What Is Distributed Generation and How Might It Shape the Utility Industry’s Future?

Programs like community-based solar are one example of how distributed generation is changing the way we generate and deliver energy

When you read about the state of the energy industry these days, you won’t get too far without coming across the term “distributed generation.” It’s a popular topic, and for good reason—the concept is basically reshaping our nation’s energy future. But what does the term mean, exactly? How is the concept applied currently? And how is the utility industry using it to expand its renewable energy portfolio, reduce carbon emissions, address climate change and ensure the energy security of our nation?

Distributed Generation Defined

The basic gist of distributed generation is that it is the process of generating energy close to its point of delivery. So, rather than having a big power plant (coal, nuclear, hydroelectric, etc.) that generates massive amounts of energy, which is then transmitted over a vast and complicated network of power lines and transfer stations to be delivered to eventual homeowners or businesses, you have smaller power plants that generate a moderate amount of energy located at closer proximity to the homes and businesses that will use it.

At its smallest, distributed generation can mean a single rooftop solar installation servicing a home in a remote area “off the grid.” At its largest—and most practical for the greatest number of people—it can mean a locally based solar project that delivers energy to the already existing grid and is distributed via a utility company to hundreds and even thousands of people in an area at close proximity to that solar project. This latter type of distributed generation application uses the grid infrastructure and utility systems that are already in place, saves money on transmission costs and allows for energy procurement from a variety of sources to ensure uninterrupted service. Meanwhile, reduced transmission costs can equal reduced energy prices for consumers and/or affordable implementation of new technology for the utility.

Distributed Generation and the Utility Industry

Distributed generation has been around in some form or another from the very beginning. In fact, according to the U.S. Department of Energy, it was the only method of energy generation and delivery in the days preceding the age of centralized multi-gigawatt thermal power plants that began in the early 1900s.

As electricity became a staple of modern life and the utility industry evolved into a government-regulated public entity, big power plants became the standard. Because this method of creating energy primarily involved unsightly, dangerous and/or pollution-generating coal or nuclear power generation, it made sense to locate plants away from the people and communities they serviced. This system was expensive and not the best process from an environmental standpoint, but it was the most reliable method at the time to ensure uninterrupted service to a nation growing in population and consumption.

Enter the Age of Renewables

Now, however, a number of factors have combined to result in a further evolution of the way energy is generated and distributed—and this new chapter involves applying modern renewable energy technology to a process that has been around from the very beginning.

The coal-powered plants of the last century are aging, and cheaper energy in the form of natural gas and renewables, along with stricter clean energy government mandates, are resulting in their decommissioning. As far as nuclear power is concerned, Reuters reports that a nuclear power plant has a lifespan of 40–60 years and most of the 104 U.S. plants were built in the 1970s and are ready for retirement over the next few decades.

When international concern about climate change and consumers’ growing insistence on cleaner energy choices are added to the infrastructure issues, change becomes inevitable.

Luckily this confluence of events is occurring at the exact moment of the rise of utility-scale solar power.

Affordable Clean Energy for Everyone

The costs associated with solar farming are at their lowest. Advancements in technology coupled with reductions in hard costs due to the economy of scale have made solar power developments more affordable than ever.

Meanwhile, out of all the renewable energy options out there, solar has the most potential for large-scale implementation. MIT in their paper, The Future of Solar Energy, reports that, “solar electricity generation is one of very few low-carbon energy technologies with the potential to grow to very large scale … [and] very likely an essential component of a workable strategy to mitigate climate change risk.” (xiii) This paper also notes that “the estimated installed cost per peak watt for a residential PV system is approximately 80% greater than that for a utility-scale plant.”

Cypress Creek Renewables – Clean Energy, Good Business

So if solar is the secret to powering America’s future, the next big question is how to transition into a new mode of operation while still allowing for businesses to achieve a profit?

This is where we come in. Cypress Creek Renewables believes in the power of solar and our business model is designed to make the transition to clean energy profitable for utilities, developers and investors.

Our website is filled with information about how we make that happen. Find out more about our process: Visit the “What We Do” page next.