As the world is looking to shift away from carbon-based fuels and toward renewable energy (for a whole host of reasons, not the least of which is to reverse climate change), innovation in distributed energy technologies is emerging as a promising means for a successful energy transition.

The problem with centralized power generation…

Currently, most energy production takes place at a centralized power plant. Conventional power generation, such as coal-, gas-, and nuclear-powered plants, as well as hydroelectric dams and large-scale solar power stations, are often located either close to needed resources to minimize transportation costs of coal, for example, or otherwise located far from population centers. Air pollution emitted from coal plants make remote locations preferable for their siting. These centralized power generating plants supply electricity to the traditional transmission grid that conveys bulk power (with great losses over long distances) to load centers. From there, this electricity is distributed to the grid’s consumers.

Centralized power plants rely heavily on the grid for transmission and distribution (T&D); however, the increasing cost of grid maintenance and grave concerns about the grid’s age, rate of deterioration, and capacity constraints are jeopardizing this relationship.

What is distributed energy?

Distributed energy, also known as distributed generation, on-site generation (OSG), or district/decentralized energy, are systems which are flexible, decentralized, and modular, and are located close to the load they serve. Distributed energy systems are usually small-scale power generation or storage technologies (typically in the range of 1 kW to 10,000 kW) used to provide an alternative to or an enhancement of the traditional electric power system.

Distributed generation systems may include the following devices/technologies:

• Combined heat power (CHP), also known as cogeneration or trigeneration

• Fuel cells

• Hybrid power systems (solar hybrid and wind hybrid systems)

• Micro combined heat and power (MicroCHP)

• Microturbines

• Photovoltaic systems (typically rooftop solar PV)

• Reciprocating engines

• Small wind power systems

• Stirling engines

Distributed generation reduces the amount of energy lost transmitting electricity because the electricity is generated very near where it is used, perhaps even on the site where it was produced. This also reduces the size and number of power lines that must be constructed. Distributed energy generation devices themselves, are likely to be mass-produced, small, and less site-specific.

Specifically, distributed energy systems which use renewable energy sources, including small hydro, biomass, biogas, solar power, wind power, and geothermal power were identified by Project Drawdown in their list of the top 80 solutions for reversing Climate Change.

Distributed Solar PV – paving the way to affordable, clean electricity

Photovoltaics (PV), are by far the most important solar technology for distributed generation of solar power. PV uses solar cells assembled into solar panels to convert sunlight into electricity. It is a fast-growing technology doubling its worldwide installed capacity every couple of years. PV systems range from distributed, residential, and commercial rooftop or building integrated installations, to large, centralized utility-scale photovoltaic power stations.

No fuel costs + no pollution during operation

First Generation, 19th-century solar panels were made of selenium. Today, photovoltaic (PV) panels use thin wafers of silicon crystal which, when struck by photons from sunlight, knock electrons loose and produce an electrical circuit. These subatomic particles are the only moving parts in a solar panel. PV incurs no fuel costs, generates no pollution during operation, and has reduced mining-safety issues.

If you considered adding solar panels to your home or business five years ago but were unimpressed by the ROI, you should consider updating your analysis. Rooftop solar is spreading as the cost of panels falls, driven by incentives to accelerate adoption, economies of scale in manufacturing, and advances in PV technology. Innovative end-user financing, such as third-party ownership arrangements like Power Purchase Agreements (PPA), have helped mainstream solar’s use. Yet, costs associated with acquisition and installation can be half the cost of a rooftop system and have not seen the same dip.

Solar PV job growth

As the cost of PV panels and shingles continues to decrease, more households are expected to take advantage of these systems, resulting in greater demand for the workers who install and maintain them, hence the higher price of installation. According to the Bureau of Labor Statistics, employment of solar PV installers is projected to grow 51% from 2019 to 2029, much faster than the average for all occupations. The continued expansion and adoption of solar PV systems will result in excellent job opportunities, particularly for those who complete training courses on solar panel installation.

PV tops all other technologies in new-builds

In recent years, PV technology has improved its sunlight to electricity conversion efficiency, reduced the installation cost per watt as well as its energy payback time (EPBT) and levelized cost of electricity (LCOE), and had reached grid parity in at least 19 different markets in 2014. Grid Parity is a term used to describe a critical point in the fight to reverse climate change and is when a clean energy form like solar costs the same or less as a conventional energy form from the grid. According to BloombergNEF, solar PV was the world’s leading power-generating technology installed in 2019, with one third of all countries making it their top choice.

Social benefits of PV

Small-scale solar systems, typically sited on rooftops, accounted for roughly 30 percent of PV capacity installed worldwide in 2015. In Germany, a leader in solar, rooftops boast 1.5 million systems. In Bangladesh, population 157 million, more than 3.6 million home solar systems have been installed. In grid-connected areas, rooftop panels can put electricity production in the hands of households. In rural parts of low-income countries, they can leapfrog the need for large-scale, centralized power grids, and accelerate access to affordable, clean electricity – becoming a powerful tool for eliminating poverty.

Distributed Energy Storage – a key supporting technology

Another key piece of the energy transition equation is distributed energy storage – the ability to retain small or large amounts of energy produced where you live or work and use it to meet your own needs.

Since the wind and sun run on their own schedules, energy generation is variable. The energy can also be less reliable, a complaint shared with the traditional T&D grid as it degrades. Storage can ensure electricity is available, even when sunshine or breezes are not. Distributed energy storage systems include several types of battery, pumped hydro, compressed air, and thermal energy storage. 

Stand-alone batteries vs. electric vehicles

There are two basic sources of small-scale battery storage: stand-alone batteries and electric vehicles. Common rechargeable battery technologies used in today's PV systems include lead-acid, nickel–cadmium, and lithium-ion (li-ion) batteries. Compared to the other types, lead-acid batteries have a shorter lifetime and lower energy density. However, due to their high reliability, low self-discharge (4–6% per year) as well as low investment and maintenance costs, they are currently the predominant technology used in small-scale, residential PV systems. Lithium-ion batteries are still being developed and about 3.5 times as expensive as lead-acid batteries. Furthermore, since storage devices for PV systems are stationary, the lower energy and power density, and therefore higher weight, of lead-acid batteries is not as critical as it is for electric vehicles.

Lithium-ion batteries, such as the Tesla Powerwall, have the potential to replace lead-acid batteries in the near future, as they are being intensively developed and lower prices are expected due to economies of scale provided by large production facilities such as the Gigafactory 1. In addition, the Li-ion batteries of plug-in electric cars may serve as future storage devices, since most vehicles are parked an average of 95 percent of the time, their batteries could be used to let electricity flow from the car to the power lines and back. Other rechargeable batteries that are considered for distributed PV systems include, sodium-sulfur and vanadium redox batteries, two prominent types of a molten salt and a flow battery, respectively.

Lower storage costs

Creating a distributed energy storage system, or grid independence, requires affordable storage, and until now, prices for batteries have been prohibitively expensive. That is changing. From $1,200 per kilowatt-hour in 2009, the cost dropped to roughly $200 in 2016. Companies are predicting $50 per kilowatt-hour in a few years. Lazard’s latest annual Levelized Cost of Storage Analysis (LCOS 5.0) shows that storage costs, particularly for lithium-ion technology, have continued to decline faster than for alternate storage technologies. Lithium-ion, particularly for shorter duration applications, remains the least expensive of energy storage technologies analyzed and continues to decrease in cost, thanks to improving efficiencies and a maturing supply chain.

Vehicle-to-grid energy storage = significant climate benefit

Due to inefficiencies in energy storage and high carbon dioxide emissions associated with the manufacturing of batteries, the use of distributed energy storage might not imply a reduction in emissions when considered in isolation. When vehicle-to-grid storage – connecting an electric vehicle to the grid to store electricity for later use – is considered alongside the increased integration of renewable energy sources for electricity generation, the impacts may prove more favorable. The emissions avoided from diesel and gasoline more than balance the emissions resulting from the manufacturing of batteries. As such, electric vehicles used as distributed energy storage can provide a significant climate benefit. Developing infrastructure and policy frameworks to promote adoption of vehicle-to-grid storage is therefore crucial as electric vehicle penetration increases.

Can distributed generation help you reach your GHG reduction goals?

A properly operated distributed energy system will reduce your reliance on centralized power plants which are predominately operated by fossil fuels. The GHG emissions savings of a distributed energy system have the potential to be tremendous. Unless power purchase agreements are in place to assure that you are receiving low carbon electricity, GHG emission factors for centralized power plants can be anywhere from of 500 to 2000 pounds of CO2 per Mwhr delivered. Depending on how your distributed energy system is powered, that same GHG emission factor can be near zero.

Many companies have established GHG reduction goals and distributed energy systems can certainly go a long way in helping you achieve those goals. Distributed energy systems do come with the higher capital cost investment but the GHG savings are significant and can be realized for the lifetime of the system. For most businesses, Scope 2 GHG emissions make up a significant percentage of the total GHG footprint and most of the Scope 2 GHG emissions are due to standard grid electricity purchases. Imagine being able to reduce the emissions of one of your major sources of GHG emissions by over half or even more, and how that can impact your GHG reductions goals. 

Let KERAMIDA be your guide in helping you achieve your GHG reduction goals. Contact us or call (800) 508-8034 today for immediate assistance.

Contact:

Becky Twohey, Ph.D.
Vice President, ESG Strategy, Planning and Reporting
KERAMIDA Inc.

Contact Becky at btwohey@keramida.com