Investor Network Says Utilities Should Face Climate Change Stress Tests

Electric utilities should undergo stress tests to show how their business models are in line with limiting global warming, a global network of investors said on Friday.

In a guide published on Friday, a network of more than 270 institutional investors with assets worth more than 20 trillion euros ($23 trillion) said they were concerned that utilities' strategies are not consistent with a global target to limit the planet's average temperature rise, compared with pre-industrial times, to below 2 degrees Celsius (3.6 Fahrenheit).

With renewable energy generation expected to increase, and overall demand low due to efficiency improvements and modest economic growth, traditional centralized power generation is being pushed out of the merit order.  The report said such plants would ultimately need to be shut down or retained to provide emergency backup in return for state payments.

New entrants such as Google are emerging as competitors with power management solutions. So electric utilities need to design new business plans and focus on cleaner energy, networks, new services and keeping customers, it said.

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