Distributed Energy Nets

Denmark has done what other countries only dream of doing: achieved energy independence. While Europe's overall energy imports rose 2.4% in 2006, Denmark's energy imports fell to -8%. In fact, the European Union as a whole scores 54% on the scale of energy dependency. Denmark scores -37%.

"Denmark is the model that the United States should be following," said Steve Pullins, executive director of the U.S. Department of Energy's Modern Grid Initiative.

How'd they do it? Distributed energy.

Unlike traditional "centralized" systems, distributed energy relies on small power-generating technologies like solar panels or ultra-efficient natural-gas turbines built near the point of energy consumption to supplement or displace grid-distributed electricity.

Consumers can not only draw power from the grid, but can feed power into it as well. For instance, homes equipped with solar-power panels could feed unused electricity back into the grid, adding to the total available supply.

Other related technologies like demand response, consumer-side controls and energy storage are expected to play an equally important role in distributed-energy networks. The key feature of a distributed system is so-called "smart metering," which allows power to flow in both directions.

It's far more efficient than most national electricity grids, which rely on large central power stations to send electricity exclusively in one direction from the power stations to the final customer. Only a third of the fuel energy burnt in power plants ends up as electricity. Roughly half is lost as heat and nearly 10% more is lost during transmission.

In addition, 20% of generating capacity exists purely to meet peak demand, so it operates only 5% of the time and provides a mere 1% of supply. The grid has growing congestion problems because it channels electricity through a few key nodes. The glut exacerbates the inefficiency by forcing the utilities to rely on dirtier and less efficient sources of power to meet peak demand rather than simply redirecting surplus power from low demand to high-demand markets.

In 2005, Denmark's distributed-energy networks generated nearly half the country's electricity while cutting carbon emissions by nearly half from 1990 levels. In July, Denmark announced plans to deploy the world's most extensive smart-grid infrastructure, which could make distributed energy the country's primary source of electricity before long.

The change has taken Denmark nearly two decades to implement, but the most critical step was the introduction of smart- or net-metering, which required utilities to buy back electricity from consumers at 85% of the price. Denmark's success has convinced a growing number of policymakers and energy executives to follow suit.

In the U.S., the movement faces constraints from a familiar place: power companies. Distributed energy aims to decouple profits and consumption so that power companies have a greater incentive to invest in energy-efficiency technologies that drive distributed-energy networks. Changing that relationship is even more critical than technological innovation.

"Very little can happen without having the utilities involved in the process," said Ron Pernick, a founder of clean-technology consulting firm Clean Edge. "Regulators need to give utilities the tools they need to get involved, which basically means decoupling."

Like most businesses, power companies have a duty to shareholders to make investments that yield a reasonable return in a reasonable time frame. Distributed-energy systems are developed piecemeal over a long period of time and often require investments that take a long time to yield meaningful returns.

In many parts of the country, regulators have relied on various tax rebates and credits to make it possible for power companies to invest in low-yielding technologies without destroying their bottom lines.

At the Federal level, the 2005 Energy Act requires all federal buildings to be equipped with two-way metering and energy-management systems by 2012. But at least so far, the results have been mixed.

Power companies in Western U.S. states have begun listing energy-efficiency as a central part of their long-term resource portfolio strategies. In the state of Washington, PG&E plans to meet half its future energy needs by investing in energy-efficiency technologies that enhance distributed-energy systems.

Other power companies are pursuing ambitious plans to ratchet up decentralized generating sources. Southern California Edison plans to install a whopping 250-megawatts worth of solar panels on rooftops in southern California by 2013.

Meanwhile, many companies and consumers have taken the initiative themselves. In the past decade, the number of small businesses and consumers substantially reducing their reliance on grid-based electricity has risen over 33% annually.

In Mountain View, Calif., Google meets 30% of its peak power needs with electricity generated by the 1.6 megawatt solar panel installation on its campus. There are compelling reasons to suspect other Silicon Valley companies will follow suit.

Blackouts are expensive, especially for Silicon Valley's high-tech companies. A blackout would cost Sun Microsystems an estimated $1 million each minute, according to Larry Owens of Silicon Valley Power. Hewlett-Packard has estimated a 20-minute power outage at a circuit-fabrication plant would cost $30 million.

But it isn't just high-tech firms in the computer capitol of the world that are taking advantage.

Last year, the U.S Army Corps of Engineers installed more than 1,000 solar-powered street lights in Fallujah, a predominantly Sunni city in central Iraq that was the scene of a brutal battle between insurgents and U.S. soldiers in 2004.

During the day, the lamps store energy from the intense desert sunlight in batteries large enough to keep them lit from dusk to dawn. Now, the streets are lit every night--in a country which, in the last five years, has probably spent more hours without electricity than with it.

Source - Forbes