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Damon Franz, a regulatory analyst with the California Public Utilities Commission, says that none of the investor-owned utilities that dominate the state have a direct monetary incentive to encourage distributed generation. But he notes that some utilities pursue some distributed energy anyway, simply because it's good public relations. Southern California Edison has conducted workshops to support customers wanting to take advantage of the California Solar Initiative, a program that pays cash incentives for photovoltaic systems. PG&E helps people connect new systems to the grid in record time.
PG&E has also been worried about losing those eco-minded and progressive customers. In 2007, just as a coalition of San Francisco environmentalists and consumer groups, including the local Sierra Club and the Democratic Party, unveiled plans to break free of the utility, PG&E launched a $10 million marketing effort called "Let's Green This City." The San Francisco County Board of Supervisors responded by approving the activists' plan, allowing the city to take advantage of a 2002 law that permits cities and groups of cities to shop among independent producers for power. "Clean Power San Francisco" has now set a goal of securing 51 percent of its power from renewable sources, including digester gas-powered fuel cells and microturbines, by 2017. "Distributed generation is a core part of the city's goals," says Michael Campbell, the program's director.
Two decades after the French went nuclear, Amory Lovins and a group of co-authors published the book Small is Profitable: The Hidden Economic Benefits of Making Electrical Resources the Right Size. In it, they argued that the free market has already begun to favor distributed energy over centralized energy, as deregulation and restructuring "exposed the previously sheltered power-plant builders to brutal market discipline," and shifted the economics toward local power. "Central thermal power plants stopped getting more efficient in the 1960s, bigger in the '70s, cheaper in the '80s and bought in the '90s," they write. "At the same time, new kinds of 'micropower' generators thousands or tens of thousands of times smaller—microturbines, solar cells, fuel cells, wind turbines—started to become serious competitors."
Speaking by cell phone as he waits for a plane in Denver, Lovins has some advice for beleaguered utilities. "If you're AT&T and somebody invents this new thing called a 'cell phone,' do you hunker down and just hope cell phones go away, or do you get into the wireless business?
"Utilities should be treating distributed generation as a source of profit and competitive advantage rather than as a competitive threat," Lovins continues. "It's hard to get their heads around a lot of little things instead of a few big things, which is what they're really good at. But if they want to provide low-cost reliable power for the least amount of risk, distributed generation can do it for them. The barriers to smaller systems are really cultural, not technical and economic."
There are some signs that utilities, investor-owned and municipal, understand what it means to adapt, even if they haven't embraced the change. Lovins notes that Idaho Power, an investor-owned utility in a state with no renewable energy goals, used to install, lease and maintain photovoltaic systems for its off-grid rural customers. The utility ended that program in 1997, a move its renewable energy specialist, Scott Gates, still laments. "I liked it," he says. "It provided a real service, (and) it made financial sense, because we didn't have to construct distribution lines at $20,000 a mile." The program no longer fit with the utility's post-deregulation business model, so it left the market to other solar providers. But Gates still writes checks at the end of the year to people who generate surplus power on their rooftops.
Southern California Edison is negotiating with state regulators to install 250 megawatts of distributed solar on rooftops leased from ratepayers, adding to nearly 450 megawatts of currently interconnected photovoltaics. Sempra Energy is using nine of Sopogy's solar collectors to air condition a 45,000 square-foot office building in Downey, Calif. And while San Diego Gas & Electric's plans for 52 megawatts of tracking photovoltaic panels were recently thwarted by regulators who deemed them overpriced (at $7 per watt), the utility has been busily installing "smart" meters in its customers' homes and offices. The meters are one step toward a grid with advanced two-way communications to help utilities manage intermittent renewable power. It may also help integrate those plug-in hybrid cars that the new chairman of the Federal Energy Regulatory Commission, Jon Wellinghoff, envisions shoring up the grid over the next decade.
Edison had it right
On a November day in 2007, Con Edison severed the last wire from the only remaining power plant Thomas Edison had established in New York City. Edison built the city's electrical framework based on a low-voltage direct current that could barely make it across the street, but many of the city's old buildings had remained wired for it. The shuttering of the old power plant at 10 East 40th Street meant the utility had finally finished converting the city to alternating current. It was, reported the New York Times, "a final, vestigial triumph by Nikola Tesla and George Westinghouse."
Then again, maybe not. For even as the city threw over Edison's current, its energy planners have begun installing microturbines in office towers, fueling them with digester gas and recycling waste heat to warm the city's buildings—in other words, steadily returning to the inventor's distribution model, the one that required a power plant every mile or so. Had we followed that model all along, we might not now be wrangling with an invisible legacy of heat-trapping pollution.
Edison wasn't right about everything. He spent decades battling Tesla's technology, to no great purpose—these days, even the hamsters generate an alternating current. But the debate over local versus long-distance power may have finally tilted in his favor.
This story originally appeared in High Country News (www.hcn.org). Judith Lewis is a contributing editor to the publication and writes from Venice, Calif.