Gaps from Tectonic Movement

We've already talked about how the competition and deregulation programs of the 1990s, rightfully called tectonic movement in this business, pulled apart the production and delivery value chain. A corresponding movement called distributed energy (or power) gained strength as well. While in principle, a distributed power (DP) system (see Figure 17.1) borrows directly from Edison's vision, the advocacy was being fed from several different directions. First, the big versus small crowd saw distributed power as a way to champion the little guy, the consumer, the ratepayer, over the big utility on its way, in their minds, to extinction. Second, the natural gas industry understood distributed power to be a way to market and sell more of its product (and you'll see why later in this chapter). Third, some factions of the environmental movement believed that anything has to be better than large dirty central power plants or nuclear plants. Fourth, utilities left with only their distribution function saw distributed power as their salvation, as a way to grow beyond collecting a toll for distributing electricity to customers on behalf of other suppliers.

The mystique of DP was enhanced at the time by analogies to the computer, software, Internet, and telecom revolutions taking place in the late 1990s. DP advocates compared central stations to mainframe computers and landline telephones. DP, on the other hand, was a robust network of intelligent devices communicating with each other, all the while empowering consumers to take responsibility for their energy destiny. Some purveyors of DP devices such as fuel cells, microturbine generators, photovoltaic solar cells, and even Stirling engines that make use of lower temperature heat sources, basked in an aura reserved at that time for dotcoms and telecoms. They were certainly on the dance cards of the investor community.

Seemingly, investors were getting on board with the vision. I remember private equity and energy tech venture capital investment funds being launched specifically focused on this sector. Lenders had devised special programs to make it efficient to lend money to many aggregated, small, distributed power projects, instead of arranging large chunks of debt for fewer larger projects. FERC was smoothing the way, too, with a big initiative called Standard Interconnection, which would have made it much easier for DP systems to link up with the utility system, and prevent more traditional utilities from torpedoing projects.

Well, by 2002, "I am DP, hear me roar" turned seemingly overnight into a hushed whimper. With the stock market scandals at the turn of the millennium, dotcom, telecom, and Enron all erupted in flames. The carnage engulfed many of the nascent DP firms as well.

Traditional Power

Traditional Power

Large Power Plants

Transmission Lines

Large Power Plants

Transmission Lines

Distribution to

Customers

Distributed Power

Distributed Power

Small and Micropower Plants at Customer Sites 20 kw-5 MW

Energy Storage Devices

Large Power Plants 100-4,000 MW

ctHxl

Large Power Plants 100-4,000 MW

ctHxl

Large Energy Storage 100-2,000 MW

Small and Micropower Plants at Customer Sites 20 kw-5 MW

Energy Storage Devices

Large Energy Storage 100-2,000 MW

Figure 17.1 Traditional versus distributed power systems.

A change in presidential administrations certainly had much to do with it as well. One of the first things President Bush did after taking office was to convene an Energy Task Force under Vice President Dick Cheney to address the California energy crisis and other serious supply/demand situations in other parts of the country. As I noted earlier, Republicans tend to solve energy crises with a production mindset, while Democrats tend to seek solutions from the demand side. And supply was precisely the tack Cheney's task force took.

Solar Stirling Engine Basics Explained

Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

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