There was a time when talking up solar was the realm of TreeHuggers and idealists.
Not any more.
In a potentially significant development, Barron's is reporting that Barclays has downgraded the entire electric sector of the US high-grade bond market, largely over evidence that solar and other disruptive energy technologies are proving to be increasingly viable competition.
They are not the first people to say this. The former Duke Energy CEO says he'd want to work in solar if he was starting out today. Some utilities are making decisive moves away from fossil fuels, and financial giants ranging from Norway's sovereign wealth fund to the Bank of England are hearing murmerings about a potential "carbon bubble".
As Barclay's credit strategy team emphasizes, this is less about solar alone, and more about a confluence of technologies—most notably solar and battery storage combined—which have the potential to fundamentally reshape how energy is produced, distributed and used (or not used):
In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power. We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade. We see near-term risks to credit from regulators and utilities falling behind the solar + storage adoption curve and long-term risks from a comprehensive re-imagining of the role utilities play in providing electric power.
In a world where some of the utilities' most profitable corporate customers—from Apple to Ikea to Mars—are investing massively in their own electricity generation capacity (and imposing carbon prices on themselves); where smart home technology promises to cut bills, even for those folks who can't be bothered in programming their thermostat; where LEDs are becoming so cheap they are a no-brainer, even for the anti-environmental crowd; where solar prices keep dropping dramatically and battery-storage innovation is just ramping up, there's good reason for investors to consider alternative options to traditionally "safe" investment in utilities.
May we live in interesting times.