1. One major problem faced by electric utilities in the US is high cost. The cost of electricity has been on the rise throughout the country due to electricity deregulation (Slocum, 2001). In most state governments, electricity supply has been left in the hand of private players completely free from government regulation. This has given these players the freedom to push upwards electricity prices as they enjoy huge profits. Another problem is increased levels of pollution. A huge proportion of the US electricity is produced using fossil fuels which have many adverse impacts on the environment (Savacool, 2008). Interruption in fuel supply also results in increased costs of electricity. There are also issues of growing vulnerability and inefficiency of transmission and distribution networks. Vulnarability is mainly brought about by the grid susceptabilty to natural disaster and terrorism.
2. Distributed generation refer to small power-generating technologies and energy management systems that are used to improve the electricity delivery system (NREL, 2009). Savacool (2008) has described Distributed Generation as an approach to power generation that involves producing power onsite and near the consumer. These technologies range from small power generating equipment that provides backup power to large power generating equipment that power a number of units. The Distributed Generation technologies are owned by different stakeholders including residential home owners, business entities and organizations.
3. Distributed Generation technologies have various benefits over the traditional utility-owned business models. Unlike the traditional models which generate power centrally and involve bulk transmissions, Distributed Generation technologies provide power at any location and can utilize different modes of operation and running. Their flexibility in terms of location gives them the ability to provide power anywhere and for any objective. Their size and flexibility also make them less susceptible to terrorism and other attacks. Therefore cases of interrupted transmission are minimal when using these technologies. This implies that these technologies are bound to be more reliable and efficient than the traditional utility-owned models.
4. Distributed Generation technologies have many advantages but there are factors that are impeding their growth to become people’s main source of power. The biggest problems associated with distributed generation involve control, cost and compliance. First, unlike centrally placed generations, distributed generations are dispersed over wide geographical areas. It becomes a daunting task to have to manage thousands of generators that are distributed across a wide geographical area. Distributed generation technologies are also associated with high capital costs. The initial cost of acquiring equipment and technology for use in the Distributed Generation is usually high and unlike in central generation; this cost is shared among a small group of people making it even more expensive. There are also environmental concerns raised against the distributed technologies. Distribution generations also need to respect the wellbeing of people and the sanctity of the environment (Savacool, 2008). Due to their wide dispersion, it becomes difficult to monitor the compliance of these technologies to environmental policies and practices.
5. Utility deregulation refers to the action of removing the regulations placed on electric utilities by the government (Slocum, 2001). The action of deregulation was motivated by the need to drive down the prices of electricity by eliminating regulation cost. The influence of the government over power production and distribution was minimized through this deregulation process. Deregulation laws also removed the cost based pricing and introduced market pricing into electricity. The main aim of deregulation, which was to reduce prices, was never achieved but on the contrary prices paid for electricity by consumers went up. Several lessons were learnt from this process. One of them is that electricity has inelastic supply and demand and therefore market forces cannot be effective in this industry. Electricity plants require high capital investment and have high operation costs that prohibit entry of many players into the industry thereby leaving the industry in the control of few companies.
6. Smart electric grid is an electricity network that uses digital technology in the transmission of power (Anderson, 2009). It also incorporate automated analysis of problem in the generation and transmission system and alternating switching capabilities. It involves transmission of electricity from generators to end users using a two way communication tool, to control appliances at consumers’ homes.
7. Smart grid involves application of an intelligent monitoring system that keep in check the entire electricity flow in the system (Anderson, 2009). Smart grid also incorporates technologies for peak curtailment and time of use pricing. Peak curtailment is a model whereby the system will cut off power use in some of home electrical appliances during peak hours to reduce demand and resume supply during off peak hours. Time of use pricing is smart grid pricing system that entails discriminative pricing based on the time one is using electricity. Prices will be higher during peak time and low during off-peak hours. Other technologies include; net metering systems and smart meters.
References
Anderson R. (2009). The Distribution Storage- Generation “Smart” Electric Grid of the Future. Columbia University. Available at http://www.pewclimate.org/docUploads/10-50_Anderson_120604_120713.pdf
National Renewable Energy Laboratory (2009). Energy Delivery and Storage Basics. April 5, 2011. Available at http://www.nrel.gov/learning/delivery_storage.html
Savacool B. (2008). Distributed Generation (DG) and the American Electric Utility System: What is Stopping It? Journal of Energy Resources Technology, 130
Slocum T. (2001). Electricity Utility Deregulation and the Myths of the Energy Crisis. Public Citizen’s Critical Mass Energy & Environmental Program
