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PR Newswire
29-05-2014, 08:16 PM
Barclays declares solar threat
JOHN conROY MAY 29, 2014 6:00PM
Barclays has downgraded the entire US electricity sector's corporate bond market to 'underweight', saying the industry is not prepared for the long-term threat posed by solar, Barron's reports.
According to the financial publication, Barclay's credit risk team said solar plus storage could "reconfigure the organisation and regulation of the electric power business over the coming decade".
Barclays wrote:
Electric utilities… are seen by many investors as a sturdy and defensive subset of the investment grade universe. Over the next few years, however, we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo. Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii. Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after.
We see near-term risks to credit from regulators and utilities falling behind the solar plus storage adoption curve and long-term risks from a comprehensive re-imagining of the role utilities play in providing electric power.
Barron's said it was a "noteworthy downgrade" as electric utilities make up nearly 7.5% of Barclays’ US Corporate Index by market value.
JOHN conROY MAY 29, 2014 6:00PM
Barclays has downgraded the entire US electricity sector's corporate bond market to 'underweight', saying the industry is not prepared for the long-term threat posed by solar, Barron's reports.
According to the financial publication, Barclay's credit risk team said solar plus storage could "reconfigure the organisation and regulation of the electric power business over the coming decade".
Barclays wrote:
Electric utilities… are seen by many investors as a sturdy and defensive subset of the investment grade universe. Over the next few years, however, we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo. Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii. Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after.
We see near-term risks to credit from regulators and utilities falling behind the solar plus storage adoption curve and long-term risks from a comprehensive re-imagining of the role utilities play in providing electric power.
Barron's said it was a "noteworthy downgrade" as electric utilities make up nearly 7.5% of Barclays’ US Corporate Index by market value.