The Distributed Grid- Why Decentralized Power Generation is the Inevitable Future of Energy

The technology of energy production is rapidly advancing. Solar modules and wind powered generators are dropping in price, the knowledge required to properly and safely integrate a supplementary energy source into a common household electrical system is readily available online, and in many nations, governments are actively funding the development of new technologies in order to deleverage their dependence on the petrodollar monetary system. It seems that everything is on the table. Tidal energy harvesters harness the kinetic force of ocean and river currents to generate electricity. Solid waste processors convert garbage to liquid fuel. Natural oils are stored within algae molecules, and researchers are looking for the key which unlocks this endless source of oil.

Just as important as power generation, power storage is advancing as well. Up to now, this has been the technological bottleneck of real off-grid energy independence for the individual consumer, because even with a power source that provides the needed energy, that power could only be used in the moment that it's produced, and then it's back to importing energy from the outside. But breakthroughs in battery technology are being announced regularly- longer service life, greater efficiency, cheaper materials. The tipping point of mass adoption is only a matter of time.

Thousands of amateur inventors are experimenting in their garages during evenings and weekends, learning and sharing their knowledge. But there's an invisible drive behind these advances; the widespread attitude that such valuable technology is worth freely giving away. This calculation arises from the reality that millions of people worldwide are being victimized by war, and the excuse for these wars is resources and energy- so amassing a personal fortune pales in comparison to the value of millions of lives. Patents aren't important to many of these researchers- instead, a shift in the fabric of humanity is the prize.

The Distributed Grid Concept

The current landscape suggests an inevitable conclusion- that we will develop a distributed power grid. By distributed grid, I mean a network of energy producers and consumers with no central source or point of control. The advantages of distribution include greater security (entire areas can never be blacked out, since there are too many energy sources to disable), greater reliability (energy producers are monetarily incentivized to maintain performance) and lower costs per kilowatt/ hour from private sources (the state protected utilities are removed from their intermediary role of billing and account administration, and shareholder profits no longer inflate the end user's cost).

So presently, we have options beyond the default standard utility connection. I'll leave the merits and disadvantages of the various energy technologies to other articles, but I will confine the scope of this article to power generation and storage sources that can be privately owned and/ or located on private land.

How It Works

Let's imagine a group of 100 properties located contiguously in an area. They are all connected to the municipal grid. Within this neighborhood, some decide to install a means to generate electricity. They have done the math and the benefit is justified in their mind, so they build it. Some of them build more capacity than they can use, and they now have the option to sell their excess capacity. They can strike an agreement with the neighbor next door, run a cable to their house with a meter (the bubble shaped thing on the side of your house that records electricity usage), and the simplest example of a distributed grid is complete.

But what if many people in this group want to have their own network? Things get more complicated, but not impossible. A joint account would have to be established among the participants, then each producer negotiates a sale rate for their power. Now we have introduced the mechanism of free market competition. We might assume that the top end of the market would be the rate that the utility charges. Each producer has an overhead cost for the energy produced- their investment in labor, equipment and maintenance. The range between these two figures is the negotiable price of privately produced energy. Once a producer's rate has been agreed to, he would deposit Kw/h into the joint account, measured by his outgoing electrical meter as electricity enters the neighborhood grid. Every consumer would withdraw Kw/h from the account, again recorded by meters. On a periodic basis, the consumers would be billed for their usage and the producers would receive payment.

This simplified system could be implemented similar to the way a homeowner's association assesses community maintenance costs. This would be a local, voluntary solution to provide a service among neighbors. Perhaps not all of the residents would participate, but they don't need to. This concept could grow organically and gradually, as long as the physical electrical conductors could be run between properties.

This market will create new business models as well. Someone's unused land might be more profitable as a solar farm, or an steeply sloping area might be perfect for wind power. And we can be sure that investors will recognize value if it exists, funding distributed power companies.

Scaling It Up

This is great for a neighborhood, but what about a region? Simple enough- neighborhoods simply create a joint account with other contiguous neighborhoods and repeat the process an echelon higher. It's likely that neighborhood A has different agreements with neighborhood B to the east and neighborhood C to the west. Again, this is just groups of individuals incentivized to work together. Coalitions of neighborhoods might form to create regional networks, and they would in turn make trade deals with other areas, small pockets of homes or even isolated individual users.

This is perfect for condominium buildings, since the residents collectively maintain the property anyway. Commercial buildings would participate as well, both on the production and consumption side of the equation.

And of course the idea that the existing utilities will cease to exist is ridiculous, at least in the next several decades. There will be exchange rates for them as well, but tempered by the free market between distributed participants.

The Transition

I happen to live in Florida, the sunshine state. Ironically, we have very little solar here and this is due almost entirely to the opposition of the state protected monopolies on power generation and distribution. The argument that they continually make to their protectors in Tallahassee centers around ownership of the infrastructure itself. They claim that it's 'publicly' owned, so private entities aren't entitled to use the existing grid. This begs the philosophical question of who exactly is the government. When it's convenient to tell us that 'we' are the government, politicians will gladly remind of our 'responsibility to the collective'. But when money and power are at stake the story always changes- they are the government when there is benefit to being the government. Not us.

In spite of the political class's resistance, this is going to happen. As technologies develop and manufacturing ramps up, costs fall and the market will respond. Fortunes will be made in this market over the next several decades as the world changes. Less dependence on externally provided necessities is always a good thing for the individual, and always opposed by those who seek to control and corrupt free markets. Politicians, utilities and worker's unions will rise up against this threat to their current cash cow. Nothing could be worse for them than millions of people who no longer need their interference in their lives.

Nevertheless, they will try to regulate it. As much as politicians have talked about ending our dependence on foreign oil, history has proven that they aren't serious about this. Maintaining our dependence upon the political class is their absolute priority, even at the expense of national security. Watch for regulations, taxes, user fees, etc. Where people have created a free and beneficial market, they will insert themselves by force to skim money off the top while adding no value.

Being aware of their tactics is the most effective way to limit their corrosive influence and protect our independence. Support these new energy technologies. It's an answer to so many of the world's problems and it's within our reach to make energy plentiful and cheap for everyone.