Fixing the Power Grid: Distributed Generation

Maintaining the integrity of the power grid is one of those topics that make your eyes glaze over — until the power grid collapses and the lights go out, as it did for much of Virginia after Hurricane Isabel in 2003, and then it becomes all-consuming.

But the power grid gets the juices flowing every day at Virginia Tech’s Consortium for Energy Restructuring. Many of the power grid’s vulnerabilities could be alleviated through the use of Distributed Generation (DG), argues Richard Hirsh, the Virginia Tech technology historian who leads the interdisciplinary consortium. Writes Hirsh in the latest edition of Virginia Tech Research:

It makes sense to begin moving toward a decentralized system that contains small-scale, modular, and diverse types of equipment that produce power close to cities or even within buildings that use a lot of electricity. Employing diesel generators, or better yet — from an environmental point of view — fuel cells, micro turbines, and photovoltaic cells, such a system would reduce the strain on the existing grid by providing power to users without depending on transmission lines at all.

The economic viability of Distributed Generation has improved in recent years thanks to technological advances such as metering enhancements, fuel conversion technology, thermal engineering, and automation and control devices.

Adoption of a DG strategy is impeded in many states, however, by monopoly rules and discriminatory rate structures protecting established electric utilities. The Virginia Tech article was not clear what barriers might exist in Virginia — other than the fact that electric rates here are lower than the national average, which is hard to complain about — but a worthy goal of the task force developing recommendations for a state energy policy would be to investigate what might be done to encourage Distributed Generation in Virginia.

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39 responses to “Fixing the Power Grid: Distributed Generation”

  1. Anonymous Avatar

    Distributed energy? Well, that’s interesting. But what about the deregulation of the electric utility industry? Now there’s a subject for you (if not for the ages).

    The General Assembly–with a few exceptions–pretty much rolled over for the electric utilities in adopting a “deregulation scheme” that was to provide “competition and customer choice” (Ha!). Well, there are no tother competitors out there as of this writing nor are there likely to be. The General Assembly, in its wisdom (or the lack therof) provided for a “wires charge” which you present utility company will be entitled to receive from you no matter what other utility you select to frunish your electricity. This means that no other utility can give you competitive pricing.

    The legislature has gone and deregulated a monopoly…we and our children going to pay through the nose for that.

  2. Anonymous Avatar

    One thing more…regarding the “power grid”. The transmission grid was designed and developed over the years to transmit power from the utility’s power generation plant to its certificated and regulated territory. It has not been designed or constructed to deal with a competitive market. As aresult there are some very real constraints on the development of this market–that is, there aren’t enough wires to handle it.

    There is going to be a very expensive cost involved to construct the transmission lines necessary to handle this system…if it ever arrives and some say the power companies don’t wnat that–they just wanted to be deregulated, period. This “free market” ain’t gonna be “free”. Trust me on that.

  3. Ray Hyde Avatar
    Ray Hyde

    When I was studying Environmental Economics and Energy Management in Grad School, one of the few bright spots with real potential for savings was Co-generation, a lesser form of community energy.

    Through cogeneration you can use the waste heat from power generation for other purposes such as hot water, heating, and cooling. The technology existed than (and now) to sell the excess power to the grid. There are some serious safety issues, but it can be and is done.

    In some areas the power company is required to buy such power at their highest marginal rate. From a practical standpoint this means that if you have solar panels, they run your meter backwards all day when you are not using much power, and then you buy it back in the evening and morning.

    But like hybrids, he technology has been around for decades. Some people will prefer to buy power than get involved in a bunch of engineering and maintenance headaches.

    I wouldn’t hold my breath.

  4. How to get the ball rolling-

    Solar School initiative.

    New Jersey’s doing it, Ohio’s doing it, Florida’s doing it.


    This makes the schools earn back taxpayer money/energy costs during the summer. It makes schools into better community emergnecy shelters. It helps make solar/DG projects more visible.

    Its for the children, dammit!

  5. Ray Hyde Avatar
    Ray Hyde

    Scott, we went around on this before. The reason it isn’t done is that it costs more than you get back.

    We can build all the money losing solar demonstration projects we like, and all they’ll demonstrate is how to lose money. There are plenty of solar applications that DO make economic sense, but the NJ plan isn’t one of them.

    Boondoggles such as this are a good example of why NJ has one of the highest tax structures.

  6. You have not proven ANYTHING, Ray.

    NJ is going to make VA eat dust under the current circumstances.

    We need to plan for the FUTURE, not live in the past.

    “Every year, each square kilometre of desert receives solar energy
    equivalent to 1.5 million barrels of oil. Multiplying by the area of deserts
    worldwide, this is nearly a thousand times the entire current energy
    consumption of the world.”……

    “The cost of collecting solar thermal energy equivalent to one barrel of oil
    is about US$50 right now (already less than the current world price of oil)
    and is likely to come down to around US$20 in future. Contrary to what is
    commonly supposed, it is entirely feasible and cost-effective to transmit
    solar electricity over long distances.”

  7. Ray Hyde Avatar
    Ray Hyde

    Are we talking solar thermal energy here or solar electric? Isn’t the NJ project solar electric?

  8. Both.

    The National Association of College & University Business Officers (NACUBO) has just issued a book called “The Business Case for Renewable Energy: A Guide for Colleges & Universities.” There’s lots of how-to info in the book. Many colleges are implementing 200 KW, 400 KW, even 1 MW renewable energy projects. With creative financing, state incentives, and deals with utilities, they are making money on these projects.

  9. Ray Hyde Avatar
    Ray Hyde

    Creative Financing and Incentives sounds like another way to say the project doesn’t make money. The school might but the state doesn’t, over all.

    In 2003, a residential solar system costs about $8,000-$12,000 per kWp installed. A typical home uses on the order of 10kwhrs per year, and a 1kWp system won’t consistently deliver 1kW.

    Realistically you are looking at spending $60,000 or more in initial cost for a home built and maintained system that might meet half your needs or less.

    That means the payback is over 50 years, and the solar cells won’t even last that long. Somebody is going to have to wash and care for those things for fifty years, too.

    That doesn’t mean it is not worth doing: between now and 50 years from now, no doubt the economics will change in your favor, just as it already has with my Hybrid vehicle.

    Solar thermal is a whole different ballgame, but it isn’t free either, far from it.

    If you sell a product with inflated claims or unrealistic expectations, then you will disappoint the market and set your goals back more than forward.

  10. We can go back and forth about the feasability all day until we have proof of concept. I still question your numbers against. It’s like global warming- what will it take to make you a believer?

    As I have expressed, there are many other positive factors to consider- the cost of fossil fuel pollution offset by solar, the reliability of solar vs. the grid, advances in nano and fuel cell solar-enhancing technology, etc.

    As others have expressed, the real barrier to distributed power are the Dominion Power lobbyists.

  11. What’s it going to take to get Dominion to throw the switch?

    They are planning for it when they are not planning against it, you know..

    Duke Energy Corporation, et al.; Electric Rate and Corporate Filings
    5, unexecuted service agreements with Igenco wholesale Power LLC. Dominion
    Virginia Power requests an effective Date June 15, 2004. …
    documents/fr/04/jy/26/fr26jy04-47.html – Supplemental Result – Similar pages

    PDF] Federal Register /Vol. 69, No. 142/Monday, July 26, 2004/Notices
    File Format: PDF/Adobe Acrobat
    with Igenco wholesale Power LLC. Dominion Virginia Power requests an.
    effective date
    June 15, 2004. Dominion Virginia Power states that … – Supplemental Result – Similar

  12. Jim Patrick Avatar
    Jim Patrick

    Jim – Isn’t it great when folks ignore the links you give and just jump in with their opinions?

    Anonymous: “there aren’t enough wires to handle it
    Link: “… DG technologies would mean fewer power lines and large plants”

    Hyde: “…prefer to buy power than get involved in a bunch of engineering and maintenance headaches.
    Link: “… “plug and play” grid-interface connectors.”

    Hyde: the “technology has been around for decades.”
    Anybody claiming electronics technology isn’t changing is …. oh nevermind. LOL

    No wonder “the [Virginia Tech] group realizes that non-technical factors seem to be greater impediments to the acceptance of the small-scale generation technologies.” It’d be great if a couple of commenters even skimmed over the material, rather than sling their preconceptions around.

  13. Ray Hyde Avatar
    Ray Hyde

    Jim, and Scott, I’m on your side on this. Distributed power has great potential. But it is still just potential (pardon the pun).

    It is not yet cost effective for most people. Part of the reason is non-technical, the costs will come down when enough people adopt it, and people will adopt it when the costs come down.

    Burbank Water and Power – Solar Photovoltaic Power.htm has a good discussion of solar from the poer companies perspective. They will buy your excess power and pay you a partial rebate for installing it. Their primary concern is that you match the phase when you hook up, and they need to know what the distributed power sources are so they don’t grab a wire they have turned off, but which is powered from someplace else. Even with plug and play connectors, someone is going to have to be notified, and someone is going to have to inspect.

    Even with the rebate, Burbank Power figures your payback is greater than 20 years. You can hardly expect them to put themselves out of business, but they are not entirely opposed either, there are just a lot of issues to be worked out. Competitive Enterprise Institute also has a good discussion, and those guys are pro-everything.

    As for myself, I have to invest my money in something that will pay back in five years, or else I’m just wasting money. And, of course, if you just don’t have the capital, there is no choice to be made. But long before I get around to PV cells I probably should invest in insulation and storm windows. Even plug and play stuff has to be maintained. Suppose you have a bunch of PV panels on your roof. Then the roof leaks. Sounds like a maintenance nightmare, even if it doesn’t involve the panels themselves.

    Consider the solar pond. Here you just make a pool and supersaturate it with salt. Then float skim of fresh water over the top. The fresh water won’t mix with the salt because of the density gradient, and it prevents the heat from escaping through convection. In a few days the salt water portion will be boiling. Ore-Ida uses this sytem to heat the oil they use for making french fries. This is simple and cheap, but just try to get a permit to build one. And the technology has been around for decades.

    I’m fascinated by pie in the sky stuff. I had a set of plans for a hybrid car conversion thirty years ago, but that was a pie I never got around to baking myself, instead I waited for Toyota to bake it for me. So, when Dominion power shows up with a truck and wants to place some panels on my lot, I’ll be happy to rent them the space.

  14. That’s your choice as a private consumer (or is it?, look at the way the laws are written for off the grid applications, especially insurance and building laws), but as a taxpayer and citizen, I demand that my government look long term and start applying technologies that a) save money in the long term, b) offer better service than the current ANTIQUE grid, especially in emergencies, c) are cleaner, safer, and less polluting.

    And in the case of Solar Schools, d) teach children about alternatives.

    Your arguments are based on the same old view of solar as 1970’s technology. Believe me, it has progressed, but our laws and government have not.

    I have already told about some other states, but look at what other countries are doing- U.K., China, Portugal. We are falling behind, and its attitudes like yours that are causing it.

  15. And Ray, recent news articles bring home the fact that the status quo is not working- not the grid, not nuclear, not coal:

  16. Jim Bacon Avatar
    Jim Bacon

    Ray, there is a pie-in-the-sky element to the Distributed Grid concept — at this point in time. But technologies are steadily improving, making solar more competitive in a wider array of applications.

    I oppose subsidies. Every energy technology should compete on its economic merits. However, I also don’t believe in excluding certain technologies because they can’t easily connect to the grid.

    Even if centrally supplied power is cheaper, some people would be willing to pay a premium to produce energy locally and insulate themselves from disruptions to the grid. I paid $2,000 for an electric generator that spends 99.5 percent of its time sitting unused in my garage. But I was awfully glad to have it when Hurricane Isabel cut off my neighborhood’s electric supply for 11 days. If I thought I could generate my own electricity with solar cells after a cataclysmic event, I would pay a premium for that assurance. So would a lot of people who have lived through a hurricane or a blackout/brownout.

  17. Ray Hyde Avatar
    Ray Hyde

    Hey, I’m on your side. As far as I know there is nothing to prevent me from putting up a PV installation. No law to prevent it. I’ve even got plenty of room. I just don’t have $60,000 lying around that I can’t spend more usefully on something else. For some other people, they may have more money or different priorities. More power to them. Let me ask, Scott, have you got PV power on your house?

    I wonder when somebody will come up with a kit so we can use our hybrids as emergency generators instead of investing another pile of money in a generator. (Jim, my backup generator only cost $450, but of course it won’t run everything, just what’s really needed.)

    I don’t have any problem with investing for the long term: I’m an early adopter and a patient investor. But the long term needs to be something short of infinite. You need to recognize that you can’t have long term profits without short term profits: other wise you never reach the long term.

    And, by the way, you also have to recognize that if you accept lower short term profits while you are witing for the long term ones to materialize, then that also means you will be poorer in the meantime.

    Probably, this is another case where the “alternatives” are really “additionals”, just like alternative modes transit. As long as they are additional, they can’t be cost savers, or not very much. They will really become alternatives when we have no other alternatives.

    It might very well be that the government has a legitimate interest in making us all poorer in favor of some public good, like lower fossil energy consumption.

    I just don’t see how you get elected or stay elected with a platform that says, “Hey, I’m going to make you poor and miserable so your great grandchildren will be rich (maybe).

  18. This country is going to have to face up to the damage of its elected leaders’ short-sighted thinking- war, debt, pollution, etc.

    As with many things, the opportunity costs are important. Even if there is more expense connected to renewable, distributed solutions, something I do not believe is true, then I would gladly be willing to accept those costs over the ever increasing costs of our ever increasing reliance on a fossil fuel grid that is failing.

    Again, look at current laws that put huge insurance requirements on cogeneration, look at current laws that make it illegal to build a full-time dwelling that is not connected in some way to the grid.

    Do I have solar or wind on my small house in Richmond? No, I am surrounded by large trees and other larger houses on a small plot that make it virtually impossible. I have told some of my neighbors with better locations that I am willing to help finance renewable solutions for their houses. It would be great if local banks and community development corporations can help fill this need.

    However, I do have an old high school just down the block that would be perfect for solar and wind installation. I am hoping Wilder’s City of the Future plans will include those ideas.

  19. Ray Hyde Avatar
    Ray Hyde

    I’m all for it as long as I don’t have to pay MORE for it, whether it is mine or the school’s.

    Look at the bright side, everything gets its place in the sun. Eventually those old trees will have to come down. We can use my sawmill to recycle them into framework for your PV System, and you will still have shade for your house:-).

    I’m not aware that it is illegal to build a home that is not connected to the grid. In fact, it is legal to call your boat your full time home, in which case you can be not only off the grid, but off the continent, if you like. We are still going to need the grid though, in order for distributed power to work. Right now, the grid is provided “free” as a necessary means for the power companies to distribute fossil fuel generated power. But if fossile fuel fails, someday, then someone is going to have to pay to keep the grid up in order for distributed power to work. Right now it looks rosy, because you don’t have to pay for the grid.

    As for the insurance requirements, maybe they are based on past history, and likely liability. If so, then that is part of the cost that needs to be included in the sunny PV outlook.

    And the banks prefer to lend money based on the proposed payback or risk that there won’t be any.

    I think you are right: eventually the costs of distributed production will be lower. We could look at distributed computing as a model, maybe. The only place we differ is how soon eventually is, and what we can reasonably do to hasten that time.

  20. Jim Bacon Avatar
    Jim Bacon

    Scott, banks and community development corporations aren’t comfortable financing solar and other renewable energy improvements? Sounds like it could be a niche for an enterprising businessman who takes the trouble to understand the paybacks and risks. Green capitalism, baby, that’s the way to go!

  21. Ray Hyde Avatar
    Ray Hyde

    Excellent Idea, Jim.

    On occasion I have made money making loans where I understood the risks and the bank didn’t.

  22. That’s what I am talking about doing. Unfortunately, you have to figure out your way around rules that say you need so much money in insurance to cogenerate with the grid.

  23. In terms of smaller steps, consider this:

    Its a lot less polluting and quieter than the traditional generator.

  24. I just realized I forgot another important, obvious advantage to distributed micropower- by bringing the possibility of energy generation right to people’s homes, right under their noses, they will be more likely to recognize the benefits of energy conservation and efficiency. If they recognize those things and are not allowed to ignore it from afar, they are more likely to do something about it. Even on a small scale, such as making only one room in the house energy independent, more energy conservation and efficiency will offset more pollution and increase ALL energy supply, giving much less reason to allow Dominion Power to install nuclear reactors at Lake Anna.

    It may be obvious but it should still be explicitly cited.

  25. Ray Hyde Avatar
    Ray Hyde

    Here is my idea for distributed micropower.

    Hang a bunch of miniature turbines under the overpasses in such a way they don’t take up any of the clearance.

    Every time a truck goes through the wind blast will spin the turbines. 😉

  26. Ray Hyde Avatar
    Ray Hyde

    Geez, that sunrnr thing costs five times as much as my generator. And that doesn’t count the cost of the solar panel to charge it.

    Plus, the picture is a hoot. It shows a lady sitting by the pool using $5000 worth of equipment to operate a fan to keep her cool. In the background, you can see the flag waving in the breeze!

  27. Actually, vertical microturbines have a lot of potential for that sort of thing.

    Yes, the Sunrnr’s presentation is a bit hokey. Still a lot quieter and cleaner than any generator.

  28. Ray Hyde Avatar
    Ray Hyde

    Except it doesn’t generate anything, it still needs a power source. and it costs five times as much.

  29. Again, this is just one example. I used it because it is a Virginia company.

    There are cheaper ones out there now and TONS more efficiency coming…


    The Government of Northern Ireland is proposing changes to the Building Regulations which will make renewable micro-generation, such as solar panels to heat hot water, solar photovoltaic panels on roofs to generate electricity or small wind turbines for houses, mandatory in less than two years.

  31. Ray Hyde Avatar

    When you find one that is a cheap as my generator, let me know.

    Is the government in Ireland also proposing to make it manadatory that employers pay enough so that these mandatory purchases can be made? I can’t wait to see how this one plays out.


    Four Out of Five New Home Buyers Want Solar
    August 1, 2006 07:44 AM – Jeff McIntire-Strasburg, St. Louis, MO

    Right on the heels of evidence that more Americans are choosing to buy green power when it’s available comes news that 80% of US residents would also like to see home builders offer solar power as an option for new houses, according to a survey by Japan’s Sharp Electric Company (the world’s largest producer of solar cells).

    The survey was conducted in May among 1,004 adults to measure their perceptions of solar power. It showed that given the current energy situation, three-quarters of Americans feel that solar energy is more important today than ever, according to Sharp.
    The number-one reason for homeowners to utilize solar power is to save money on monthly utility bills, but respondents are also concerned with using solar to decrease the United States’ dependence on oil.

    The survey showed that two-thirds of Americans are willing to pay a premium for homes that have solar systems installed, according to Sharp. One-half of those surveyed would spend up to 10 percent more for a solar-equipped house, according to the company.

    While some may question the results based on the survey’s source, clearly many Americans are finally recognizing that the often sizable investment required for solar energy installations can pay healthy dividends in reduced electricity and/or water heating costs over the life of the system. As many builders are recognizing the value of green construction, perhaps we’re seeing a convergence of forces that will make solar power, and other green housing features, the norm. Hey, we can hope… ::Personal Tech Pipeline via It’s Getting Hot in Here

  33. Ray Hyde Avatar

    OK. You have a $500,000 home. At todays rate the mortgage is $3038 per month. If you pay tenpercent more your mortgage is $3341 per month or about $303 a month more. That will buy you a solar system that provides on third of your power needs so it saves you about $75 to $100 per month.

    And, the system will need to be replaced before the first system is paid for on a thirty year note.

    Where is the substantial dividend?

  34. Jim Bacon Avatar
    Jim Bacon

    Ray, Like you, I am dubious that solar energy is economically viable at this moment in time. But here’s what you’ve left out of your calculation: (a) the increasing cost of electricity (what happens to the return on investment if the retail price of electricity increases 4 percent per year?), and (b) security from disruptions to the grid. I used a generator to get through the aftermath of Hurricane Isabel, but it was dicey for a couple of days when it was really hard to get gasoline to run the thing. Of course, it’s possible to get a natural gas-powered backup generator, but the installation cost of that approaches $5,000 and up.

  35. Ray Hyde Avatar

    Nope, I figured on gas prices increasing. When I bought the Prius the return was dubious, but it is no longer in doubt. (Unless they charge me a bloody fortune for a new battery someday.)

    The payback on Solar PV just isn’t there yet. If you think fuel prices will go up enough to make it pay, like a factor of five, then you might have to invest an equal amount in an arsenal, because things will be very ugly.

    Even your natural gas generator is only ten percent of what PV costs. But there is such a thing as a natural gas heat pump, and that might make sense. It uses a natural gas engine to drive the generator and compressor, and the waste exhaust heat is used for hot water, and or additional space heating. This thing is your very own personal community generating plant. It drives your electric meter backwards when it is not turning the compressor, and recovers the waste heat. These are just now becoming available but look for big improvements and price drops if they ever take off.

    Installing and maintaining it is nontrivial, but it is a technology that does work and will pay.

  36. Ray Hyde Avatar

    I was on my generator for ten days before the power crews got here. I was tired of listening to the thing. Now I’m in the market for one I can run off the tractor, it would be a lot quieter.

  37. Anonymous Avatar

    I have enjoyed this set of commentary more than any other since I’ve been reading Bacon’s Rebellion.

    Key points, however, not focused upon: who owns the transmission and distribution infrastructure in Virginia (hint, think Dominion)? If there is one owner and if legislation supports that, how would that entity support or not support a change in distribution? I think that is an important question. Also, why is fuel cell technology not proceeding in America? It is effective in Europe. I would be happy to buy a battery the size of a freezer to power my house for twenty years–it could be financed with the house.

    Last, remember our ancesters: they never knew a grid existed and used the fireplace and other available fuels as needed. They survived off the grid just fine albeit with a radically different ecnonomy.

    They didn’t have to go into an office to work; however, they needed no phones, no computers, no satellites. Air conditioning? They were probably happy they weren’t freezing for a change.
    Maybe their lives were better for the lack of appliances. Happiness doesn’t really seem tied to electricity.

    I appreciate Ray Hyde’s commentary.

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