Ending outdated attitudes to decentralized energy

Date: 5 February 2014

By Steve Hodgson, Editor, COSPP:
One of the main barriers to the more widespread adoption of decentralized energy in the US has been a set of outdated attitudes held within not just the local utilities but also their regulators – so says a new report from the Center for the New Energy Economy (CNEE) at Colorado State University.

Indeed the former governor of Colorado, Bill Ritter, now director of the Center, quotes one utility executive suggesting that, while today’s new [decentralized] energy technologies are 10 years ahead of utilities in the US, the utilities are a decade ahead of regulations.

Utilities on both sides of the Atlantic have viewed the emergence and connection to their distribution systems of small and medium-sized decentralized power plants with suspicion, at best, over the last couple of decades. For obvious reasons – on-site power generation cuts utility income streams.

However, the more imaginative and far-seeing utilities also saw business opportunities – if a factory or leisure centre is going to build a CHP plant to generate its own power on-site, why can’t the incumbent utility finance and build that plant, and sell its power output through some sort of power purchase agreement? In Europe, a good deal of the larger CHP plants built over the last two decades followed this model.

But, even as a utility’s CHP subsidiary was building on-site power plants, the same utility’s distribution system people were often being less than helpful in connecting third party, decentralized plants to its network. Untold hours were spent by utilities, regulators and decentralized energy system developers in trying to nail down fair connection agreements.

The connection problem is far from solved, but there has been considerable attitude movement within utilities, as the realisation that decentralized generation – from PV systems generating a few hundred watts to industrial CHP schemes with capacities of a few hundred megawatts – is here to stay. Elisa Wood suggests in the current issue of COSPP that US utilities are now sending messages of friendship to the distributed generation industry, secure in the knowledge that consumers need both healthy traditional-style utilities working alongside a range of leaner, locally-based, decentralized generators.

Utilities are under pressure to change from so many directions – to modernize grids, to reduce carbon emissions, to embrace renewables and to invest in energy efficiency for their customers – that the acceptance of decentralized generation is just part of much wider reinvention. As the report concludes, US federal agencies need to work with both utilities and their regulators to update old regulations that get in the way of clean energy technologies.