The Political and Technical Advantages of Distributed Generation
While technology has helped change the economics of electricity production (in favor of renewables and distributed generation), this new dynamic can as easily be controlled by the incumbent utilities as the old paradigm of centralized fossil fuel power generation.
The cornerstone of the distributed generation revolution is its potential democratizing influence on the electric grid, the opportunity unlocked for local ownership and the coincident political support for more renewable energy. In no place is that clearer than in the public support for renewable energy.
An increasing number of renewable energy projects (primarily wind, but also large-scale solar) have met with resistance from local residents or environmentalists. Centralized, remote generation might seem to avoid NIMBY issues by placing wind turbines or solar power plants far from population centers; but in practice, there have been opponents to these projects as well. Large power plants raise questions about environmental impact from creature habitat to water consumption. Power from distant plants must be transmitted over high-voltage transmission lines to get to load centers without significant losses, and such lines are built only at great ratepayer expense, over many years, and with the taking of land with eminent domain. Some folks just hate the look of power plants, regardless of their sustainable nature.
Resistance has been organized enough to win restrictive state siting policies (e.g. wind policy in Wisconsin) or to coordinate environmental advocacy organizations to oppose solar power plants on undeveloped desert lands. In some cases, resistance takes on the strange aspect of “wind turbine syndrome,” or other mysterious illnesses.
At the heart of the matter, citizens rightly see renewable energy as different, and find it frustrating to see new, widely available resources like sun and wind developed under the old, centralized paradigm and owned by the usual suspects. In a recent study by the ever-methodical Europeans, they found that opponents to new wind and solar power have two key desires: “people want to avoid environmental and personal harm” and they also want to “share in the economic benefits of their local renewable energy resources.”
It’s not that people are made physically ill by new renewable energy projects. Rather, they are sick and tired of seeing the economic benefits of their local wind and sun leaving their community.
Local Ownership Boosts Economic Benefit of Renewables:
Such opposition is perfectly rational, since investments in renewable energy can be quite lucrative (private developers and their equity partners routinely seek 10% return on investment or higher). And the economic benefits of local ownership far outweigh the economic colonialism of absentee owners profiting from local renewable energy resources.
Additionally, when projects are absentee owned, local residents see little to no economic advantage to offset their concerns about health or the environment.
It’s not just centralized renewable energy projects facing opposition; distributed generation (DG) can also face resistance. While DG projects are of a more modest scale than centralized power generation, they also reside closer to actual electricity demand; thus, they are closer to population centers. For solar, this is largely a non-issue, because it can be easily installed on rooftops or other existing structures. Similarly, other technologies like geothermal or even natural gas generate little hostility from locals. On the other hand, for wind power there’s little distinction between a 30 MW and 300 MW project, because all the turbines are the same size. A distributed wind project will place very large turbines close to population centers and wind projects of all sizes have met with stiffer resistance.
For both centralized and distributed generation, local ownership becomes the key to unlocking local support. For example, the following chart illustrates the local support for wind power in two German towns, Nossen and Zschadraß.
Local Ownership Boosts Public Support for Wind (study link):
With local ownership of the wind project, 45% of residents had a positive view toward more wind energy (Zschadraß). In the town with an absentee-owned project (Nossen), only 16% of residents had a positive view of expanding wind power; a majority had a negative view.
By unlocking economic opportunity, distributed generation and local ownership of renewable energy create a positive feedback loop for more investment in renewable energy.
Avoiding Eminent Domain
Distributed generation also avoids one of the major drawbacks to centralized generation: the need for new transmission infrastructure, commonly constructed by seizing land with the power of eminent domain. According to the Federal Energy Regulatory Commission (FERC), there are nearly 15,000 miles of new, high-voltage transmission lines planned to be in service by 2013. With most transmission lines requiring significant right-of-way (200 feet), this is equivalent to 363,500 acres of property needed. A substantial portion that will be taken with eminent domain or negotiated with landowners under the threat of eminent domain.
One issue for many landowners is that their land is taken or easement granted for a one-time payment, while the utility continues to draw revenue from selling access to the transmission line for decades. In Wyoming, landowners have organized to try to change the law to require an annual payment, in part because the transmission lines are being constructed to ferry wind power from Wyoming to places out-of-state.
There are few solutions to the eminent domain challenge, although a bill introduced during the 2009 Minnesota state legislative session would have tried to make the process fairer in that state. Currently, Minnesota utilities are exempt from many of the rules restricting how local government entities can use eminent domain. Utilities, unlike governments, do not have to negotiate in good faith, are not required to show landowners any appraisals of their property and do not have to compensate businesses for losses stemming from a forced change of location. The proposed legislation (which failed) would have harmonized the rules for utilities and local governments, and made eminent domain for transmission fairer.