Distributed Generation: Here To Stay?


For the third year in a row I have been asked to participate at RECAM, a conference whose full name is: Renewable Energy In the Caribbean and Central America. You can see why the acronym is preferable.

Two years ago I presented data that showed how climate change is impacting project risk and, by extension, financing of sustainable energy projects in the region. Last year I shared some research regarding Central America's regional electricity transmission system, SIEPAC. This year I have been asked to present trends regarding distributed generation, or the strategy of placing electricity generation closer to the point of consumption and foregoing a more centralized model common in most countries. That strategy has clearly not stood up to the extreme damage wrought by more and more storms as a result of global climate change and utilities, especially in the Caribbean and Central America, are looking at alternatives to withstand future damage.

Distributed generation, or simply DG, is not new. Rooftop solar panels, mini-hydropower turbines, and small wind turbines have been around for some time. However, the increasing effects of climate change are forcing utilities' hand as storm devastation reveals how vulnerable centralized systems are. Anyone who has paid a bit of attention to what hurricane Maria did to Puerto Rico understands this.

Instead of a network of centralized generation assets and a wide-ranging web of transmission and distribution lines, a DG strategy calls for a strategic network of electricity-generating assets and a local mini-grid to serve a distinct population center. Should a strong storm hit and damage one locale, areas that were spared would still have access to power. For backup, these mini-grids can be interconnected so as to provide some level of power to a damaged community while it rebuilds.

Accomplishing this requires flexible generation and an electric grid technologically savvy enough to support it. The former is taking root in the Caribbean and Central America, while the latter struggles. In just five years renewable energy has made significant inroads in Central America while the Caribbean Community (CARICOM) has a long-term renewable energy penetration target of 47 percent for the region. As equipment becomes more affordable, customers and utilities are experimenting with new business and operating models to determine the long-term viability of DG strategies.

For a long time renewable energy equipment cost was the primary barrier to implementing more flexible DG solutions in the region. No longer. Solar and battery costs have sunk to the point where they can ensure services for critical needs during prolonged outages and fuel droughts. The barriers now are largely due to regulatory issues and the ability of local utilities to learn the skills necessary to install, maintain, and operate more technologically advanced hardware to enable a continual use of more flexible generation and consumption behaviors. The graphic above from Bloomberg New Energy Finance shows the kinds of markets and revenue streams accessed by more modern and dynamic grid operations. Not all are viable in smaller countries, particularly small-island developing states, but they certain provide more options than the current model of "dumb" wires simply carrying electricity one way.

These are just a few of the images and points I'll be presenting today as I participate in what are sure to be engaging and thoughtful panel discussions. I am grateful to Green Power for once again allowing me to participate, and I invite you to connect with me via the social media buttons below to discuss the topic further.

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#LatinAmerica #Caribbean

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© 2020 by Mark Konold