Through the combination of new technologies and energy policy, there is an increasing trend in Europe away from centralised large scale generation towards smaller scale more decentralised generation. Decentralised generation comes in multiple forms from on-site combined heat and power units, to mid-sized wind plant connected to distribution networks and small-scale solar photovoltaics mounted on the roofs of domestic consumers.
The benefits of decentralised generation include faster deployment of low carbon technologies, enhanced local security of supply, savings in network costs and losses, and wider community participation in energy supply.
This trend towards more decentralised energy is allowing new business models to evolve, well removed from traditional utility ownership. The growth in energy services companies, community energy schemes and providers of ‘behind-the-meter’ generation solutions bears testament to this. Baringa has advised a number of organisations in these areas, including supporting the development of a European business development strategy for a major energy services company and advising on an on-site generation investment strategy for a large chemicals producer.
A key issue in the move towards decentralised generation is the impact on local distribution networks. Networks previously sized to meet the peak demand of consumers now must be designed to consider the extent to which future reinforcement can be avoided due to the additional security of supply provided by local generation, but also whether additional capacity is needed in some areas to export generation where it exceeds local consumer demand. Together with other new technologies such as demand side response and electricity storage, distribution network operators will increasingly be required to manage their networks actively in order to deploy assets most efficiently.
Baringa is working with network operators in developing commercial arrangements to allow active network management of distributed generation so that greater volumes can be connected more rapidly whilst maintaining the quality of power supply in their local areas.