Energy myth six-the barriers to new and innovative energy technologies are primarily technical: The case of distributed generation (DG)

Abstract

For almost a century, the electric utility system had been well served by gigantic generating plants that delivered energy to customers through an intricate grid of power lines. But traditional generation technology appeared to reach limits to improvement by the 1970s, hindering companies' ability to lower the cost of power. Moreover, as consumption grew and as utility firms and independent generating companies put new demands on the grid, especially during the period of utility restructuring that began in the 1990s, the transmission and distribution network became constrained. Parts of the grid became unstable, leading to events such as the cascading Northeast blackout of 2003. Advocates of distributed generation (DG) facilities have suggested a novel approach to the challenges facing the conventional network of power production, transmission, and distribution. Employing small, modular (and sometimes renewable-energy) generators that produce power close to end users, they foresee a host of potential benefits. In contrast to the customary use of a few largescale generators distantly located from load centers, employment of numerous, but small plants can provide power onsite with little reliance on the distribution and transmission grid. DG technologies produce power in capacities that range from a fraction of a kilowatt (kW) to about 100 megawatts (MW); utility-scale generation units have capacities that sometimes reach beyond 1,000MW. Distributed generators can also offer, in many cases, lower-cost electricity and higher power reliability and security with fewer environmental consequences when compared to traditional power generators. Despite such potential benefits, DG technologies remain minimally utilized in the American electric utility system. To be fair, some of the criticisms are legitimate: DG technologies tend to have higher capital costs per installed kW than centralized stations; interconnecting DG technologies to the power grid can sometimes complicate system safety; and the intermittent and dispersed nature of DG technologies makes them more difficult to monitor and standardize. But the relative neglect of DG technologies occurs at least partly because opponents prefer to take a conservative approach - such as fixing problems within the century-old paradigm that relies on large-scale generation units and the transmission infrastructure. Perhaps more significantly, they criticize the new technologies by arguing that they are immature or technically inadequate. For example, when evaluating the prospects of renewable-energy DG technologies, Brian O'Shaughnessy (2005, p. 68), president of an American manufacturing firm, told senators that "since the evolution of renewable power is at a very early stage in its development, mandating renewable power with today's technology is like trying to go to the moon in the 1950s." The Electric Power Research Institute's Electricity Technology Roadmap (2003, p. 3) concluded that technical problems relating to energy capture, storage, and manufacturing meant that "the market penetration of renewable technologies has been limited." A comprehensive Resources for the Future study of small-scale renewable energy systems further noted in 1999 that such technologies "have failed to emerge as a prominent component of the U.S. energy infrastructure" because of poor "technological performance" compared to "conventional technologies" (McVeigh et al., 1999, pp. i-ii). Criticisms of other DG technologies, such as microturbines and small-scale gasturbine generators, tend to focus primarily on technical issues such as poor fuel efficiency, limited power supply, and the untested nature of such systems. Thomas Petersik, a former analyst at the U.S. Energy Information Administration, argued that "distributed generation technologies experience much higher (in the neighborhood of 50%) capital costs per kilowatt, in part because they lack economies of scale; they are much less fuel efficient, and operations and maintenance are much more expensive" (Sovacool, 2006, p. 203). A 2004 Energy Policy article contended that "mini power plants" are still constrained by factors such as "limited power supply" and "low load factor" (Chaurey et al., 2004, p. 1694). William E. Liss (1999, p. 4), Director of the Gas Research Institute, suggested that "the market for small-scale power generation has not developed in the past two decades" because of "negative scaling effects" and "legitimate technical issues." Denigration of DG technologies on grounds of perceived technical failure should not appear unusual. Actually, it continues a long trend among engineers (and historians too) who view technical problems as the primary reason for the failure of other nascent technologies. For example, most people who have evaluated electricitypowered automobiles of the early twentieth-century argue that their inability to thrive resulted simply from the lack of reliable batteries that could store enough energy for the vehicles (Rae, 1955; Flink, 1970, 1990; Graves et al., 1981). Yet other scholars have established that electric taxis and trucks used in a few cities demonstrated remarkable technical success. The revisionist academics suggest that the failure of electric automobile technology to flourish had more to do with an inadequate social and business infrastructure than with hardware deficiencies (Kirsch, 2000; Moms and Kirsch, 2001). Similarly, after the Space Shuttle Challenger exploded in 1986, numerous investigations concluded that the cause of the accident was a circular seal made of rubber, known as an O-ring. In a televised press conference, the physicist Richard Feynman famously placed an O-ring in a glass of cold water to demonstrate such a seemingly uncomplicated technical failure. Others, however, have argued that the Challenger accident stemmed more from an overly rigid and hierarchical culture among managers of the National Aeronautics and Space Administration than from the deficiency of any individual piece of hardware (Collins and Pinch, 1998). In both cases, technical deficiency was used to explain otherwise socio-technical and institutional "failures." To put such thinking in the context of contemporary American energy policy, this chapter addresses the myth that barriers to innovative energy technologies, such as distributed generation, are primarily technical. The chapter begins by examining the potential benefits of distributed generation technologies. Then, it explores government incentives for these technologies as a way to demonstrate how policymakers have attempted (perhaps not always wholeheartedly) to advance them. Next, we examine some of the demonstrable technical reasons for slow adoption of DG systems. The final part of the chapter, however, suggests that the success of the new technologies has been impeded by a host of social - not exclusively technical - factors. We find that a historical examination of the culture of electricity producers and users helps clarify why the new technologies have seen little use. Going beyond technical explanations (of alleged low efficiencies, limited capacity factors, etc.), we focus on the social nature of decision making among participants in the electric utility system. The approach not only helps us understand the reluctance to employ distributed generation technologies. It also suggests ways of overcoming the barriers faced by their advocates.