A new report by Navigant Research projects that distributed generation will roughly double in the next nine years.
Distributed generation (DG) is the decentralised production of electricity by small-scale systems – most often in the form of rooftop solar, but it can include biomass, wind, and other forms of renewable power as well. Navigant Research’s analysis also included natural gas and diesel generators of 6 megawatts or less, along with solar arrays of one megawatt or less and small wind turbines of 500 kilowatts or less.
According to their forecast (unfortunately behind a paywall) the total capacity for DG installed around the world will grow from 87.3 gigawatts in 2014 to 165.5 gigawatts in 2023. Most of the growth is anticipated to come from the deployment of solar. Geographically, the biggest increase in the projection was in Western Europe, with North America and the Asian Pacific not too far behind.
“Utilities in Western Europe are losing hundreds of billions of dollars in market capitalisation as DG reaches higher levels of penetration in leading countries such as Germany, the United Kingdom, and Italy,” said Dexter Gauntlett, a senior research analyst with Navigant Research. “The prospect of similar losses by utilities in the United States is prompting a struggle among utilities, the DG industry, and regulators over the future of DG models.”
Source: CleanTechnica/Navigant Research
A recent report by the investment bank HSBC, for example, anticipates that the dropping price of solar power and battery technology will rapidly make home solar systems cheaper than traditional grid power in Germany. As a result, power generation from units that are 10 megawatts or less should grow from 30 per cent of the country’s power now to 50 per cent by 2025. Another analysis by UBS anticipated that the same dynamic could render the construction of new power plants irrelevant throughout Europe after 2020. And here in the United States, as John Aziz reported at The Week, the cost of a home solar-plus-battery system could dip below the price of grid power by the end of the decade.
As CleanTechnica noted, Navigant also expects the global revenue from DG to top $US182 billion by 2023, a massive increase over the $US97 billion it brought in in 2014. That revenue stream often comes at the expense of traditional utilities, as they lose customers and compensate by jacking rates up on their remaining customers to maintain their infrastructure and business models. That’s set off a series of conflicts across the country over the future of the grid, as utilities lobby for taxes, fees, and other policies that hamstring the distribution of rooftop solar and homeowners push back.
“One of the most important issues for the energy industry is striking a balance between DG growth and fairly compensating utilities for the ability to effectively use the existing electrical grid as a backup service for onsite power at higher concentrations in the future,” Gauntlett continued. “Utilities that pro-actively engage with their customers to accommodate DG – and even participate in the market themselves – limit their risk and stand to benefit the most.”
One example of that proactive approach is arguably occurring in the State of New York, where the Public Service Commission is working on a plan under which traditional utilities would move to provide rooftop solar, community solar, and microgrids as a service, and would operate as a platform and clearinghouse for the sale of distributed power.
In the developing world, meanwhile, rooftop and community solar has arisen as a cheap and effective alternative to waiting around for their governments to connect them to the electrical grid. Hundreds of millions of people in South Asia and Africa still lack access to centrally-generated electricity, and often rely on diesel for generators and kerosene for heat. While each individual purchase is cheap, the cumulative cost of kerosene and such over a year is quite high. Meanwhile, a home or community solar array comes with a higher, one-time, and up-front cost, but is much cheaper over the long run – and programs are springing up across the developing world to help low-income people make the transition.
Originally published by Climate Progress. Reproduced with permission.