Blockbuster recently announced that it intends to close 40% of its stores over the next two years. As professional futurist and someone who has been warning of this inevitability for the past few years, the news came as no great surprise. (I suspect it didn’t to a number of other forward-looking individuals as well.) All a person needed to do was track the trends in data storage, manufacturing, Internet Bandwidth and consumer behavior to understand Blockbuster’s future plight.
The first and second factors (data storage and manufacturing advances) helped drop the cost of DVD production and made it more feasible for companies such as Redbox to offer DVD’s for $1 at any number of retail outlets. The third trend (increasing bandwidth) is driving NetFlix’s ability to offer more movies over the Internet, and the fourth trend (consumer behavior) continues to show that younger people are more interested in gaming—and less so in videos.
My point here is not to gloat or engage in “hindcasting,” rather I want to use the Blockbuster story as a warning to another industry—the utility industry. For years, industry experts have held fast in their belief that coal will remain the leading source of electricity production for the next 20 to 30 years.
I disagree. Coal will undoubtedly remain the predominant source for electricity for some time (perhaps 10 years) but a number of trends are pointing to a much different future. For example, just today, Technology Review has an informative article on Nanosolar—the company claims it is now capable of producing electricity for 5-6 cents per kilowatt hour. This is already price competitive with coal!
Second and third, the efficiency of solar cells is increasing and manufacturing cost is decreasing. These trends suggest solar will eventually be cheaper than coal.
Finally, consumer and political behavior toward coal is changing quickly. Concerns over climate change are legitimate and these concerns will likely manifest themselves in some sort of carbon pricing scheme on coal. Moreover, consumers, if given the choice of choosing between solar or coal, will likely demand solar from their local utility providers.
All of these trends point to a fate similar to that of Blockbuster. In the year 2019, I predict a headline will read: “Worldwide Construction of New Solar Farms Outpaces Coal.” The subtitle will be: “Older Coal Plants are Shuttering at an Accelerating Rate.”
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