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Unprecedented restructuring

A distributed power system that relies on a broad mix of large and small generating plants could dramatically improve efficiency and lower the environmental burden to today's power systems. And wind power can play a prominent part in such a system, according to the Worldwatch Institute's year-book, State of the World '94.

An electric utility that has 50 big power plants today may have 5000 or even 50,000 small generating units in operation by the year 2010, write Christopher Flavin and Nicholas Lenssen, co-authors of the chapter, Reshaping the Power Industry in State of the World '94. The power industry is on the verge of an unprecedented restructuring, comparable in magnitude to the one underway in telecommunications. If guided by wise policy making, one day the power industry may be decentralised, service oriented and market driven. With a little extra effort it may be environmentally sustainable as well, they predict. To make the point clear, the authors also compare these coming events in the power industry with what happened during the last decade in the computer business; companies that used to have a few huge central computers now have thousands of PCs instead, often inter-linked in networks.

The huge coal and oil fired power plants and nuclear reactors will soon be outmoded and unable to compete on the market. Fossil fuels are unable to live up to environmental demands. Coal fired plants, that today produce 40% of the electricity worldwide, have a limited future because they cause acid rain and contribute to the greenhouse effect. The big, vertically integrated power companies will eventually be dissolved and replaced by independent producers. This development has already started in the US and some other countries. New generators coming on line range from gas turbines to wind turbines and from geothermal power to solar cells. They have dramatically changed the trend towards ever bigger plants; independent plants averaged just 24 MW in 1991.

These new independent producers are technically innovative and competitive. One innovation is to convert airplane jet-engines for runnin electric generators. Gas fired combined cycle plants now reach efficiencies of over 50%, cost only $700/kW to build, are small and have a wide range of applications. They also have major environmental advantages; emissions of nitrogen oxides can be cut by 90% and CO2 by 60%.

Solar energy and the wind that flows from it is a nearly unlimited resource that can substitute the fossil fuels that now threaten the stability of the climate, note Flavin and Lenssen, pointing out that among the renewables wind power technology is most ready for the market: "By relying on advanced blades, electronic controls, and the economics of mass production, wind power could contend with gas turbines as the least expensive major power source by the end of this decade." A few years later they expect that big cost-competitive solar thermal and photo voltaic power plants will spread in the world's sun belts.

The role of the utilities will change. They will buy electricity from small and medium sized power plants. These will be operated by independent producers, but the utilities will distribute the power and sell it to consumers. As electricity distributors, the utilities will be service oriented and care about efficiency, employing administrative techniques such as demand side management (DSM) to assist them meet these aims. Other technical innovations will further advance the concept of local generation for local consumption -- such as solar cells on roofs and fuel cells in basements.

Scientists at the Californian Lawrence Livermore Laboratory are developing a mechanical battery, a high-tech lightweight flywheel made of composites that can be spun in a vacuum up to 200,000 revolutions a minute, with a 90% efficiency to store and release energy. Within ten years the laboratory expects to produce a device half the size of a washing machine, fit for the basement of a home. It could, for example, store solar energy during the day and release it when needed. Residential consumers could then produce their own power and sell the excess through the grid. The development of "smart" distributed systems of power generation with modern electronic devices that can turn decentralised generators and consumer appliances on and off will make this possible.

Some utilities have already re-shaped their structures along these lines. Most prominent is the Sacramento Municipal Utility District (SMUD) of California. In 1989, after a local referendum, SMUD closed down its 900 MW nuclear reactor in Rancho Seco and turned into a service oriented distribution utility. Its DSM programme includes the replacement of 42,000 old refrigerators, planting 500,000 trees to give shade, purchasing power from industrial co-generation plants, investing in a 50 MW wind farm and installing solar cells on customers' rooftops. And Rancho Seco has been retrofitted as a solar thermal plant.

It takes a wise policy to guide this development in the right direction. The keys are a competitive market for power generation, an open access transmission system, incentives for reliance on a diverse array of power supplies, taking into account the environmental differences between various sources, and development of a service rather than commodity oriented local distribution system that is committed to DSM. Existing power plants should be sold to independents and high cost nuclear plants written off as tax losses. This policy has its risks, though. The old power companies, with expensive coal and nuclear plants, can be forced into desperate cost cutting to bring their electricity prices down. And focusing on cheap bulk electricity mainly helps large customers at the expense of small.

To create a service-focused utility industry, governments will have to set new rules that reward the ability to provide cost effective and environmentally clean energy services. To ensure that environmental values are included there has to be a mechanism to encourage a diverse array of generating technologies -- and one which will boost the use of renewables.

No single policy model will work equally well everywhere, say Flavin and Lenssen. Utility monopolies are, for example, more closely guarded in some European countries than in the US. New approaches have to be adapted to local conditions. But if it follows the telecommunications model, the electric power industry will be vertically separated, with a competitive commodity market connected to service oriented distribution utilities through a "common-carrier" transmission system. In which case, a low cost, ecologically sustainable power system can begin to take shape.

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