While we’re on the subject of energy innovation, please check out Randall Parker’s Futurepundit post on the potential for fuel cell vehicles to heat homes. I’ve discussed this potential with several industry folks, and it is truly exciting. Consider being able to drive up to your house and plug in your car in order to power your house.
OK, now the wet blanket part: our regulatory structure is a major impediment to the implementation of such cool options. Utilities view any request for customers to leave the grid, called bypass, as a reduction in their load and therefore a direct reduction in their profit. The nasty little incentive problem of cost-based rate-of-return regulation is that utilities have developed a “sell more power, make more profit” mentality over the past 85 years. In that mentality, keeping us as captive consumers is their business model, because the converse is “sell less power, make less profit”.
The challenge: get thought leaders in utilities to recognize that the difference in consumer preferences and demand elasticity over the day, week, and season creates opportunities for utilities to make more profit selling less power. Then we will be captive no longer, bypass will not be so vigorously refused, and we can apply the innovations in distributed energy technologies, using fewer resources along the way.