Stephen Lacey’s post at Greentech Media raises an important question: Will American utilities avoid some of the problems that are now plaguing European utilities?

Just for background, here’s the broad situation in European countries that are heavily supporting renewable energy. The inherent volatility and high amounts of renewable energy deployments create situations in which there are surges in renewable energy supply. This creates odd situations where the market is suddenly flooded with power, like during a wind storm, sending margins into the negative and impacting other power generation technologies like coal and natural gas.

Additionally in European countries like Germany, laws require that clean energy be prioritized in power markets. Adding to this problem is that subsidies have made power expensive for consumers, which has incentivized both businesses and consumers to move off the gird, something that has caused Germany to consider self generating taxes on solar.  Meanwhile the costs of maintaining the grid remain constant or even rise. Multiple European utilities are facing terrible earnings reports.

Now to be fair, the situation is massively different in the U.S., where subsidies are disappearing for renewables. But the issue of defecting customers, better energy storage options for off the grid options, and the increasingly competitive pricing of renewable energy will, I believe, disrupt the utility industry. Utilities may inevitably have to embrace a future as service oriented companies that focus on long haul renewable energy transmission, renewable development, and consumer oriented programs like demand response that help balance the grid and address the challenges of energy intermittency.

As for Europe, the core question is how long can utilities lose money before the government steps in to stabilize the situation? Because the rub is that one way or the other, consumers need functioning and stable utilities. Even if they want more energy options, clean energy, and the option of leaving the grid altogether.