Seize the means of generation: inside distributed power

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Distributed generation, also known as ‘on-site generation’ or ‘decentralised generation’, describes the generation of electricity for use on-site, rather than transmitting energy over the electric grid from a large, centralised facility. While a radical departure from much of the world’s power infrastructure, distributed generation could serve as a means to address the world’s skyrocketing energy prices and frequent blackouts that have become increasingly commonplace. 

This process can sidestep many of the costs and complexities associated with electricity production in a large, central facility, and could be a new blueprint for power distribution. 

The process has the backing of a number of research organisations, including the US-based Environmental and Energy Study Institute (EESI), which offers science-based solutions for climate change, energy, and environmental challenges. According to a spokesperson: “By generating electricity in smaller amounts closer to end-users, we can dramatically increase energy efficiency, reduce carbon pollution, improve grid resiliency and curtail the need for new transmission investments,” high praise for a high-potential solution.

Most of the power in the US is currently generated from centralised sources, which transmit large amounts of power over long distances. “While this approach has benefits, it also has a number of issues,” says the EESI spokesperson. “6% of generated power in the US is lost through inefficiencies in the transmission process, mostly due to the long distances the power must travel.” 

“When the grid goes down, millions can be left without power. By deploying smaller power systems near where they are needed, distributed generation avoids most of these issues,” the EESI continues. 

In the UK, Energy Local is trying to transform the electricity market for communities and small-scale renewable generators by delivering local-scale power. Its mission is to help communities get more value from small-scale renewable generation by using the electricity locally, sidestepping many of the costs associated with energy transport and storage. 

When asked about its ‘energy local clubs’ to deliver these benefits, a company spokesperson explains: “This enables households to club together and show they are using local, clean power when it is generated. They agree upon a better price for local generators and reduce their bills. It reflects local renewables’ true value and keeps more money local.”

The company wants to expand the framework across the UK, claiming it could make thousands of clean power schemes possible, create green jobs, tackle fuel poverty, and lower carbon emissions. 

There are similar initiatives in continental Europe. Rezolv Energy, an independent power producer (IPP), is building what is expected to be the largest solar photovoltaic (PV) power plant in Europe, a 1GW solar PV facility in Arad County, western Romania. Construction is expected to start by summer 2023, with commercial operation beginning in 2025. 

Rezolv said the plant will feature about 1.6 million solar panels, with average annual power generation of some 1.5TWh. The power will be sold to commercial and industrial users through long-term power purchase agreements, and will be connected to 400kV high-voltage transmission lines. It is expected to include a 135MW battery storage system, so much of the necessary power infrastructure is already in place.

It is not just wealthier parts of the world that are investing in this approach. Sub-Saharan Africa, much of which suffers from a shortage of grid supplied electricity, is increasingly benefitting from locally distributed power, as the framework looks to deliver both greater control over locally-produced power, and more reliable electricity than legacy power infrastructure. 

South Africa currently suffers regular load shedding from its domestic provider ESKOM. This power shortage represents a decline from past decades when the country’s domestic power sector was the envy of sub-Saharan Africa. At the end of February this year, South African President Cyril Ramaphosa, declared a "state of disaster" over the crippling power shortages, which he described as posing “an existential threat to the economy and social fabric”. One of the main causes of the nation’s power woes is the low level of maintenance at ESKOM’s fleet of ageing coal-fired power stations. 

To take up the slack, local power providers are now stepping up. The Sungrove Power Supply Company, a South African provider, is working with local communities to establish access to power through its dedicated PV inverter and energy storage system solutions. Last December, the company partnered with the SOLA Group to supply Africa's largest private IPP PV Project of 256MWp.

Phyllis Yang, Head of Sungrow Southern Africa said: "Sungrow has engaged in plenty of local commercial and industrial projects to meet the electricity demand of the facilities' daily operations." Yang envisages more private investments flowing into South Africa’s grid-connected renewable energy generation and more utility-scale projects being commissioned as a result of the government’s Renewable Energy IPP Procurement Programme. 

Meanwhile in Asia, IPP projects are moving ahead briskly. Singapore's IPP platform company Athein, established as a joint venture partnership between four Southeast Asian companies, has set itself an ambitious target to raise $1bn in the next three years to fund its pipeline of solar and wind power in Australia, India, Philippines and Vietnam. Its operating assets and projects under development currently stand at 2GW, and the success of this project could set a precedent for other new large-scale investments in Asia.

But in the US, where there are a number of regional grids, there is a significant delay in new projects awaiting connection to these local grids. This is a concern to the American Clean Power Association (ACP), which describes the gridlock as presenting a “major hurdle” to President Biden’s decarbonisation strategy. 

The ACP claims the queue to join the US’s seven leading regional grids had ballooned to include projects with 1TW of capacity by the end of 2022. This is almost as large as the 1.26TW of total installed power plant in America today. ACP’s worry is that any delay in connecting to the local grid could impact on the goals of various states, such as California, which plans to draw all of its electricity from clean energy by 2045. 

One solution could be a greater reliance on Regional Transmission Organisations (RTOs). These non-profit organisations operate multi-state electricity grids, and oversee regional wholesale electricity markets, and provide reliability planning for their local regions could provide the answer.

Aside from California, there are seven RTOs elsewhere in the country covering about half of the US states and meeting two-thirds of national energy demand, and organisations such as these could help overcome the bureaucratic challenges required for such a large-scale transition of power generation. 

A report prepared for the California Independent System Operator estimated that an RTO of 11 western states would: “save Californians up to $563m in annual energy bill savings, create 138,700 new high-paying jobs, produce $21.7bn in economic growth and accelerate 470MW of new clean energy construction.” 

It is clear that demand for clean, affordable locally sourced power is growing across the world. A report from ReportLinker estimates that the global off-grid solar power systems market will grow at a compound annual growth rate of 11.92% between 2022 and 2027 to reach a size of $3.27bn. However, for community power provision to reach its full potential, a number of hurdles need to be satisfactorily addressed, with bureaucratic and administrative concerns chief among them. But with much of the world ready to invest in, or already backing, decentralised power, there could be cause for optimism.