Why solar power will change traditional power systems and when is the big question facing electrical generation companies, transmission companies and investors. Utilities in the power generation and transmission have been cash cows for investors for years and many investors are beginning to wonder if their cash dividends are at risk. The quick answer is that it depends on how the existing companies respond to this new source of power and how they manage the environmental impact message for the new and old systems. There is no question that there is less air pollution from solar and wind farm generation compared to coal, oil and natural gas fired generation plants. There is a lot of pressure to have a higher percentage of generation come from these sources as time goes on.
Why Solar Power will change Traditional Power Systems
Traditional power system companies must realize that they need to invest in this new technology to protect their investments in transmission systems and retain existing customers while being seen as being progressive from an environment perspective. Progressive companies will make this transition and therefore protect their dividend stream for investors while producing low cost electrical power.
The real threat comes from roof top solar power which removes bottom line revenue from the system and drives the per unit cost up for everyone else who does not deploy a roof top solar installation. Remote areas and high cost per kilowatt areas will be the first to convert to roof top solar simply because of the economics.
An aggressive approach to generating power by traditional power generation companies will help to keep costs to the consumer down and decrease the motivation to install roof top solar generation. The jury is still out on how this issue will evolve, however investors in utilities would be wise to pay attention to these issues.