utility companiesThe next time you’re driving around town, observe the community and see how many homes and businesses have installed solar panels.  You may be surprised at how common these devices have become in recent years.  In fact, some believe that solar panels are becoming so common that they may eventually put utilities out of business.  Can this really happen?

A recent drop in the cost and installation of solar panels has drawn more interest in distributed solar.  Jim Rogers, chairman and CEO of Duke Energy, explained in an interview with Bloomberg, “If the cost of solar panels keeps coming down, installation costs come down, and if they combine solar with battery technology and a power management system, then we have someone just using us for backup.”

While some companies are worrying how this will affect their bottom line, other companies are embracing the change.  NRG Energy, an operator of traditional power plants, is among the first to expand into administering mini-generation structures that provide power to a single building, completely bypassing the utilities.  NRG Energy CEO David Crane explains how consumers are beginning to realize that they may not actually need to rely on the power industry, “The individual homeowner should be able to tie a machine to their natural gas line and tie that with solar on the roof, and suddenly they can say to the transmission-distribution company, ‘Disconnect that line.’”

NRG Energy constructs its solar projects for commercial and industrial buildings, but they are now considering the opportunity of offering leases for solar panel roof structures to businesses as well as homeowners.

These solar leases give customers the opportunity to install rooftop panels at no upfront cost.  The customer signs a contract that ensures they pay a fixed monthly payment.  Companies that offer this type of agreement normally provide its customers with a lower payment for their energy than through their utility.

Eventually, Crane also wants to apply a similar concept to the network of underground pipes that distribute gas to the majority of the homes in the U.S.  If this idea materializes, customers will be able to produce electricity from fuel cells and microturbines.

The spike in distributed generation, or on-site generation, will have a greater affect on the electric utilities than on the consumers.  “They can’t cut costs, so they will try to distribute costs over fewer and fewer customers,” stated Crane.  He then explained how this method will end up raising energy costs for customers, who will then become more interested in distributed generation, resulting in a major snowball effect.

What do you think?  If this system becomes affordable in your area, would you embrace it?  Leave your thoughts in the comments section below.