Some 12 GW of coal fire plants — equivalent to a sixth of the total generation capacity can now only operate for a limited number of hours before they are closed to comply with European Union pollution regulations. Shortfalls could see the National Grid cutting energy to business by 2015, "to avoid families being left in the dark." If no action is taken, there is a 42 percent likelihood that customers will be cut off at some point in 2015 or 2016.
This is grim news, for even assuming that gas-fired power plants and nuclear reactors are ordered today, it would still take 5 years for them to start coming online. The utilities are in no hurry to invest in new gas plants until they know what subsidies will be available under electric market reforms that are over a year from completion.
Ofgem said that little had changed since its last report in 2009 when it warned that the financial crisis, tough environmental targets and the closure of old power stations threatened security of supply. Nothing is mentioned about the part renewables will play in averting this crisis, so we assume that it has already been factored into the equation. Are we left just accepting it fait accompli, or do we ignore pollution regulations and pay a heavy price?
Distributed power can make a serious contribution to both delivering power at current mart prices and reducing carbon dioxide emissions, but it requires utilities to buy into this new model. At the present, they are reluctant to accept or pursue this possibility. What they want is to continue the central model of large-scale generation and distribution — a one-way flow of electricity from them to the consumer.
They are embracing smart meters as the first plank in their smart grid strategy. This gives them information on domestic consumption, demand patterns and the possibility to smooth demand with variable pricing. More important, it gives them automatic billing, which provides a direct return on their investment.
Making the distributed network smart and investing in communication networks, which would ultimately deliver revenues greater than simply supplying electricity, are of interest to them. However, they only want this within their time frame and control. Provided utilities continue to deliver electricity to both domestic and industrial users, they can be assured that they keep setting the policy and timetable of the smart grid. But this grim news from Ofgem shows there is a serious doubt that we can leave them to just get on with the job.
Distributed power has sufficient scale to make a serious contribution to our electric generation. Industry is concerned about the rising cost of power and large companies are considering making their own power. Those that operate combined heat and power units are installing newer and more efficient systems and selling electricity back onto the grid. This all makes the proposition even more attractive. I would imagine the Ofgem announcement has now gotten them concerned not just about cost but also about reliability of supply.
This does not stop with industry. There are now hundreds of smart buildings delivering energy efficient and relatively clean power through automatic controls and grid-interfaced software, thus functioning as virtual power plants. While we don't mean to suggest that our present dilemma can be solved only through distributed power, it could certainly help.
Distributed power should be a part of the new model of power generation and distribution: Enhanced by virtual power plants, delivered through industry, bolstered by smart buildings and interfacing with the smart grid. Government cannot afford to sit back and let the utilities decide whether distributed energy gets to join the party.