Are AGL Energy Ltd and Origin Energy Limited under threat from new age technologies?

Recently a report published in Business Spectator drew attention to a body of research which focuses on the potential for consumers to go “off-grid” on mass.

One paper cited was – What happens when we un-plug? The authors Szatow and Moyse suggest that as soon as 2020, technology could be far enough advanced to allow individual homes to viably produce their power independently. It appears the key to this thesis is an expectation that cost-effective battery technology will soon become a reality.

In the words of Szatow and Moyse:

“A new era of local, cheap, clean energy is dawning. It is backed by an irresistible intersection of falling energy storage costs, cheap solar energy, rising energy prices and high levels of customer dissatisfaction with energy companies.”

Accurately predicting how the future of energy supply will unfold as clean, renewable sources become price competitive is mind-bogglingly complex. While I wouldn’t be ringing the death knell of AGL Energy Ltd (ASX: AGK) and Origin Energy Limited (ASX: ORG) just yet, the potential for disruptive technologies to cause electricity generation plants to become structurally redundant is worth being aware of.

If a mass move “off-grid” was to become a reality it would also likely affect the utility providers of electricity transmission such as Spark Infrastructure Group (ASX: SKI) and SP AusNet (ASX: SPN). Szatow and Moyse’s paper did suggest there would likely still be a role for gas to the home in a future “off-grid” world, which is good news for investors in gas pipeline owner and operator APA Group (ASX: APA).

While it appears a bold call to suggest a large number of homes could become self-sufficient and affect the economics of current electricity suppliers, there are bound to be technological innovators which succeed to some degree. Two micro-caps that investors might take a closer look at are RedFlow Ltd (ASX: RFX) which is developing a high quality battery and Ceramic Fuel Cells Limited (ASX: CFU) which is commercialising technology which will allow a household to generate electricity from natural gas and renewable fuels.

Foolish takeaway

Recent data from Roy Morgan Research shows that 16% of Australian households have solar electric panels. With the cost of solar panels continuing to decline and their efficiency going up, the development of a small, cheap and effective battery coupled with households looking to cut their ever rising electricity bills, makes the case for consumers moving “off-grid” not so far-fetched.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy Ltd.

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