What will be the effect of greater decentralization of power generation?
The decentralization of power generation is an important step in attaining energy efficiency and meeting future demands. First, it is important to consider the drawbacks of a centralized system. Centralized power is a wide network of transmission lines which supply residences, industries, and almost every structure demanding power. This system is very inefficient because of the distance the energy must travel and from the loss of energy through conversion. The biggest problem; however, is the systems vulnerability to natural hazards. When one section of the distribution system is cut off due to a natural hazard, the whole system suffers.
Greater decentralization will provide a more flexible system where distributive capacity could be added through the development of a smart grid. This allows consumers to generate their own power and supply the grid with any excess power not used. The formation of ‘micro grids’ will create a more efficient, reliable system that can form a symbiotic relationship with the main grid. In the event of natural disaster, a micro grid can disconnect from the main grid and still generate it’s own power. The market implications are enormous through decentralization of power generation. Of course, the decentralization depends on government policy and the massive amounts of money spent on lobbying politicians.
What new businesses will evolve in this changing landscape?
There will be many business opportunities in the energy industry created by decentralization. The renewable energy sector alone will have major growth potential in solar, wind, geothermal, biomass, and other forms. Within these renewable energy generation sectors there will be need for installers, maintenance workers, and designers. Battery storage is a business opportunity that will continue to expand as technology increases the storage capacity. Computer software and sensors will play a large part in the development of the micro grid, which will create opportunities for entrepreneurs to cash in on their innovations. Consulting firms will be needed to help direct entrepreneurs and forecast certain niche markets made available in the changing energy industry. Finally, capital will be needed to finance these business opportunities and investors who can foresee the potential, while understanding the government incentives, stand to make substantial returns.
What business can you see yourself creating to serve this market?
I could see myself starting a consulting firm. I am not a computer programmer and do not possess the engineering skills to create something innovative. I am more interested in finance and policy, and would help entrepreneurs navigate through the government incentives and regulations, while providing them with a financial analysis of project plans. My consulting firm will help align business strategy and compliance initiatives while also providing risk assessment and governance goals. The consulting aspect in this industry could provide a business the tools needed to capture it’s full market potential.
Hi Mark,
I didn’t really look at decentralization the way you have regarding a higher reliability with the decentralized power generation. It obviously makes senses and with a decentralized area, repairs would be more easily found and more rapidly resolved when disaster damages infrastructure. I think it should be easier to manage and maintain the smaller system and should it fail it will not affect a large area. I would like to believe that more efficient and renewable technologies would be implemented for these smaller systems because state and federal governments will most likely not want a say in how it is installed and/or managed.
I believe as these technologies continue to break through society, consulting services will be needed across the U.S. and the world. I’ve had the same idea in past courses regarding a consultation firm but I would consider more specifically to the residential and small business side of the market. I think it would be a good idea to educate residents on how they can save on their energy costs while preserving the environment as well.
Great Post!
~Jim
Hi Mark. I loved your post and agree with your points. Don’t you find it interesting that in all the conversations about distributed generation and micro grids, we still continue to discuss how they will tie to the traditional utility model. Decentralization may be in our future, but it will take time and will also require a comprehensive plan that has been well thought out and devoid of political and special interest posturing. An entrepreneur who can figure out how to accomplish that — and help us transition from where we are today to true decentralization — will be a very rich person in my humble opinion.
Yes, it would be amazing to figure out how to accomplish decentralization without special interest!