Energy Business

• Throughout the western world, electricity generation is the energy business and has largely been commercialized.

This means that the generation and distribution of electricity is operated like a business by both government and private commercial entities. This approach generally creates greater operational and market efficiencies than are often produced by government operated monopolies, so the arrangement usually provides benefits to consumers.

• But when corporations generate and control our energy supply, who is most important to them … you or Wall Street?

The basic premise of commercial success is the principle of supply and demand.

In marketing a traditional product, supply can be increased to meet increased demand, and the increased efficiencies in longer production runs and bulk purchasing of raw materials/components means that manufacturing costs often decrease. If there are competitors providing equivalent products, then those cost savings will be passed onto the customers to gain market share – and to potentially increase the overall size of the market as well.

However, electricity is a commodity that everyone must have, and with population growth and increasing reliance on electrical appliances in our homes and at work, demand for electricity continues to grow.

• Unfortunately, building new energy generation is extremely expensive, technically challenging and very time consuming. The planning and approval processes alone can take years as well as huge amounts of money!

When consumer energy prices are high due to limited supply, the increased profits for the suppliers mean that it actually becomes more feasible for investment in new generation – either traditional methods or new sustainable methods. But increasing supply, especially if that increase creates excess for future demand as well as immediate requirements, actually decreases prices. This means it takes longer for the generating company to get a return on its investment, so there is potential disincentive to build more supply. This is specially true for facilities that will add to the consumption of finite resources! Likewise, there is little incentive for the energy business to actually encourage us to become more energy efficient!

Also when prices are high, consumers will naturally look to reduce their energy costs by adopting more energy conservation strategies. If enough people do this, then demand drops which reduces pressure on the limited supply, and prices can then also drop. However, natural population growth as well as our increasingly electronics based lifestyle will typically ensure a steady increase in demand anyway.

So the whole supply and demand and pricing situation, and therefore the whole energy business, is in a constant state of flux.

• Everyone should be aware that greater and greater demand on limited and expensive resources will inevitably and inexorably push energy prices higher and higher!

The supply can be and is being increased, but those technology and environmental costs will be passed onto consumers through higher prices. The situation regarding construction of new coal fired energy generation in the USA can be seen in this report.

• Your Home Solar Energy suggests, therefore, that it makes sense, therefore, to take practical steps like installing solar energy panels or wind energy to reduce your exposure to increasing energy costs, and to shifting to being more energy efficient at home.

In doing so, you’ll gain a degree of independence (possibly full independence) from the energy business, and in reducing your demand from the grid you will also contribute to extending the life of the traditional energy resources currently available.

Now check out the Environmental Benefits of solar energy!

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