Academic journal article Management Quarterly

Distributive Generation - Approaching a Paradigm Shift

Academic journal article Management Quarterly

Distributive Generation - Approaching a Paradigm Shift

Article excerpt

Famous last words:

"Everything that can be invented has been invented."

...Charles H. Duell Commissioner, U.S. Office of Patents, 1899

The electric utility industry is not exempt from change and while the industry has evolved since its early beginnings, some facets have until now remained largely untouched. Remaining as one of the last bastions of monopolistic enterprise, the electrics have had only to deal with governing boards or public utility commissions for maintenance of their treasuries. The customers have had relatively little choice in matters regarding the selection of whom or where their electric power comes from or the price they paid for it. Until now, due to lagging technology, the economic production of electric power was left to the "central station" generation and delivery mechanisms. With invention and a complimentary political mood, a definite shift in the status quo appears imminent. Now long-standing monopolies are headed for extinction with the "freedom of choice" movement commonly acknowledged as "industry restructuring".

However, the state of today's technology may have a more significant impact on the electric industry than any restructuring initiative could have envisioned. There is ample evidence that on-site electric power generation is poised and ready to move onto the electric customer's premises.

Thus, the industry is faced with yet another challenge for which a new term has been coined. Basically, customers will generate power for themselves with the ability to sever ties with the traditional electric utility. This new issue, "distributive generation" will challenge the electric industry's longheld standing as the only show in town.

Distributive generation or dispersed generation will begin to amplify its presence during the first decade of the new millennium. Distributed generation is the installation of power generation resources at the point of power consumption, permitting choice of association or non-association with the existing electric utility infrastructure. This fundamental change in energy resource application has become feasible and acceptable with advances in technology, accompanied by political and environmental advocacy. The net affect of what is anticipated to be a shift from traditional sources of central station electric power, including fossil fuels, hydro, and nuclear electric generation, to renewable fuel-sourced energy is currently unclear. However with the coming transition, distributive generation presents the potential to subjugate traditional power resources, ultimately forcing them into a diminished role in the nations overall power production and delivery system.

New technology is not expected to completely displace the traditional sources in one, two or perhaps even three decades. However, significant shifts are likely to occur thereby steadily changing the complexion of the industry. For this transition to occur, the factors that could affect outcomes include Further technological breakthroughs, successful methodologies for producing specialized fuel and public acceptance of these innovations.

Another lurking problem in the coming transition is encroachment of electric utility deregulation. While deregulation has not enveloped all states, its presence may play a larger part in the emerging mix. Dependent upon the level of public confidence, cost, and legislative initiatives, the actual transitional period and subsequent outcomes could vary significantly. At this juncture, the movement appears to be traveling at a moderately accelerated rate resulting from rapid technological advances, coupled with a strengthened advocacy for renewable fuels, brought about by mounting environmental pressure. One may also postulate that this shift may have its roots in a desire for energy self-sufficiency by those seeking independence from the inherent monopolistic characteristics found in most if not all of the traditional utility services. …

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