What is Distributed Energy and Why is it the Future of Energy?

by John Brian Shannon.

Annual Renewable Distributed Energy Generation Capacity Additions, World Markets: 2009-2015. Image by Pike Research.
Annual Renewable Distributed Energy Generation Capacity Additions, World Markets: 2009-2015. Image by Pike Research.

Simply stated, distributed energy is many small energy producers adding electrical power to a much larger electrical grid.

The most common way that distributed energy occurs is for solar panels to be mounted on the rooftops of residential or commercial buildings, along with new and sophisticated meters, to measure, record, and direct the resulting electrical flows in real time.

For decades, energy flowed in one direction only — from the utility company to your house, and directly out of your bank account to the utility company. This makes for a very nice flowchart if you’re a utility company!

Now, with so-called Net-Metering the power produced by your rooftop solar array is distributed and sold to the electrical utility in real time, through the two-way (net-metering) electrical meter and the wires that carry electrical power from the street. With Net-Metering, electricity can flow in either direction, as required, and completely automatically.

While at one time doing this was considered a technological impossibility, nowadays this is one of the easier parts of the equation.

What could be easier you say, than having a company install solar panels and a net metering system at your home and then sitting back to enjoy dramatically lower energy bills?

In some jurisdictions, that is exactly what is happening. Homeowners with sufficiently large rooftop space are producing more energy than they use per year and many are receiving $2000. cheques every January — for the difference between the electricity they consumed and what their rooftop produced. (California law says that utility companies must ‘square up’ by Feb 1st of each year for the previous year’s energy consumption/production). Some California homeowners are receiving more than $2000. annually for selling their excess electricity to the grid.

Well, that’s California for you! A tiny number of states (and countries around the world) allow net metering and require their utility companies to ‘pay up’ at the end of each year, for the net electricity purchase.

As you can imagine, utility companies have mixed responses to net metering. Some see net metering as a threat to their existing business model.

But in the case of California, utility companies were looking at multi-billion dollar investments to build behemoth (and politically unpopular) nuclear power plants, hydro-electric dams, or costly natural gas fired power generation at a time of increasingly stringent environmental regulations/oversight.

Since the foresighted regulations brought along by former California Governor Arnold Schwarzenegger and followed up nicely by present Governor Jerry Brown, California has eased through its energy crunch with power to spare.

Not only has it worked, it has added power generation capacity exactly where the power is required and when — which, in the Great Bear State, is when the Sun is high in the sky and air-conditioning units are blasting away (statewide) at max capacity.

More distributed energy is planned for California — and funny enough, this time, the power companies are cautiously leading the charge!

Worthwhile MIT video on distributed energy here.

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