The Age of Paradigm Shifts

Renewables are riding on the waves of multiple Paradigm Shifts

In my recent post about the dawning of the renewable energy sector (https://power2x.medium.com/the-dawning-of-renewables-a019fee69e48), I referred to what I call the “Age of Paradigm Shifts”. Put simply, renewable energy has transformed the global electricity markets in multiple, profound ways over the past several years.

To summarise, the traditional electric utility model is no longer sustainable:

· Electricity generated from wind and solar is now less expensive in more and more countries than the local / national utility’s preferred technology (i.e., traditional thermal power generation technologies, such as CCGTs, nuclear and/or coal).

· Renewables have become a preferred asset class of a new type of investor — an investor that has a much lower cost of capital than utilities

· Utilities are now losing their best customers to renewables

· “Must run” renewables have taken away utilities’ largest traditional profit centre (i.e., peak supply)

· Finally, the simplicity of renewables eliminates the opportunity to “charge for complexity”, a common tactic of large companies that have historically enjoyed high barriers to entry.