Decentralized Power and a Contestable Grid

Any day is a good one when I channel Tyler Cowen, who points us to an article in the Washington Post on decentralized power. This New York Times article from last week about Hen Island points out many of the same strategies for removing yourself from grid reliance. Technological change in generators and in solar panels have made such redundancy affordable and, as I argue in this article on the obsolesence of the natural monopoly model,

Technological change in generation is making transmission contestable, and therefore no longer a natural monopoly.

It’s important enough to say that I isolate and highlight it. Cannot be said often enough.

UPDATE: I found one of the links I was looking for: this AP story from Monday highlights a woman who produces more power than she consumes, and under a “net metering agreement” can connect her solar system to the grid and add her power to it.

But substantial regulatory barriers exist to DG, particularly at the state level. This 2000 DOE report details some of those barriers, as does this 1997 report.

FERC has been trying to facilitate creating a consistent set of DG interconnection standards acruss systems and states, but this has been a daunting task.

In particular, utilities see DG as a reduction in their market, because they continue to operate from the historic culture and business model that “we make more profits by selling more power.” So if you want to generate for yourself, your gain is their loss, because of this zero-sum perspective on their business. DG interconnection would not be perceived as such a threat if

utilities seized the idea that retail customer choice can enable them to make more profits by selling less power.

Yet again cannot be said strongly or often enough.