Following a series of reports from major Wall Street institutions, Barclays announced this week that it would downgrade the entire U.S. electric utility sector bond market ratings against the U.S. corporate bond index due to the “challenge from ratepayers’ increasing opportunities to cut electricity consumption with solar and battery storage.” Translation: the cost of powering homes and businesses with solar energy is continuing its trend downward as more consumers opt to get their electricity from the sun instead of from traditional utility grids.
Though Barclays warns against optimism over rapid growth in the solar industry, their downgrade represents a shift in paradigm regarding energy markets. Traditional electric utility bonds were long considered a solid, conservative investment, and they provided investors with steady returns while allowing people in most areas of the country to enjoy the use of consistent, reliable electricity. Electric utilities currently make up about 7.5% of Barclays’ U.S. Corporate Index by market value.
But as the grid ages and the price of fossil fuels rises, utilities struggle to maintain their position as the most cost-effective means of powering the modern world. Generating electricity with the sun’s energy and storing it in hi-tech batteries is sounding like the best bet for more people each day, and the financial world is catching on quickly. Though nobody can forecast the future, there is a growing consensus that advances in solar power and storage technologies will likely be the main challenge to utilities in the coming years.
Hawaii is the bellwether for this trend, seeing solar prices that are already competitive with traditional grid power in the energy markets. Analysts predict that California will see the same shift by 2017, with New York and Arizona following in 2018. While these trends do not forecast a certain dominance of solar power in energy markets in the coming years, they reflect the sentiment that solar technologies will disrupt the status quo very soon.
This isn’t great news for anyone with a stake in traditional electric power generation, but it represents a step in the right direction for socially-minded investors. An average household could prevent almost 14,000 pounds of carbon dioxide, the greenhouse gas most closely linked to climate change, emissions over the course of one year by generating their electricity with solar technologies instead of fossil fuels. A wider adoption of solar power will also result in a reduction of other harmful pollutants like sulfur dioxide and nitrogen dioxide in our air. Through increased investment in new energy technologies, we can shift our society away from dirty, antiquated energy sources and towards a profitable, sustainable, and healthy future. For more information on fossil-free investment options, visit http://www.greenamerica.org/fossilfree.