Electric utilities! They are to me what sideboobs are to Huffington Post -- I just can't stop writing about them.
A couple of days ago I posted a brief introduction to utilities and the way they currently work. The take-home lesson is that current regulations give utilities every incentive to build more infrastructure and sell more power, but very little incentive to cut costs or innovate.
The situation is no longer working for us. We need rapid, large-scale innovation in low-carbon electricity systems, and we need it now. It's time to fundamentally rethink the utility business model.
I hope you'll indulge me just one more scene-setting post before I finally get to the long-awaited post on solutions. Today we're going to take a look at the way electricity has typically gotten from generator to customer, the electricity "value chain," so we can better understand which parts need to change. This is a complicated topic, to say the least, but I'll do my best to break it down in the simplest terms I can, with the proviso that I'm glossing over lots and lots of important details.
The electricity value chain
OK. Think of the electricity value chain as having three basic links: