Thursday, February 12, 2009

Grid? We don't need no stinkin' grid. . .

Power Plant at Sunset
Originally uploaded by lady_lbrty

A recent guest post in the New York Times by Amory B. Lovins of the Rocky Mountain Institute speaks to a theme that is becoming increasingly prevalent in energy discussions: the advantages of distributed generation. Putting clean, small-scale power plants close to where the energy is needed makes more sense than building mammoth power plants, rebuilding the nationwide electrical grid, and then distributing electricity over hundreds of miles.

The core of the argument goes like this:

Bigger power plants’ hoped-for economies of scale were overwhelmed by diseconomies of scale. Central thermal power plants stopped getting more efficient in the 1960’s, bigger in the 1970’s, cheaper in the 1980’s, and bought in the 1990’s. Smaller units offered greater economies from mass production than big ones could gain through unit size. In the 1990’s, the cost differences between giant nuclear plants — gigantism’s last gasp — and railcar-deliverable, combined-cycle, gas-fired plants derived from mass-produced aircraft engines, created political stresses that drove the restructuring of the utility industry.

Meanwhile, generators thousands or tens of thousands of times smaller — microturbines, solar cells, fuel cells, wind turbines — started to become serious competitors, often enabled by IT and telecoms. The restructured industry exposed previously sheltered power-plant builders to brutal market discipline. Competition from a swarm of smaller electrical sources and savings created financial risks far beyond the capital markets’ appetite. Moreover, the 2008 Defense Science Board report “More Fight, Less Fuel” advised U.S. military bases to make their own power onsite, preferably from renewables, because the grid is vulnerable to long and vast disruptions.

Lower risk energy projects constructed on a human scale have a greater chance of success than past-generation mega power plants. The market is swiftly coming around to recognize this fact.