Distributed Energy – The Next Logical Step

by John Brian Shannon

Distributed Energy adds capacity to the electrical grid during the hours that electrical demand is highest, adding to grid stability and lowering costs for consumers

Over the centuries, different kinds of energy and energy delivery systems have been employed by human beings. In the Neolithic Period some 10,000 years ago, our ancestors sat around campfires for the light, warmth and security that a fire can provide. Neolithic people mostly ate their food raw, but are known to have cooked meat and occasionally grains over a fire.

For many centuries that general energy usage pattern continued and the only difference was the kind of fuel (coal later replaced wood and straw) and the size of the fire and the number of people it served.

New ways of using energy

The Industrial Revolution changed all that for people in those suddenly developing nations. New energy technology offered huge economies of scale — whereby the larger the power plant, the more efficiently it could produce affordable power for large numbers of people.

The first electrical grids were then formed to transport electricity from large-scale coal power plants or hydro-electric dams to population centres.

Since then, every decade shows larger and more efficient power plants and ever-larger populations being served by this wonderfully efficient grid system. Huge power plants and sprawling electrical grids delivered electricity to citizens over very long distances and at reasonable rates, while investors, utility companies, and power producers received reasonable rates of return on their investment.

It was (and still is) an excellent model to employ, one which brings electrical current from remote power plants to electricity users at an energy price that works for everyone. Except for the fact that some power plants produce unimaginable amounts of pollution and are necessarily and massively subsidized by taxpayers, this has been a winning energy model for a number of decades. And this very successful and reliable model will continue to provide our electricity for many years to come.

But there are serious drawbacks to grid power

Utility-scale power generation requires huge power plants, each costing tens of billions of dollars in the case of nuclear power plants, billions of dollars each in the case of hydro-electric power plants, and hundreds of millions of dollars in the case of coal power plants.

All coal and nuclear power plants were heavily subsidized by taxpayers, or they couldn’t have been built in the first place

It doesn’t end there, as coal fired power plants use hundreds or even thousands of tons of coal every day of the year at a cost of $50. to $160. per ton, not to mention the huge infrastructure costs required to build the ports and rail lines to transport the coal — paid for by taxpayers. And then add to that, the freight costs paid to the shipping companies and the railway companies to transport that coal to the power generation site. Most of the coal that Asia burns comes from North America and Australia. Even within coal rich North America, thousands of miles of railway tracks were laid down to transport North American coal to North American coal power plants.

Let’s not forget the environmental costs associated with all that toxic smoke either. China and the U.S. each produced 7.2 billion tons of coal fired CO2 in 2010 and that number is rising every year. Not to mention the many toxic oxides of nitrogen and sulfur, along with soot and airborne heavy metals that are produced wherever power plants burn coal.

Nuclear power plants likewise, use expensive to produce nuclear fuel rods or pellets and simply could not survive without massive government subsidies. Then there is the storage problem, as the so-called ‘spent fuel’ is highly radioactive and must be securely stored for up to 20,000 years in temperature-controlled conditions. Again, massive taxpayer funded infrastructure must be provided to store the world’s ever-growing pile of spent fuel.

Other than costing billions of dollars and disrupting river flows and fish habitat, hydro-electric power is a benign and good electrical generation solution. If only there were enough rivers to provide all the electricity that 7.1 billion people require! With almost every possible river already dammed on the planet, hydro-electric power plants provide only 16.2% of the world’s electricity.

An even better energy model has arrived in the form of distributed energy

Simply stated, distributed energy is created when many homes or businesses place solar panels on their rooftops or wind turbines on their properties — and then connect it to the electrical grid. Either solar panels or wind turbines can be used in the distributed energy context.

With progressive policies designed to strengthen and balance existing electricity grids, distributed energy can play a large role in ameliorating our present energy challenges.

Distributed energy is the opposite of utility-scale electrical power generation in three very important ways

  • Distributed energy emits no measurable pollution.
  • Distributed energy assists the grid operator to locate the energy source close to electrical demand centres.
  • Unimaginably large and expensive national utility grids crisscrossing the countryside are not required in the case of distributed energy.

Connecting distributed energy to the grid results in many positives for micro-energy producers, homeowners, businesses, and the grid operator. During the daytime, solar panels may produce more electricity than the homeowner or business can actually use — although during that same time of day, the utility company power plants may be straining to produce all the electricity that the grid demands during those peak hours.

Net-Metering to the Rescue!

Therefore, energy-sharing takes place via the use of a net-metering system allowing the homeowner or business owner to sell their surplus electricity to the utility company. Net-Metering allows homeowners and businesses to sell their excess electricity to the grid at a profit, while retaining all the benefits of grid connection. Installation of a net-meter at each home is the essential part of a distributed energy grid.

New financing options are becoming available to homeowners and businesses to install rooftop arrays — and even renters are able to purchase renewable energy through innovative programmes designed to boost the market share of renewables.

Some auto assembly plants in Germany and in the U.S.A. have installed wind turbines on their properties, or on nearby land purchased specifically for that purpose. Both BMW and Volkswagen are famous for building great cars, and for being distributed wind producers that have installed wind turbines near their factories, to ensure more reliable power and to avoid energy price spikes. Many ‘world citizens’ admire their environmental commitment.

IKEA, WalMart and Walgreens are famous for installing solar power plants on their store rooftops and warehouses, and WalMart, Google and Apple Computer and others, have purchased wind farms in an effort to Go Green and to alleviate the energy price spikes which are so common in the U.S. and Europe. Well done.

Distributed Energy pays off!

In California, homeowners with solar panels on their rooftops are receiving cheques for up to $2000. — or even larger amounts in the case of larger rooftop solar installations — from their utility company every January, to pay for all the surplus electricity they’ve sold to the utility company during the course of the year. California law mandates that distributed energy producers be paid up-to-date by February 1 of each year and other energy policies in the Great Bear state prove their commitment to a

In Australia, many thousands of homes with solar panels on their rooftops have dramatically added to overall grid capacity and stability by curtailing the power outages common there during peak demand hours, and some coal power plants have shut down while other coal plants are now planning for decommissioning.

Understandably so, the heavily subsidized coal and nuclear industries fear the rapidly growing distributed energy model, although coal exports to China from coal giant Australia continue at a frenetic pace.

Turn down the burners — the Sun is up!

Natural gas and hydro-electric power producers cautiously embrace distributed energy as an augmentation of their efforts to provide reliable electricity to the grid — as they can all exist as energy producers at different hours of the 24 hour day — and for very different reasons none of them are able to eclipse the others.

Distributed energy typically produces its power during peak demand hours, and is known for reducing electricity costs across-the-board due to the Merit Order effect, which is a ranking system utility companies use to decide which energy generator to employ (in real-time) throughout the day and night.

In fact, distributed energy is all about adding peak demand power to the grid — resulting in a stronger, more reliable power grid while displacing dirty energy in the process — and monetarily rewarding citizens for their surplus electricity.

China Opens A Window of Opportunity 2014-2020

by John Brian Shannon.

Three Decades of GDP Growth

After three full decades of impressive GDP numbers, China’s strong growth looks set to continue until the end of the decade.

Never in history has any country accomplished such staggering GDP growth numbers, modernized its infrastructure, oriented its political structures to accept a minimal degree of capitalism, and carry the demands of 1.35 billion people.

Let’s take a look at China’s 1979-2013 GDP numbers.

China GDP growth 1979-2013. Image courtesy of the IMF.

China is now enjoying stable growth rates. In short, as China’s economy has matured, it has successfully transitioned from a Frontier economy to an Emerging economy — and with plenty of momentum in hand, has settled-in to the long-term task of building a Developed economy.

For those willing to engage with China there is the potential for substantial reward, and as in any emerging economy, an element of risk is associated with investing there. In the case of investment or corporate relocation to China, responsible leaders and individual investors alike, are wise to seek the guidance from experienced professionals as they navigate several cultures and languages and the various levels and departments of a (still) communist government.

Focus on Planning

Fortunately, statist economies like China’s are centrally-planned in five year cycles, and for the most part these five year plans are released, translated, and then published by the media.

For one example of China’s long-range planning, in this case regarding China’s aggressive energy, renewable energy and conservation policies, please see: CHINA – Atmospheric Pollution Prevention Action Plan – State Council on the issuance of air pollution control action plan notification – Guo Fa 2013, No.37 [English Translation]

For a summary of that official document, please see: China’s new Atmospheric Pollution Prevention Action Plan

Addressing the Source

One of China’s most pressing problems is the quality of life for her citizens, the absence of which can affect overall citizen satisfaction and even worker productivity.

The poor air quality in China, which reportedly leads to 410,000 premature worker deaths per year, has been addressed with a huge push towards renewable energy. The Common Language Project (clpmag.org) provides a telling snapshot:

“China faces a number of serious environmental issues caused by overpopulation and rapid industrial growth.

Water pollution and a resulting shortage of drinking water is one such issue, as is air pollution caused by an over-reliance on coal as fuel.

It has been estimated that 410,000 Chinese die as a result of pollution each year.

Deforestation and desertification are also issues and an estimated one-fifth of agricultural land since 1949 has been lost to soil erosion and economic development. The country is also host to the trade of endangered species. The country’s rivers constitute the largest potential source of hydropower in the world.

Since 2007, China has stepped up government efforts to work toward environmental sustainability by holding local officials to national standards, publishing national climate change policies and establishing groups on climate change.” — clpmag.org

Measurable Results

To say China’s leadership has posted an aggressive response to air pollution, water pollution, soil contamination and the follow-on effects on citizen health and the economic costs of widespread pollution is a verifiable understatement.

In only a few years, China has surpassed wind and solar PV leaders Germany and the U.S. in the production and installation of wind turbines and solar panels and increased energy efficiency.

Announced in July of 2013, China’s National Energy Administration told the media that they expected to install 10 GW of solar by year end of 2013, another 10 GW of solar to be installed in year 2014, and yet another 10 GW of solar to be installed in year 2015.

While many nations were installing mere MegaWatts (MW) of solar or wind power in an effort to ‘look green’ — China’s energy officials said that although they had planned to install 10 GW of solar power in 2013, China may have surpassed that target by a full 4 GigaWatts for a grand total of 14 GW of solar installed in year 2013!

It was later announced that 12 GW would be installed in year 2014, and it has been reset once more to 14 GW of solar PV power to be installed in year 2014.

The latest pollution reduction measures announced in China now point to increased spending on energy efficiency and a commitment to the installation of 14 GW of solar panels in 2013 (already done), another 14 GW in year 2014 (in progress) and yet another 14 GW for 2015.

Now that’s an active pollution management file.

Energy news is never boring in China — so stay tuned!