IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change

4.3.8 Decentralized energy

Decentralized (or distributed) energy systems (DES) located close to customer loads often employ small- to medium-scale facilities to provide multiple-energy services referred to as ‘polygeneration’. Grid-connected DES are already commercial in both densely populated urban markets requiring supply reliability and peak shedding as well as in the form of mini-grids in rural markets with high grid connection costs and abundant renewable energy resources. Diesel-generating sets are an option, but will generally emit more CO2 per kWh than a power grid system. Renewable-energy systems connected to the grid or used instead of diesel gensets will reduce GHG emissions. The merits of DES include:

  • reduced need for costly transmission systems and shorter times to bring on-stream;
  • substantially reduced grid power losses over long transmission distances resulting in deferred costs for upgrading transmission and distribution infrastructure capacity to meet a growing load;
  • improved reliability of industrial parks, information technology and data management systems including stock markets, banks and credit card providers where outages would prove to be very costly (IEA, 2006g);
  • proximity to demand for heating and cooling systems which, for fossil fuels, can increase the total energy recovered from 40–50% up to 70–85% with corresponding reductions in CO2 emissions of 50% or more;
  • zero-carbon, renewable energy sources such as solar, wind and biomass are widely distributed and useful resources for DES. However, developing decentralized mini-power grids is usual practice if these sources are to make significant local contributions to electricity supply and emission reductions.

There are added expenses, power limitations and reliability issues with DES. The World Alliance for Decentralized Energy (WADE, 2005) reported that at the end of 2004, just 7.2% of global electric power generation was supplied by decentralized systems, having a total capacity of 281.9 GWe. Capacity of DES expanded by 11.4% between 2002 and 2004, much of it as combined heat and power (CHP) using natural gas or biomass to combine electric power generation with the capture and use of waste heat for space heating, industrial and residential hot water, or for cooling. Growth in the USA, where capacity stands at 80 GWe, has been relatively slow because of regulatory barriers and the rising price of natural gas. The European market is expected to expand following the 2003 Cogeneration Directive from the European Commission, while India has added decentralized generation to enhance system reliability. Brazil, Australia and elsewhere are adding CHP facilities that use bagasse from their sugar and ethanol processing. Brazil has the potential to generate 11% of its electricity from this source. China is also adding small amounts of decentralized electric power in some of its major cities (50 GWe in 2004), but central power still dominates. Japan is promoting the use of natural gas-fuelled CHP with a target of almost 5000 MW by 2010 to save over 11 MtCO2 (Kantei, 2006). In 2005, 24% of global electricity markets from all newly installed power plants were claimed to be from DES (WADE, 2006).

The trend towards DES is growing, especially for distributed electricity generation (DG), in which local energy sources (often renewable) are utilized or energy is carried as a fuel to a point at or near the location of consumption where it is then converted to electricity and distributed locally. As well as wind, geothermal and biomass-fuelled technologies, DG systems can use a wide range of fuels to run diesel generators, gas engines, small and micro-turbines, and Stirling engines with power outputs down to <1 kWe and widely varying power-heat output ratios between 1:3 and 1:36 (IEA, 2006a). The motive power of a vehicle to supply electricity could be used. Hydrogen (Section, could fuel modified internal combustion engines to provide a near-term option, or fuel cells in the longer term (Gehl, 2004). A critical objective, however, will be to first increase the power density of fuel cells, reduce the installed costs and store the hydrogen safely.

Small-to-medium CHP systems at a scale of 1–40 MWe are in common use as the heat can be usefully employed on site or locally. CCS systems will probably not be economic at such a small scale. Mass production of technologies as demand increases will help reduce the current high costs of around 5000 US$/kWe for many small systems. Reciprocating engine generator sets are commercially available; micro CHP Stirling engine systems are close to market (Whispergen, 2005) and fuel cells with the highest power-heat ratio need significant capital cost reductions.

The recent growth in DG technologies, mainly diesel-generation based, to provide reliable back-up systems, is apparent in North America (Figure 4.24). Technology advances may encourage the emergence of a new generation of higher-value energy services, including power quality and information-related services based on fuel cells with good reliability.


Figure 4.24: Recent growth in distributed electricity generation using fossil-fuel resources in North America.

Flexible alternating-current transmission systems (FACTS) are now being employed as components using information technology (IT) and solid-state electronics to control power flow. Numerous generators can then be controlled by the utility or line company to match the ever-changing load demand. Improved grid stability can result from appliances such as cool stores shedding load and generation plants starting up in response to system frequency variations. In addition, price sensitivities and real-time metering could be used to stimulate selected appliances to be used off-peak. IT could provide a better quality product and services for customers, but in itself may not reduce emissions if say peak load is switched to base load and the utility uses gas for peaking plants and coal for base-load plants. It could, however, enable the greater integration of more low-carbon-emitting technologies into the grid. The intermittent nature of many forms of renewable energy may require some form of energy storage or the use of a mix of energy sources and load responses to provide system reliability. To optimize the integration of intermittent renewable energy systems, IT could be used to determine generator preference and priority through a predetermined merit order based on both availability and market price.