Investigating the Effect of Renewable Distributed Generation and Price Elasticity of Demand on Electric Utilities' Death Spiral

As the deployment of distributed renewable generation accelerates, electric utilities face a threat called “Utilities' Death Spiral”, which means if they attempt to recover their lost revenue with conventional tools such as raising electricity tariffs, a vicious cycle of increasing prices, falling sales and eventual bankruptcy will trap them. In this paper, the severity of this threat is investigated by analyzing the effect of rooftop solar PVs penetration on utilities' income and business model using “System Dynamics” as simulation method. We would also investigate the effect of population growth and price elasticity of demand on death spiral. Simulation results show that utilities may lose large amounts of customers and revenue if they don't adapt to the new circumstances.