When analysts look at the challenges facing the energy utility business and the emergence of solar and storage and other distributed technologies, the common refrain is that the utility business is about to face its "Kodak" moment. That’s the reference to Kodak’s inability to embrace the digital technology it had helped develop and its decision to put most of its eggs in the traditional film business.
But perhaps the best comparison of what awaits the utility business is what happened to fixed-line telephony with the introduction of wireless technology and mobile phones.
What can energy utilities learn from this? It is one of the aspects picked up by Morgan Stanley analysts
in their report on the threat of solar and storage. The firm notes that those telecom companies that survived did so because they re-invented themselves. The industry was deregulated, incumbent local exchange carriers were forced to allow competitors to access their equipment, and to provide local and long distance service.
With the rise and fall of competition, the remaining wireline operators reconsolidated and now use their existing infrastructure to provide broadband to residential customers and various services to Enterprise customers. Grid operators and distribution networks in the electricity industry face a similar threat, as do retailers.
As the Morgan Stanley report notes, fixed-line (wireline in the tables) telephony revenues and usage have steadily declined since 2000, and copper wires could be fossilised (made redundant) by 2020 if carriers have their way ...
The report notes that revenues have declined 20% since 2000 and usage has declined even further -- 63% -- since that date (note the increase in margins). By 2020, Morgan Stanley suggests more than 50% of US households will have a wireless-only service by 2017 ...