This is something I've been thinking about a lot.
The way an electricity utility works, you need power plants (or to buy power from someone with power plants), transmission lines and some form of last mile delivery. You have substations and other infrastructure too. That infrastructure has ongoing maintenance costs but also capex to build it in the first place.
So your per kWh price is the sum of the electricity cost, the maintenance cost and the amortized capex plus some profit.
Utilities are heavy regulated but only the electricity cost tends to be highly regulated. Any maintenance or capex costs can be passed on directly to the consumer. Private equity has realized this. Data centers have realized this where they can negotiate a lower electricity rate and the build out for multi-gigawatt transmission and power generation can be passed on to consumers. This has gotten creative enough that people in unrelated states end up paying more because of upgrades required for shared infrastructure for interstate utility compacts.
The obvious endpoint for all this is for users to eventually opt out. Disconnect from the grid and use totally renewable energy plus batteries. Generally in any urban environment you can't avoid the monthly connection cost even if you use no power. The city will declare your house unlivable. I can see this changing in the coming years with soaring prices that basically go to share buybacks and bonuses for private utilities.
But what if the connection to the grid drops significantly shifting maintenance costs to the rest?
I think the future is going to move away from large connected grids towards self-sufficiency and smaller localized grids, ideally municipally owned. But you can't gradually move from a large grid to smaller grids like this because of the problems of who pays for the grid in between.
I think you are spot on. The grid death spiral. Unless you can have enough generation co-locatrd with consumption you need the grid and the utility scale plants. In the densely populated areas you simply cannot have enough generation within the same footprint as the demand with existing tech.
jmyeet · · focus · HN ↗
The way an electricity utility works, you need power plants (or to buy power from someone with power plants), transmission lines and some form of last mile delivery. You have substations and other infrastructure too. That infrastructure has ongoing maintenance costs but also capex to build it in the first place.
So your per kWh price is the sum of the electricity cost, the maintenance cost and the amortized capex plus some profit.
Utilities are heavy regulated but only the electricity cost tends to be highly regulated. Any maintenance or capex costs can be passed on directly to the consumer. Private equity has realized this. Data centers have realized this where they can negotiate a lower electricity rate and the build out for multi-gigawatt transmission and power generation can be passed on to consumers. This has gotten creative enough that people in unrelated states end up paying more because of upgrades required for shared infrastructure for interstate utility compacts.
The obvious endpoint for all this is for users to eventually opt out. Disconnect from the grid and use totally renewable energy plus batteries. Generally in any urban environment you can't avoid the monthly connection cost even if you use no power. The city will declare your house unlivable. I can see this changing in the coming years with soaring prices that basically go to share buybacks and bonuses for private utilities.
But what if the connection to the grid drops significantly shifting maintenance costs to the rest?
I think the future is going to move away from large connected grids towards self-sufficiency and smaller localized grids, ideally municipally owned. But you can't gradually move from a large grid to smaller grids like this because of the problems of who pays for the grid in between.
entech · · focus · HN ↗