Distributed Generation

Distributed Solar Generation

As the cost of production for thin film solar panels has decreased, the possibility of distributed generation is coming closer to reality.  Distributed generation has the possibility to empower urban centers without renewable resources to generate power.  As a recent article about rooftop solar generation describes (http://seekingalpha.com/article/175616-rooftop-solar-generation-ready-for-prime-time?source=yahoo), distributed generation may have far reaching effects for not only the point of energy production but also on the energy transmission regarding the development of power lines to access renewable energy resources such as wind farms and solar plants.  The transmission line question is a direct result of California’s goal of obtaining a third of electricity from renewable sources to connect the renewable assets to the coastal urban centers.

Residential projects around the country are attempting to utilize distributed generation, and companies exist to deliver such at-home generation such as Solar City (www.solarcity.com).  In terms of residential installations, vendors speak in terms of money saved in their electricity bills.  This still leaves questions open for the homeowner.  What will happen to the property value of the home?  Will the solar generation be viewed as an asset or an eye sore similar to interpretations of wind farms?  These questions come down to the value of total cost of ownership.  When all the maintenance, smart meters, etc., are included for a home for distributed generation, will the individual consumer embrace distributed generation as the US government supports the solar industry with incentives?

On the other end of spectrum, utilities will be expected to support the green initiative of distributed generation when they do not necessarily have an incentive do so because of the impact on revenue.  If the distributed generation were to take off, does it mean that utilities could take base power generators such as coal plants offline?  With the variability in renewable power production, the utilities may not be able to efficiently scale back fossil fuel generation because of its reliability.  A utility has an obligation to provide its customers with reliable power all the time.  This would mean that a utility is buying power from customers and then also paying to supply power in a more traditional method of fossil fuels.  Uncertainty also exists in the projected revenue of the utility from the reduced revenue from distributed generators.

With the uncertainty around the business model, distributed solar generation may not be primed for prime time.  The utilities will need to sort out how they can capture revenue to fond operations.  For homeowners, will solar panels be an investment that will improve property value and truly prove beneficial in the long run?  Without government mandates, will consumers drive the demand for sustainable energy?

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2 Comments

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2 responses to “Distributed Generation

  1. bhgully

    Nice synopsis, I really do think we will see distribution and transmission take a central role as energy issues develop in the years to come.

  2. blackpressinc

    I have serious doubts about the effectiveness of distributed generation for two specific reasons that may be addressed in the future.

    The First reason is capital cost versus effectiveness. If a home owner wanted to install 10kW of electric power on their house it would currently cost them approximately $25,000 without the cost of installation and wiring. This is significantly out of the price range of most normal consumers. And subsidies only help if a few of the tax payers paying for subsidies are the people are utilizing this new technology.

    My point is, if you want to power 1,000,000 homes then it makes much more sense to negotiate in large quantities, and if you want to lower costs it makes sense to lease or rent panels. This is essentially the make up of a large corporation which I believe may in the future be the solution to distributive electric generation. But, a corporation with $25,000,000,000 to spend on power generation would most likely spend it’s money building low risk coal power plants in today’s current market with energy prices so low.

    The second point being. For a consumer who was looking to upgrade their home for the amount of $25,000 a number of other options can be considered.

    Upgrading your home installation
    Installing in line water heaters
    Installing skylights for lighting
    Installing solar water heaters (esp. in Texas)
    Upgrading to new, more energy efficient appliances.

    All of these options can provide a significant reduction in your homes energy consumption while we wait for the cost of alternative energies to reduce.

    http://www.affordable-solar.com/solar.panels.htm

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