Stories by Steve McBee

Expert Voices

Utilities pressured to adapt as next wave of energy tech gains steam

 Luminalt solar installers Pam Quan moves a solar panel during an istallation on the roof of a home on May 9, 2018 in San Francisco, California.
Luminalt worker installs a solar panel on the roof of a home on May 9, 2018, in San Francisco, California. Photo: Justin Sullivan via Getty Images

As the costs for fossil fuels continue to rise and the prices for renewable energy hit all-time lows, fast-moving startups and adaptive incumbents are developing new energy service models.

The big picture: Traditional utility models, organized around the subsidized delivery of commodity electricity, are facing pressure from distributed-service models, which promise to deliver the tailored, efficient and connected energy services to power emerging smart-home markets and meet increasingly discerning consumers.

Expert Voices

Short-term strategies threaten utilities as power demand stagnates

Workers install solar panels on the roofs of homes under construction south of Corona on May 3, 2018.
Worker installs solar panels on California homes. Distributed energy like rooftop solar has contributed to utility stagnation. Photo: Will Lester/Inland Valley Daily Bulletin via Getty Images

Last week, activist firm Elliott Management Corporation mandated that California-based Sempra Energy return to basics and shutter future growth activities. With U.S. electricity demand continuing to flatline, "a return to basics" will juice near-term prices, but risks Sempra’s long-term stability.

Why it matters: Elliott's strategy, like those of other activist investors, intensifies the structural pressure on once-stable utilities. As declining utility demand, stiffer competition and increased consumer interest in distributed services challenge legacy service models, utilities are struggling in part because some owners are playing a profit-squeezing short-game at the expense of long-term planning.