Micro-Grids and Distributed Power Generation

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Micro-Grids and Distributed Power Generation

When Hurricane Sandy ripped through the eastern seaboard in October 2012, it demonstrated once again just how vulnerable our nation’s electrical grid is to storms, natural disasters, or terrorist attacks.  In the aftermath of Sandy, 8.5 million homes and businesses lost electricity, according to the Department of Energy.  The economic impact of the power outage was huge, with an estimated cost of $5.7 billion in lost productivity.1

The Category 2 storm prompted yet another round of demands for a more resilient system for generating and distributing power.  Over the past few years, thanks to falling prices for natural gas and solar panels, as well as an increase in the frequency of power outages caused by natural disasters, momentum for micro-grids has been building like, well, a hurricane.

The economic impact of weather-related power outages, according to a White House report, is severe:  The economy lost as much as $52 billion in productivity from 2003 to 2012.

That explains why companies are now generating about 5 percent of their electricity on-site, according to the Wall Street Journal.2  And the trend has been picking up speed, with the number of electricity-generation units at businesses soaring from 10,000 to 40,000 since 2006 as the cost of generating power becomes almost as cheap as the cost of buying it.

Costs of solar systems have dropped by 50 percent over the past decade, with solar modules falling 80 percent during the past four years, from $4 a watt to 65 cents a watt.  Meanwhile, federal subsidies on solar systems provide a 30 percent tax credit on top of state subsidies.

Solar energy is probably the least viable source of distributed power.  Businesses are also generating electricity from wind turbines and biomass.  However, fuel cells, small gas turbines, and reciprocating engines appear the most promising because they run on natural gas, which will be cheap and plentiful for the foreseeable future, as explained in the trend Taking Advantage of America’s Natural Gas Windfall.

Through technologies like these, companies are already creating a more reliable and cost-effective electrical grid.3  Consider a few typical examples:

  • The Kroger supermarket chain is saving $160 million a year on electricity by using wind turbines at a dairy and solar panels at four grocery stores...

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