The present commodity nature of electricity is being replaced by a decentralized model where homeowners can supply their own power using their own equipment. This changes the variable and volatile cost of electricity in a "fixed" cost which never goes up.
Can Electricity Become A Fixed Cost?
Toby Kinkaid | Solardyne Corporation
by Toby Kinkaid, Solardyne Corporation
Since Adam Smith published his discourse on economics the world has been ruled by "Supply" and "Demand". Yet, this old economic model is based on the assumption that you need to go to some outside source for the item or service you need. Recent advances in clean energy technology seem to challenge this old model by going directly to the root of economics: the need to outsource your supply.
With solar and wind systems, with a fixed hardware, installation and maintenance cost, the commodity nature of electricity can be challenged. Of course, you generally must find a vendor for this hardware, and an installer to hook it up, but after that the entire economics changes. No longer are you at the mercy of a utility for one of the most important modern human needs: electricity.
Whether you're a home or business owner, or even on the scale of our entire country, almost everyone pays an electric bill. One of the best kept industrial secrets of the modern age is that you must pay an electric bill to some utility - a variable and ever increasing cost. The present commodity nature of electricity is being replaced by a decentralized model where homeowners can supply their own power using their own equipment. This changes the variable and volatile cost of electricity in a "fixed" cost which never goes up. The entire country paid over $800 billion dollars last year to electrical utilities, up from the year before. Five years from now what will be the price of electricity? Who knows? But with an industry standard 25 year warranty a solar photovoltaic (PV) array can produce reliable power for decades after it's entirely paid off.
As we move from Centralized power plants to Decentralized power plants (owned by home and business owners) we'll see a transformation of the very economics of energy. The traditional energy business sells you energy (electrical and chemical) through their distribution network: power-lines and gas stations. As more people become Independent Power Producers the need to buy power from an outside source will transfer to a self-reliance, and energy independence. Energy self-determination: a good old fashioned American value is reemerging in one of the largest industries in our country.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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