Tesla won't kill off utility stocks: Aus Ethical

By Taylee Lewis
 — 1 minute read

The rise of 'distributed generation' in the energy sector will not displace traditional utility companies, argues Australian Ethical.

Rooftop solar and battery storage (such as Tesla's Powerwall) have received significant media coverage recently, says Australian Ethical equities portfolio manager Nathan Lim.

The popular 'narrative' is that so-called distributed generation will cause a massive 'grid defection' by consumers that will lead to a loss of revenue by the utilities, Mr Lim said.


"[The argument is that ] rising self-generation from increasing solar rooftop penetration and load shifting via home batteries will lead to a utility death spiral from an ever-shrinking customer pool," he said.

"These disruptive impacts are indeed occurring, but we believe it is too early and also unlikely to say traditional utilities are dead men walking," Mr Lim said.

Utilities have numerous strengths such as "huge balance sheets", ready access to capital, existing customer relationships, technical expertise and existing regulatory and political relationships, he said.

"With all these strengths, there are already examples where utilities are adapting to their changed circumstances," Mr Lim said.

New Jersey Resources, NRG Energy, Southern California Edison and Pinnacle West are some of the North American companies that appeal to Australian Ethical, he said.

"This year in Australia, AGL has launched a solar rooftop and battery storage product. Customers agree to sign-up for either a seven or 12-year contract thus ensuring AGL retains these customers as the industry environment evolves," Mr Lim said.

The must-attend event for financial advisers is back in 2022: the ESG Summit, coming to Sydney and Melbourne in February. Walk away with vital knowledge on a number of key ESG areas to help you make informed ESG strategy decisions and to better communicate and integrate the growing ESG space to clients. Visit the website to secure your place.


Tesla won't kill off utility stocks: Aus Ethical
investordaily image
ID logo


related articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.