Destroying the Middle Man

One of the biggest burden's on consumer pricing is the overhead added by the middle man. In construction projects it is not unusual for any material to go through four or five different hands and have a fifteen to twenty percent markup leveraged on it by each set of hands. One of the benefits of decentralised technologies is the ability to remove the cost of the middle man.

From a Wired article titled; The Dotcom King & the Rooftop Solar Revolution" on the topic of solar power;

But PV's price differential isn't quite as bad as it seems, thanks to one huge advantage: Solar panels are small enough to fit on rooftops, which is darn close to the electricity user. By bringing energy production and consumption together - something coal, nukes, and gas can't do - solar has the potential to cut out the middleman, along with his markup. That is, instead of competing with wholesale power from distant power plants, rooftop solar competes with retail kilowatt-hours delivered by the local electric company, which often are marked up as much as 1,000 percent over their original generating cost.

The internet has removed the middle man from communications and content. Now content providers publish directly to their audiences without having to deal with the overhead, cost, constriction, or mass-market economics of the middle man. This is something that the music and film industry has not yet understood.

A decentralised energy technology will come through and challenge the existing centralised energy market, whether it is photo-voltaic cells or not is a different matter.
Permalink, Destroying the Middle Man, Nov 2005, cam
ranomatic: I read this earlier today: I must say, as an employee of an electric utility company, I start to feel like a dinosaur.  It could be that point-of-use photovoltaic cells will be our comet.

ranomatic: The Numbers: Something is wrong with the numbers in the source article.

Even in sunny places like California, the pre-rebate cost of PV-generated electricity is roughly 21 cents per kilowatt-hour. Coal (from 4.74 cents per kilowatt-hour), natural gas (5.15 cents), nukes (5.92 cents), even windmills (5.15 cents) offer cheaper ways to keep the lights on.

Assuming these are production costs, the thousand percent markup rate (also quoted in the article) would push retail electricity to over fifty cents per kilowatt-hour.  My company retails electricity below eight cents.  We are tightly regulated against excessive mark-ups.  We might be a dinosaur, but we are well trained.  At that kind of price difference, extinction could be a while.

On the other hand, Gross\' Sunflower design is expected to cost about one third of the current pure PV approach, with another twenty percent reduction as the manufacturing process is improved.  This should put it below six cents per kwh, after incentives.  Hello again, extinction.
cam: I thought his 1000% figure: ... pie in the sky too, it is a rare industrial player (monopoly?) that can get away with those kind of markups. That is also why I mentioned the one hundred percent markup on material being normal, as opposed to one thousand.

cam
ranomatic: 100%: That seems about right as long as he is talking about gross rather than net.  Generation, transmission, and distribution all get marked up and these days those may well be different companies.

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