October 2013: PWC’s latest annual energy and utilities survey – ‘Energy Transformation: The impact on the power sector business model‘ is proving quite a stir as a result of its findings on the future of the electricity generation sector. An incredible “82% see distributed power generation as ‘an opportunity’ versus only 18% rating it as a ‘threat’.”
The Executive Summary sets out that “The growth of distributed generation and its threat to the power utility business model depends on technological developments and cost. Its rise in Europe has been subsidy-driven. Cost barriers remain in the way of it being truly market-driven. But, if these barriers can be overcome, they could set the scene for widespread global industry transformation. Many believe that point is within reach. Energy efficiency, falling solar prices, demand-side management and smart grid technology head the list of technological developments that the industry believes will have the biggest impact on their power markets.“
“At the moment we are beginning to come to the end of a phase where the spread of distributed generation has been policy and subsidy-led. With the economics of distributed generation fast changing, we are likely to move into a phase where take-up is commercially and market-led.” [p17]
The growth of smaller scale, localised distributed – or decentralised – energy generation technologies is critical in helping cities such as London determine their own energy future. Many of the larger scale centralised generation plant currently in operation reflected the opportunities that were available at the time: coal power stations were sited near coal-seams; the 1990s ‘dash for gas’ led to a dramatic increase of new ‘Combined Cycle Gas Turbine’ (CCGT) plants, often situated close to gas terminals. Increasingly, smaller, cleaner energy systems, from PV to CHP, heat pumps to district heating schemes, are becoming technologies of choice: importantly they are sited at the place of demand – where consumers actually need to use power and heat. It’s therefore good to see such significant support for this dramatic change in this timely and important analysis.