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Cheap solar power is sending electrical grids into a death spiral

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By illuminem briefings

· 2 min read


illuminem summarizes for you the essential news of the day. Read the full piece on The Economist or enjoy below:

🗞️ Driving the news: The rapid adoption of affordable solar power in countries like Pakistan and South Africa is leading to a decline in traditional utility revenues, as consumers increasingly generate their own electricity
• This trend threatens the financial stability of national grids, creating a potential "death spiral" where decreasing grid usage leads to higher costs for remaining users

🔭 The context: In Pakistan, the influx of inexpensive Chinese solar panels (see sustainability performance of companies like JinkoSolar Holding Company Limited) has enabled businesses and households to reduce their reliance on the state-run power grid
• Similarly, in South Africa, persistent power outages and rising electricity prices have driven consumers toward distributed solar energy solutions, further diminishing utility revenues

🌍 Why it matters for the planet: While the shift to solar energy contributes to global renewable energy goals, it poses challenges for existing power infrastructures
• The financial strain on utilities may hinder their ability to maintain and upgrade grid systems, potentially affecting energy reliability and the broader transition to sustainable energy sources

⏭️ What's next: Utilities must adapt by integrating distributed generation into their business models and exploring competitive electricity trading
• Policy reforms are essential to balance the growth of renewable energy with the financial health of traditional power providers, ensuring a stable and sustainable energy transition

💬 One quote: "The solar industry is doing to the power sector what TikTok and YouTube (see sustainability performance of Google) have done to the media industry." — Waqas Moosa, Chairman of the Pakistan Solar Association

📈 One stat: Pakistan imported approximately 17-18 GW of solar panels in 2024, significantly increasing its solar capacity and reducing dependence on the national grid

See here detailed sustainability performance of YouTube's owner - Google

Click for more news covering the latest on renewable energy and power grid

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