models in order to compete for a share of the customer-generated power market. Some examples of these new business models include the development of distributed generation systems and the provision of energy storage solutions. To ensure continued patronage from their clientele, power companies may need to move their primary focus away from the sale of electricity and toward the provision of other energy-related services.

Another compromise that may need to be made by power companies is striking a balance between the advantages of having customers generate their own power and the need of maintaining grid stability. In spite of the fact that customer-generated power can contribute to the reduction of carbon emissions and the promotion of energy independence, it can also develop pressure on the power system. In order to maintain grid stability and manage the variable amount of electricity generated by customers, power providers will need to make investments in smart grid technologies as well as other infrastructure.

In conclusion, the increase in the amount of power generated by individual customers confronts power companies with both challenges and opportunities. The development of new business models and investments in infrastructure to accommodate customer-generated power while ensuring grid stability will be required of power providers if they are to preserve their competitiveness and profitability in the future.

References:

International Energy Agency. (2019). World Energy Outlook 2019. Retrieved from https://www.iea.org/reports/world-energy-outlook-2019 Shah, N., Stettler, J., & Weber, R. . The impact of customer-generated power on traditional utility companies. Nature Energy.

• mentioned In this statement about a balance between the advantages of customer-generated power and the need to maintain grid stability. What do you mean by grid stability, what is the threat?
• I understand the point about power companies needing to change business strategies, but I am confused about grid stability. Are you saying that as demand decreases, power grid maintenance costs will start to outweigh production. What business strategy would fix this?