Environment: Rethinking the Grid

In March 2004, San Francisco Mayor Gavin Newsom dedicated a new 675-kilowatt solar electric system atop the Moscone Center—the largest city-owned solar installation in the country to date. He said in his address, “This solar project marks the city’s first major step towards achieving its goal of obtaining all municipal electricity from pollution-free sources, while creating jobs and driving economic development.”

Distributed generation (DG) is the name for a new trend in electricity production in which, instead of drawing power solely from a few large, far-off power plants, buildings get some of their power from numerous smaller, local facilities often located in or on the buildings themselves. DG’s first advantage is to eliminate the roughly seven percent energy loss of transporting electricity over distant power lines. The growing desire for clean and renewable energy also plays a part, as many DG facilities, like the Moscone Center’s newly installed array, use solar power, wind, biomass, fuel cells, co-generation, and clean natural gas turbines. As DG becomes more prominent, it is changing not only how cities get their power but how city residents think about power—from recalculating property values to rethinking their relationships with utility companies. 

Urban Renewal through Distributed Generation

San Francisco has been a national leader in the DG movement. The Moscone Center is the first major project completed after the electorate passed a $100 million bond initiative to fund solar generation, energy efficiency measures, and other renewable power sources for public buildings. With its Energy Resource Investment Strategy, San Francisco has a plan to phase out its oldest and dirtiest large fossil fuel plant by the end of 2005 and to be free of large centralized generation by 2020. The city will meet its power needs instead by adding four small natural gas peaking plants, an additional transmission line to bring in power generated outside the city, and numerous distributed generation and energy efficiency projects. Says Ed Smeloff, Assistant General Manager of the San Francisco Public Utilities Commission, “Distributed generation and energy efficiency can be a major, if not the most important, part of a plan that improves reliability, reduces emissions, and provides local jobs.”

The City of Chicago is another leader in using clean distributed generation to facilitate urban revitalization. The Chicago Solar Partnership has installed solar electric systems on seven major museums, eight Chicago Public Schools, and many other public facilities and private buildings, displacing tons of carbon dioxide and other emissions from coal-burning power plants. Spire Solar Chicago, one of the sponsors of the Chicago Solar Partnership, manufactures custom photovoltaic modules at its West Side factory for structures within the city, such as the Bethel New Life Lake-Pulaski Commercial Center and Millenium Park. Homan Square, the former headquarters of the Sears and Roebuck Company, is now a mixed-income, full-facility development in a low-income urban neighborhood that uses Spire’s solar panels to generate electricity. “This Center was built to be a long-term, sustainable part of the community,” says Kristin Dean, Executive Director of the Homan Square Community Center Foundation. “We are also pleased that Spire is creating jobs in the West Side Chicago community, and using Spire Solar panels just seemed like the right thing to do.”

And in Texas, Austin Energy has launched a solar program that gives special financial incentives for purchasing equipment manufactured in Austin. “This program is not only about decreasing our reliance on fossil fuels and delaying the need for new generation through our green power program,” says general manager Juan Garza, “but also about making Austin an attractive destination for solar manufacturers.”

Limits of Conventional Generation

Cities have a voracious appetite for electricity, and power plants consume the reserves from coal mines, oil and gas fields, and uranium mines to satiate it. As demand for electricity grows, so does the number of power plants. They are often hulking dirty beasts, blighting coastlines and spewing toxins into the air, water, and ground. Pollution from power plants—sulfur dioxide, nitrogen oxides, and particulates—is linked to over 30,000 deaths every year, along with hundreds of thousands of asthma attacks, cardiovascular ailments, and other health problems, not to mention global warming, to which power plant emissions contribute heavily.

Centralized generation plants are potential terrorist targets, especially near large cities. Coal, natural gas, uranium, and oil must be mined or drilled from locales either environmentally pristine or politically unsavory—abroad, unstable countries in Eurasia or Africa are chief sources of oil, while domestically, draining natural gas pockets often means damaging the land that lies above them. The delivery pathways back to the plants are subject to municipal squabbles, the whims of private sector ownership, and terrorist attack. Distributed generation installations are smaller, safer, and according to the U.S. Department of Energy, “by nature, dispersed, and therefore, more difficult to disrupt or destroy.”

Additionally, building more power plants doesn’t solve the problem of an overloaded transmission and distribution (T&D) system—the wires, substations, and transformers that deliver the power from generators to users. The T&D capacity shortage is due to what Greg Kats, Principal of the consulting firm Capital E and former Director of Financing for the federal Office of Energy Efficiency and Renewable Energy, calls the “large industry-wide under-investment in both peak power and T&D. Ten years ago we had 25 percent generation margins; now it’s down to 15 percent.” Greater system instability and events like the cascading blackouts from summer 2003 are the result.

Utilities are feeling the crunch. Matt Koenig, reliability engineer at ConEd in New York City, says, “The continued growth of electric load in New York City makes it imperative that we continue to invest in our infrastructure. That means upgrading our services along with building new feeders and substations for reliability and to meet the demands of the region’s economic expansion. The streets of New York are already filled with utility, communications, and transportation systems, leaving precious little space to work with. That’s why solutions such as distributed generation, superconductivity, and other advanced technologies will play an increasing role in our planning and design considerations.”

Easing the Grid and Cleaning the Air

Distributed generation uses local energy resources to generate electricity for local consumption. These resources are ideally renewable, with environmentally sound harvesting processes. Solar panels convert the sunlight that is already shining down. Wind turbines harvest wind. Small hydroelectric power stations can generate electricity from flowing water without the huge artificial dams that devastate river ecosystems. Biogas generators use waste methane from sewage treatment plants. The technologies best suited for a particular site depend upon what natural resources are available locally.

With photovoltaic technology, solar power can be harvested anywhere. Sunlight levels have the added benefit of correlating closely with peak electrical loads, as shown by the work of Dr. Richard Perez at the University of Albany. Thus, the strategic application of solar panels can reduce peak loads, strengthen the grid, and prevent blackouts. Smeloff, in talking about the Moscone Center installation, says that “reliable solar generation benefits both the city and the entire Bay Area region by reducing congestion on the electricity grid as well as improving air quality and preventing other environmental impacts.”

“Clean DG is of primary importance in urban load pockets,” says Josh Radoff, co-Director of GreenHomeNYC. “These are the places where power plants are located next to dense population centers, where effects of air pollution are maximized and where land use is at a premium such that siting new plants and transmission capacity can be difficult to impossible. Clean DG, like the fuel cells in 4 Times Square or the proposed wind turbines in the Freedom Tower [at the site of the former World Trade Center] are excellent forward-thinking examples of relatively large-scale clean DG that can have a real impact on peak demand and peak pollution.”

The Intersection of Old and New

The existing network grids of large cities were designed to handle a large outpouring of energy from a few centralized plants. Generators must work constantly to match the amount of power required by utility customers at every second of every day, and must be able to react to abrupt, extreme changes in demand (for example, when a large air conditioning system turns on or shuts off). To incorporate many smaller, more local plants requires some modifications to the existing infrastructure, and federal and states standards are currently in the works that would format power networks to allow these small plants to “plug in” more easily.

Occasionally buildings in urban areas avoid these difficulties by choosing to stay off the grid altogether. The new Audubon Center in Los Angeles is a 5,023 square-foot building entirely powered by on-site solar systems functioning off the grid. This includes systems for electricity, heating, and cooling. It stores the excess power from its solar panels in batteries, for use when the sun is not shining.

The vast majority of urban DG, however, is grid-connected. A building with solar cells will draw from the grid to get power at night, rather than storing it in costly and maintenance-intensive batteries. Any excess power produced when the sun is shining can be fed back into the grid, supplying peak power when the system needs it most. In effect, these buildings become generators as well as purchasers of electricity, establishing an entirely new relationship between the utility and its customers.

Reshaping Markets

Cogeneration, a kind of distributed generation (see sidebar), is frequently cheaper than utility power even with a short and narrow investment horizon. Other forms of distributed generation are often viewed as too costly, however, because the monetary savings accrue over time, and some of the savings do not accrue to the plant owner but rather to society at large. The owner of the generation equipment saves or earns the market price of the electricity (depending on whether the owner uses the electricity itself or sells it to the utility or other consumers). The utility receives the benefits of a stronger grid under less strain. And society at large receives the health and environmental benefits of reduced pollution as well as increased reliability in the electrical system and downward pressures on electricity prices.

While incorporating social pluses like environmental benefits will require policy changes, already market forces are harnessing the long-term benefits to utilities of DG in ways that help the building owner’s bottom line. Commercial customers can install solar and other DG systems without the high initial cost through companies like SunEdison and Homeland Energy, who then handle the financing and charge the customer an electricity rate less than conventional utility prices.

“Even if renewable resources are more expensive initially, they bring fewer risks. They act as a physical hedge against risks because their price doesn’t vary with market movements,” says Dr. Joel Swisher of the Rocky Mountain Institute. “And you can quickly build them as needed, rather than building a big plant and risking being stuck with huge costs if you guessed wrong.” Generators that require only sun, wind, or water to produce power get their fuel for free and escape the price fluctuations that torment traditional generators.

DG may also affect the real estate market, which has begun to recognize the benefits of reduced energy consumption. A series of articles that appeared in The Appraisal Journal in the late-1990s suggested that home value increases by $20 for every $1 reduction in annual utility bills. While this research was done with respect to energy efficiency, it is only logical that it should apply to distributed generation as well. In the future, this could mean that proximity to renewable energy generating resources will partially determine property value. A plot just north of a skyscraper may be appraised lower than one to its south because the skyscraper blocks out the sun.

Designing Sustainable Cities

Contrary to conventional wisdom, we are not experiencing a shortage of energy: we are experiencing a shortage of political creativity in harnessing the energy that is all around us. “Cities are inevitably going to have difficulties,” says Steve Hammer, researcher at the London School of Economics, “because [in America] policy-making authority… rests at the state level. In Europe there are national-level commitments to do something about climate change which filter down to the local level.”

Despite the policy gap, there is significant momentum today towards thinking about energy differently that goes beyond past efforts. For example, the Citigroup Center on Manhattan’s Lexington Avenue, built during the energy crisis in the 1970s, has a large south-sloped roof that was designed to harness solar energy. The original solar technology was never installed, but a team that includes the original architects and major players in the solar industry has recently resurrected the plan to install photovoltaics on the crown of the tower.

The vision is compelling: clean power without pollution, without price volatility, independent of overseas disputes and environmental destruction, and creating local jobs. Obstacles abound—politics, business, technical competence, and societal inertia—but none insurmountable. The rewards are cities that are healthier, safer, more stable, and more independent. As clean energy expert Greg Kats describes a DG future, “It’s going to be more democratic. People are going to have flexibility and choice and greater control.”

REFERENCES

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L. Chamberlain. “Mayor Daley’s Green Crusade.” Metropolis Magazine , July 2004.

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“Distributed Energy Program.” Energy Efficiency and Renewable Energy, U.S. Department of Energy.

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A. Lovins, et al. “Small is Profitable: The Hidden Economic Benefits of Making Electrical Resources the Right Size.”

Rocky Mountain Institute, 2002.

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“Prospects for Distributed Electricity Generation.” Congressional Budget Office, Sep. 2003.

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A.M. Shipley and R.N. Elliott. “Stationary Fuel Cells: Future Promise, Current Hype.” American Council for an Energy-Efficient Economy, Report # IE041. Mar. 2004.

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