Why Aren’t Utility Companies Running off Solar Power?

Information verified correct on October 24th, 2016

Sadly, the answer comes down to business and to money.

It’s a great way to generate clean, cheap energy and is ideal for sunny countries like Australia. So why then aren’t utility companies jumping at it?

The energy business model

Energy companies make their money by generating energy and then selling it to you and other around Australia, so it is against their best interests for people and businesses to generate their own electricity.

Solar power and self generated energy is one of the largest threats to one of the largest business areas in Australia, and to several of Australia’s largest companies. While some large companies have attempted to alter their business strategy to incorporate solar, others have become strong opponents of a solar in Australia.

The solar cycle

As more homes and businesses connect to solar panels, there are fewer people paying the energy companies for the generation of energy and distribution of energy, and the maintenance of the grid. This reduction in consumer base in effect raises energy prices for everyone else, which in turn prompts more people to go solar. It’s a cycle that is great for the consumer and for the environment, but not so great for the energy providers.

Why don’t utility companies generate power through solar?

Most large energy providers in Australia still generate most of their power from non-renewable sources or fossil fuels, such as coal, natural gas or oil. Switching their energy generation away from fossil fuels and towards renewables would incur a large initial expenditure and would force them to continue paying for expensive fossil fuel power plants, while at the same time encouraging people to move away from it.

The future

The future is bright for solar power. As more and more people wake up to the high rates and higher profit margins of certain Australian energy companies and seek self generating power, and as concerns for the environment continue push people away from fossil fuels, the solar industry will continue to grow.

However, there is a downside to rising popularity, as we may also see a reduction in solar buy-back tariffs and incentives as more people sign up to solar power and the government attempts to reduce pressure on the energy providers.

Shahedul Islam

Shahedul is the publishing assistant for He's Internet savvy and loves to learn new things about finance and technology. He spends most of his time learning about the wonderful world of the internet.

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