Environmental Review: Information, Regulation, and Networks: A Tale of Distributed Generation to Improve Air Quality

Abstract

One important result of electric power deregulation in the United States has been a growing potential for small, distributed sources of electrical power that may serve a single home, neighborhood, business, or business complex more efficiently and reliably than centrally located power plants, and at lower cost. The expectation that distributed generation (DG) can provide reliable electrical power more efficiently and less expensively than conventional power plants is complicated, however, by the high levels of air pollution and low efficiency generally associated with the most affordable and accessible DG technologies. Therefore, the prospect of greater reliance on distributed sources of electrical power raises a number of important questions, among them, these: (1) How can a state's energy and environmental regulatory system best encourage the economic success of clean and efficient DG? (2) Exactly which DG technologies are the cleanest and most efficient? (3) What kind of policy is most likely to yield the most favorable level of DG usage in a given state? In answer to these questions, we present the development of DG policy in California as a study in establishing and deepening a network of state agencies, nongovernmental organizations, businesses, and individuals committed to the integration of clean, efficient DG into the state's electric utility system. More specifically, the California Energy Commission, the California Air Resources Board and most local air districts, the California Public Utilities Commission, environmental and professional organizations, DG manufacturers and other businesses, and interested individuals have responded to the rising demand for electricity in the state by advocating clean and efficient DG. Although the many agencies, organizations, and individuals involved in the “clean DG” network have not been overtly identified as such, we argue that administering the currently favored technology-forcing, clean DG policy will require ongoing and pervasive coordination among the members of this nascent network.