Economics of Distributed Renewable Power - Why We Should Democratize the Electricity System, Part 2

[kristopher]

The Economics of Distributed Renewable Power - Why We Should Democratize the Electricity System, Part 2

The Economics of Distributed Generation
The falling cost of distributed renewable generation has been one of the key drivers of the transformation of the U.S. electric grid.

The following chart illustrates the cost of power generation calculated by averaging the total lifetime cost over the total electricity generated (“levelized cost”), as estimated by the investment bank, Lazard. Federal incentives cause a significant reduction in the levelized cost of renewable energy, in the form of upfront tax credits as well as ongoing production-based tax credits.

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Not all costs are covered in this levelized cost comparison. A grid with majority renewable power (from variable sources like wind and solar) will require a different approach than the existing grid. Whereas current generation scheduling, peaking and backup are tailored to a system with large, centralized baseload power plants. A grid with distributed renewable resources will require new load balancing ingenuity. It will be necessary to use smart grid technologies to enable greater demand response and to defer elective electricity use (such as electric vehicle charging) to times with greater supply, and to use energy storage like pumped hydro or batteries to shift surplus production to times of higher demand. It’s also a question of whether any additional costs incurred would be offset by other economic benefits. These issues are discussed later in this report.

Likewise, hidden subsidies for fossil fuels – incentives they once received for technological development, the cost of military operations to secure fossil fuel energy sources, and massive environmental externalities – are also omitted.

The Issue of Scale...

http://www.renewableenergyworld.com/rea/blog/post/2011/09/the-economics-of-distributed-renewable-power-why-we-should-democratize-the-electricity-system-part-2?cmpid=SolarNL-Tuesday-September6-2011