— no, the country isn’t going to double its energy exports that are already four times domestic consumption — led to a long-time Australian contact pointing out that the Australian Pipelines & Gas Association was a big sponsor of the study. My contact also pointed out that APGA was getting very aggressive about hydrogen blending.
And so to a conversation I had with Michael Liebreich, founder of BNEF, former UK Olympian and regular bettor on where the next trillion dollar cleantech industry would be. We’d finally managed to connect, after our earlier attempt had been sidelined by a combination of COVID and COP27. One of the many topics of conversations was what the heck to do about gas utilities and the death spiral that they were racing toward.
What’s a utility death spiral? Let’s start with utilities being natural geographical monopolies. That means that they have a patch of ground where they don’t have to compete with anyone. Utilities like electricity, water, and gas, all of which have to build and maintain a lot of wires and pipes, are natural monopolies, meaning it doesn’t make sense for society to allow 47 different organizations to build massive amounts of wires and pipes and compete for customers.
Where does the death spiral come in? Well, when better alternatives arise to the thing the utility provides, then customers will slowly peel away across its entire geographical service area, reducing its revenue, but it will still have to provide service everywhere, hook up new customers if they want it, and maintain the entire network of linear assets. Reduced revenue, no reduction in expenses.
Natural gas utilities, like FortisBC which delivers gas in my geography, all the utilities served by APGA, and the gas utilities in the UK served by its gas transmission pipelines, are all facing this death spiral. The