The Future Will Be Distributed

Reposted from Sustainable Industries

Bigger may be better in some cases, but when it comes to the future of renewable power generation, small may be best.

That’s according to a new report from Pike Research and a panel of analysts and industry experts who convened in San Francisco this week to talk about distributed generation and microgrids as part of the Berkeley-Stanford Cleantech conference series.

“The wave of the future is dealing with energy supply problems as close to the load as possible,” Peter Asmus, a Pike Research senior analyst, told the audience at Pacific Gas and Electric’s headquarters.

That’s because, in addition to providing low-carbon power, distributed resources can also skirt complicated transmission and permitting issues that can plague large projects. Decentralized power generation can also offer increased reliability, especially if combined with energy storage, demand response and grid management technologies, panelists said.

“Central power plants cost too much and have too much risk to be good investments,” said Amory Lovins, co-founder of the Rocky Mountain Institute. “A diversified portfolio of renewables is more reliable.”

While photovoltaic panels comprise the bulk of renewable distributed generation, such resources include a wide range of technologies and scales and can be defined as any situation in which a customer is self-generating electricity, said Helen Priest, PG&E director of emerging markets.

Today, renewable distributed generation makes up about 2 percent of the global power supply. But the Pike report predicts that the worldwide system revenues from renewable distributed generation will reach almost $155 billion by 2015, up from about $51 billion in 2009. Driving those new installations will be renewable energy requirements and financial incentives such as net metering and feed-in tariffs. Leasing programs, power purchase agreements, community ownership and price drops in solar modules could also fuel a shift towards distributed generation.

Despite the bright outlook for distributed renewables, figuring out how to manage diverse power sources will likely pose a challenge for utilities, but could offer big opportunities for startups.

“The potential lack of standards and control will create a barrier to distributed generation,” said Eric Dresselhuys, chief marketing officer of smart grid startup Silver Spring Networks.

For utilities, concerns range from how to make sure distributed sources are reliable to how to charge customers for electricity.

“A hell of a lot of this comes down to billing,” Priest said. “Tracking financial flows is very complex — that’s where I’d like to see innovation.”