Locally-produced power disrupts utilities' business as usual

by David Lagerman

A while back I wrote about a local farming family and their unsuccessful efforts to reach a reasonable rate agreement with the utility to buy the surplus power from their big wind turbine. An aspect of this episode is that the utility was not just being mean or indifferent: No. There is a deepseated problem developing with this kind of thing, and the power and utilities industries are worried about it.

We are seeing, and are going to see more of, “distributed generation”— various ways of producing power locally. That can be by wind or solar, or a co-generation scheme in which a school or a shopping mall, say, makes its own heat and power with fuel cells or some other way. So what’s the problem? It is this: Our present system consists of very large, remote power plants, with the power distributed over long distances. (It was not always so. In the early years, Plymouth had its own generating plant right here in town.) The utility, the generation companies and the power transmission companies have a huge investment in all this infrastructure, including its maintenance costs. But if more power will be made “on site” or nearby, the big industries are going to be selling less power, yet stuck with all those costs. We all depend on this infrastructure to guarantee reliable power, but the industry is not structured to cope with this changing landscape. Hence, the power establishments are not thrilled with locally made and used power, whatever they may say for public consumption.

Is this new world of power thing for real? If so, how soon is this going to come along in a big way? Tony Seba of Stanford University is working on a forthcoming book in which he flatly predicts that by 2030 solar will eclipse fossil fuels. He is convinced that gasoline cars will be obsolete by that time. “Not on the way out. Obsolete.” He thinks the rapidly falling price of solar electric panels and the continuing improvements in the power density and price of batteries are going to be pivotal in this revolution, since energy storage is a key to all this. This will start around 2018 to 2020, Seba says, a crossover point in our energy history.

I was bit startled to hear these predictions, because it has been a long slog to get as far as we have with green energy. But, I think he may turn out to have been right, more or less. Here’s why:

There is a lot of incentive, worldwide, to continue to forge forward on this stuff. And when there is a lot of incentive, amazing and preposterous things can happen. Consider: The heart of Edison’s first light bulb was a filament made of carbonized thread. Pretty primitive sounding, eh? Eventually it became evident that the way to go was to make filaments from tungsten wire. That sounds reasonable enough. But how do you draw out tungsten, one of the most obstinate, hard, tough, brittle metals there is, into a teeny, fine wire and shape it into little spirals? The drive to figure it out, that’s how. Those smart, incentivized guys in their labs and workshops discovered how to do it! Not only that, they figured out a number of quite DIFFERENT ways to do it If we really are looking at a completely different energy world on our doorstep, we will need to evolve the economics and develop the new business models to make all this work. If the present industry just raised the prices of distributed electricity to balance their books, that would make their power even less competitive. That’s called a “death spiral.”

Tony Seba thinks that innovative companies will arise to take advantage of the changing landscape. Progressive policy will be important, and the present vested interests in coal, oil, natural gas, and conventional power generally can spread misinformation and try to obstruct change, but eventually it will happen anyway. It didn’t take that long for motorcars to displace horses and buggies once the advantages of the newfangled machines were clear. Once renewable power, likely including power made at your house, gets to the same point, we’re off and running.

We have enough solar electric (PhotoVoltaic) panels at our house right now to make 125% of the power we need on an annual basis. We got some incentives to make this possible, but what will it be like when this is an obvious thing for a family to do in financial terms alone?

“When it was time to railroad, people started laying tracks.”

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