I have blogged on previous occasions about the impact of distributed generation and renewable sources of electric power on the traditonal business model of electirc power utilities.  In this context the recently released Annual Stakeholder Report 2012/13 from Ergon Energy which supplies power to most of Queensland makes for very interesting reading.

Transitioning from transporter of power to market enabler

Ian McLeod is the Chief Executive of Ergon and in his summary of the year he sees Ergon transitioning from a monopoly delivering power to a market enabler.  Ergon customers are increasingly becoming producers selling energy into the grid.  This change means that Ergon’s value proposition needs to shift to enable a strong market for energy, storage and demand management solutions, while still ensuring a safe, secure and reliable supply.

Reduced demand for power from the traditional grid

Since the summer of 2010/11 customers have been using less electricity for the first time in Ergon Energy’s history.  In addition peak demand has been well below forecast for the past three years.  There are several reasons for this but a greater awareness of energy efficiency and the availability of alternatives like solar PV are among the more important. Decreased demand has resulted in increased rates for electric power, up about 22.6% in 2013/14.  Bascially the cost of maintaining the infrastructure remains the same, but less power is being bought by consumers so to keep revenue commensurate, rates have to go up to compensate.

Power infrastructure increasingly being funded by consumers and third parties

The uptake of solar PV, which was initially primed by government rebates and hgh feed-in-tariffs, is continuing even after the reduction of the feed-in-tariff rate from 44 to 8 cents/kWh.  14 % of households in Queensland now have solar PV. “Capital investment and technology is now flowing downstream into the customer installations – from traditional regulated infrastructure funded by Ergon Energy to unregulated solutions funded by customers or third parties.”  In response to this and in order to mitigate the risk of parallel investment into the supply chain, Ergon Energy has been reducing its works program and the size of its workforce.