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The Distributed Power Transformation

Decentralization is a growing, global trend.  The organization of resources and people is moving away from centralized systems toward integrated networks that include both distributed and centralized elements.

Distributed power technologies, which have been around since Thomas Edison built the first power plant in 1882, are increasingly used today to provide electrical and mechanical power at or near the point of use.

The portfolio of distributed power technologies includes diesel and gas reciprocating engines, gas turbines, fuel cells, solar panels and small wind turbines. Although no standard definition of “distributed power technologies” exists, they are less than 100 megawatts (MW) in size and typically less than 50 MW. They are highly flexible and suitable across a range of applications including electric power, mechanical power and propulsion. Distributed power technologies can stand alone, or they can work together within a network of integrated technologies to meet the needs of both large and small energy users.

When deployed, distributed power technologies create a decentralized power system, allowing distributed generators to meet local power demands throughout the network. The rise of distributed power is being driven by technologies that are more widely available, smaller, more efficient and less costly today than they were just a decade ago.

In 2000, $30 billion was invested in building distributed power systems.  A dozen years later that figure increased five-fold to $150 billion and annual distributed power capacity additions grew from 47 to 142 GW per year.  By 2020, distributed power will play an even larger role. GE estimates that distributed power capacity additions will grow to 200 GW per year in 2020 for an annual growth rate of 4.4 percent; investment in distributed power technologies will increase to $205 billion.

The rise of distributed power is also being driven by the ability of distributed power systems to overcome the constraints that typically inhibit the development of large capital projects and transmission and distribution (T&D) lines. Because distributed power systems are small, they have lower capital requirements and can be built and become operational faster and with less risk than large power plants. In addition, distributed power systems can be incrementally added to meet growing energy needs.

In developing economies such as China and India, the transmission challenge is not focused on the expansion of existing infrastructure, but the development of a whole new T&D system at a pace that meets the rapid rate of electricity demand growth. Here, distributed power can provide electricity to remote areas where there is no T&D network.

Some distributed power technologies are being propelled by the “Age of Gas,” an era of more widely available natural gas enabled by the growth of unconventional natural gas production, as well as the expansion of land and seaborne gas networks. Greater gas abundance creates opportunities for gas-fired distributed power systems. The emergence of virtual pipelines — a collection of technologies designed to move natural gas from the end of the pipeline to remote uses — have the potential to amplify the Age of Gas and make gas-fired distributed power technologies even more ubiquitous.

To be clear, even though the drivers for distributed power are strong today, this growing trend does not spell the end of central power stations. A variety of forces, such as increasing urbanization and continued economies of scale, are creating a sustained need for central power stations in many locations. Thus, the rise of distributed power is occurring against the backdrop of a continuation of centralized power development. This is leading to a new era in which central power stations will co-exist with growing distributed power technologies. In this emerging landscape, central power stations and distributed power systems will be integrated in order to provide a range of services that couldn’t be provided by either alone. However, the rise of distributed power isn’t just using more reciprocating engines and gas turbines. It is about the transformation of large stand-alone generators and isolated transmission networks into “Integrated Energy Systems.”

Integrated Energy Systems
An Integrated Energy System is created when energy equipment and accompanying IT technologies are interconnected at the plant, facility and network level. The rise of distributed power means that many balkanized power systems will be transformed into hybrid systems that include a combination of both distributed and central power stations connected by enabling hardware, such as smart grid technologies, and software, such as Industrial Internet-based control systems.

At the end of the day, Integrated Energy Systems are more efficient and enable greater levels of service due to the synergistic pairing of hardware and software and optimization at the system level. This translates into productivity gains and the associated environmental benefits that come from being smarter about the use of energy resources.

The trend toward distributed power systems can have a significant positive impact on the environment and national power systems.  Its environmental and economic advantages provide policymakers with the opportunity to help guide outcomes using legislative and regulatory strategies that make distributed power systems more viable and help relive the stress on aging electrical infrastructures.

Brandon Owens is the Director of Ecomagination Strategy at GE

The Distributed Power Transformation was originally published on Ideas Lab

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