Rooftop solar and battery storage (such as Tesla's Powerwall) have received significant media coverage recently, says Australian Ethical equities portfolio manager Nathan Lim.
The popular 'narrative' is that so-called distributed generation will cause a massive 'grid defection' by consumers that will lead to a loss of revenue by the utilities, Mr Lim said.
"[The argument is that ] rising self-generation from increasing solar rooftop penetration and load shifting via home batteries will lead to a utility death spiral from an ever-shrinking customer pool," he said.
"These disruptive impacts are indeed occurring, but we believe it is too early and also unlikely to say traditional utilities are dead men walking," Mr Lim said.
Utilities have numerous strengths such as "huge balance sheets", ready access to capital, existing customer relationships, technical expertise and existing regulatory and political relationships, he said.
"With all these strengths, there are already examples where utilities are adapting to their changed circumstances," Mr Lim said.
New Jersey Resources, NRG Energy, Southern California Edison and Pinnacle West are some of the North American companies that appeal to Australian Ethical, he said.
"This year in Australia, AGL has launched a solar rooftop and battery storage product. Customers agree to sign-up for either a seven or 12-year contract thus ensuring AGL retains these customers as the industry environment evolves," Mr Lim said.
