Utilities traditionally have met renewable portfolio standards with power purchases from IPPs. But new approaches are allowing utilities to build their rate bases with investments in solar...
The future looks bright for distributed PV.
of small, utility-owned generation plants spread throughout the grid and particularly near load centers rarely enters the discussion. When it does, usually it gets the stiff arm.
Reticence is understandable. Central generation affords economies of scale, proven and familiar technology and a business model that utilities understand. Distributed generation is perceived as a third-party-owned asset that cuts into the rate base and adds a complicated and unprofitable layer to the system. But as emissions restrictions tighten, renewables standards increase and the cost and efficiency of PV improve, then the calculus shifts.
“In other parts of the world, ‘distributed’ is actually the inherent nature of energy production and distribution in general, especially anywhere that incurs any type of social unrest or has difficulty maintaining centralized infrastructure,” says Anne-Marie Borbely-Bartis, co-author of the book, Distributed Generation: Power Paradigm for the New Millennium . “In places like Afghanistan, parts of Central and South America and Africa, if you build a centralized system, it’s simply going to be torn down again during the next social upheaval.”
The same attributes that make distributed generation a third-world solution—speed, flexibility and security—have real appeal in a first-world preoccupied with load growth, carbon constraints and cyber-attacks. But realizing those benefits in a mature grid isn’t a simple matter of plug-and-play.
The difficulty with a robust national distributed generation system is the need for a grid that can accept two-way control of the electrons themselves. That requires fully automated sub-stations at the transmission and at the distribution level. The cost of automating all of the sub-stations across the country is in the hundreds of billions of dollars.
That process of automation already is in progress—albeit in a piecemeal and sometimes halting fashion—as North America gradually builds the smart grid. The perhaps unintended result of the capital and technological investment utilities now are making to enable smart meters, demand response and greater efficiency in general is a framework that also makes viable distributed generation.
“Some enlightened utilities are looking at this because other options are limited. The traditional approach of, ‘lets go build another big coal plant and string some wires up,’ is less of an option right now,” says David Sweet, executive director of the World Alliance for Decentralized Energy [no relation to the IEEE’s Bill Sweet]. “There are a lot reasons —climate change, renewable portfolio requirements, the need to solve some of these intermittency issues. The smart grid isn’t just a bunch of switches and meters, it’s also how you make power available where and when people need it.”
For example, an oft-cited benefit of distributed solar is its relative proximity to the end user, and the efficiencies that can result from that close proximity. A lot of power bleeds out of the system between a central power plant and its customers, but distributed power is used locally, dramatically reducing line loss. Factor in solar’s afternoon peaking profile, and its value in load management is amplified.
Such complementary relationships are real considerations, but they’re not the kinds of things that tend to drive investor-owned utilities to change their generation profile.