Traditional Commercial Model or Distributed Generation: Finding the Proper Scale for Wind Energy

Abstract

In this paper, I attempt to compare costs and benefits of the traditional model with distributed generation within the scope of wind energy generation. In Section II, I examine the following economic aspects of both models: in part A, economies of scale; part B, economics of permanence; part C, allocation of costs and benefits among stakeholders. Traditional notions of economies of scale favor a larger model of production, though economist E. F. Schumacher presents an alternative view of production that would favor smaller-scale development. In Section III, I discuss logistical and technological barriers to widespread application of our two models. In part A, I examine the smart grid. As we will see, distributed generation may be dependent upon a smart grid to maximize the benefits inherent in its “grassroots” structure, while the traditional model can flourish with or without technological advances in the grid. In part B, I discuss facility siting in both the rural and urban contexts. There, I examine the biggest logistical challenge for the traditional model, which is the transmission of energy from its rural generation facilities to population centers. I also discuss the potential for distributed generation in urban areas. While distributed generation in urban centers has been limited thus far to solar generation rather than wind, numerous companies are working on wind solutions that will work in an urban setting, with the potential for a tremendous impact on the way we think about energy.