The 20th century of electricity generation was characterized by ever larger and more distant central power plants. But a 21st century technological dynamic offers the possibility of a dramatically different electricity future: millions of widely dispersed renewable energy plants and storage systems tied into a smart grid. It’s a more democratic and participatory paradigm, with homes and businesses and communities becoming energy producers as well as consumers actively involved in designing the rules for the new electricity system.
Several decades ago, several people – Amory Lovins in Brittle Power, David Morris in Self-Reliant Cities – explored the implications of this decentralized vision. Most importantly, this vision represents a transformation in the ownership and control of the electricity system. Instead of a 20th century grid dominated by large, centralized utilities, the 21st century grid would be a democratized network of independently-owned and widely dispersed renewable energy generators, with the economic benefits of electricity generation as widely dispersed as the ownership.
This graphic, adapted from the European Commission, illustrates the paradigm change (click for a larger version):
The difference in the ensuing decades is the commoditization of distributed energy production (e.g. solar panels sold at Home Depot), the renewable energy industry growing to $100 billion, and the critical mass of such production on the electricity grid.
In the last two years a number of events have forced policymakers at the local, state and national level to grapple with the implications of a decentralized grid system and how the policies they adopt help or hinder such a 21st century energy system:
- Sixteen (16) states of the twenty-nine (29) that have renewable energy mandates have added mandates for solar and other distributed energy technologies.
- Germany installed an astonishing 7,400 megawatts (MW) of distributed solar PV in 2010. It has begun to change its incentive program to not only maximize solar power but on-site self-reliance via a combination of distributed generation, demand shifting and storage.
- In this country’s largest solar market, California, the number of rooftop solar PV systems has grown from 500 to 50,000 in 10 years.  The number of buildings with rooftop solar in San Francisco alone has increased from 9 to 7,050 in the same period.
- California’s governor announced his goal for the state to generate 12,000 MW from renewable distributed power plants by 2020.  The state public utility commission has established a new renewable auction mechanism for up to 1,000 MW of distributed renewable energy projects 20 MW and smaller.
- Southern California Edison recently completed its solicitation for 250 MW of distributed solar PV on dozens of commercial rooftops with the price of electricity expected to be lower than natural gas generation. 
- And many more 
These events coincide with a dramatic rise in the amount of renewable energy on the U.S. electric grid. Although total renewable generation is only 10 percent of total electricity, in some regions the concentration has reached 15 to 20 percent or more. The rapid growth rate of this distributed renewable energy means that regulatory and utility policy must change immediately, to plan appropriately for the coming distributed generation grid.