Have you noticed that there's been more and more talk lately about distributed energy and its connection to the rise of renewable energy? This concept, which until a few years ago seemed reserved for experts and visionaries, has become key to understanding how the way we produce and consume electricity around the world is changing.
In this article, you'll find a comprehensive and clear overview of everything related to distributed energy: Its principles, advantages, challenges, technology, different types, its connection to self-consumption and renewables, the role of regulation, and its potential as a driver of the energy transition. Get ready to discover how this energy revolution works and how it could transform your daily life.
What is distributed energy?
Distributed energy, also known as distributed or decentralized generation, is a model in which electricity production is distributed across a set of small facilities close to the points of consumption.This represents a break from the traditional system, in which large power plants located far from cities generated electricity that then had to be transported miles to users.
Thanks to distributed energyUsers, communities, and businesses can produce, consume, and even sell their own energy. This is achieved by leveraging local energy resources and technologies such as photovoltaic solar panels, small-scale wind turbines, micro-hydro turbines, biomass, cogeneration, and, increasingly, advanced solutions based on storage and smart grids.
Origin and evolution of the energy model: from centralization to decentralization
Centralization has been the norm in energy production and distribution for decades. Large thermal, hydroelectric, and nuclear power plants converted energy into electricity and transmitted it over long distances using complex high- and medium-voltage infrastructure. This approach responded to economic, safety, and environmental considerations specific to each technology. For example, hydroelectric plants were located in large reservoirs, while thermal or nuclear power plants were installed far from populated areas.
Over time, the quest for efficiency and sustainability has driven the emergence of distributed generation. The growth of cities, the explosion in electricity demand, and the need to reduce losses and emissions, along with the decline in the cost of renewable technologies, have made production close to consumption profitable and viable.
Essential characteristics of distributed generation
Distributed energy has a number of characteristics that distinguish it from traditional systems:
- Proximity to consumption: Small generation sources are located near or even at the point of consumption itself, whether a home, a business, a public building, or an energy community.
- Diversity of technologies: Multiple sources can be used (solar, wind, hydro, biomass, cogeneration, etc.), providing flexibility and adaptability.
- Few losses in transport: By shortening the path between generation and consumption, electrical losses are reduced, which in centralized systems can amount to up to 10% of the total energy generated.
- Better reliability: The system is more resilient: if one source fails, the others continue to cover demand, limiting widespread blackouts.
- Flexibility and scalability: Small and medium-scale facilities allow for adapting to growing demand in an organic and modular manner.
Types of distributed generation: from solar to hydrogen
Within the umbrella of distributed energy, various technologies and applications coexist. The most notable are:
- Distributed solar generation: The use of photovoltaic solar panels on roofs, homes, industrial buildings, and public infrastructure is the most visible and widespread example. They allow for both self-consumption and the distribution of excess electricity to the grid.
- Distributed wind generation: Small wind turbines installed in urban or rural areas or on private properties, providing local electricity.
- Microhydraulics: Take advantage of small waterfalls in nearby streams or rivers, ideal for rural and remote areas.
- Biomass and biogas: Use of organic waste to produce electricity and heat on a small scale, very common in rural or industrial settings.
- Localized cogeneration and trigeneration: Systems that efficiently produce electrical and thermal energy (and, in the case of cogeneration, also cold energy) at a single point, taking advantage of excess heat.
- Green hydrogen: Although still in its early stages, it is emerging as a key vector for storing and supplying renewable energy in non-electrifiable sectors or for providing grid flexibility.
Thanks to this diversity, Distributed generation adapts to both urban and rural areas and to the specific needs of homes, businesses or energy communities.
Microgeneration: energy in buildings and public spaces
Microgeneration is a specific form of distributed energy based on very low-power installations, generally below 1.000 kW. They are typically located on buildings, rooftops, small businesses, or infrastructure such as smart streetlights. They stand out for their versatility, ease of installation, and ability to reduce dependence on the general system.
The devices used can range from solar panels to small wind turbines or micro-hydro turbines for self-consumption, with the option of feeding surplus energy back into the grid, thus benefiting the community.
Advantages of distributed energy and its role in the energy transition
Distributed generation brings benefits on numerous fronts, both for individual users and for society and the economy as a whole:
- Reduction of energy losses: By shortening the electricity route, transmission losses are significantly reduced, resulting in more efficient and sustainable use of resources.
- Improving resilience and reliability: The existence of multiple generation sources spread throughout the country means that a single failure does not severely affect the system. This translates into fewer blackouts and higher quality electricity supply.
- Facilitates self-consumption and energy independence: Users can produce, manage, and consume their own electricity, reducing dependence on large power companies and providing greater control over spending.
- Promotes the integration of renewable energies: Distributed energy is largely based on green sources (solar, wind, biomass, hydroelectric), which directly reduces CO2 emissions and other pollutants.
- Local economic stimulus: It promotes job creation and investment in local areas by boosting local value chains for the installation, maintenance, and management of renewable energy equipment.
- Social development: It facilitates access to electricity in remote or vulnerable areas and allows entire communities to organize to generate and share energy.
- Economic savings: Self-consumption, combined with lower losses and transportation costs, contributes to lower electricity bills for homes, businesses, and public administrations.
- Reduction of external dependence: By producing energy in one's own territory, exposure to price fluctuations in international markets or import problems is reduced.
The connection between distributed energy and smart grids
The new energy model depends largely on digitalization and the deployment of smart grids. These technological infrastructures allow for the management of bidirectional energy flows (from large centers to homes and also vice versa when users feed their surpluses into the grid), adapting production in real time to demand.
Smart grids also facilitate: the integration of energy storage systems (such as batteries), greater participation of prosumer consumers, and efficient resource management to avoid overloads, outages, or imbalances.
One of the technical challenges has been that traditional power grids were not designed for this bidirectional flow, requiring investments in technology, inverters, storage, and control.
Main challenges and challenges of distributed energy
Despite its advantages, distributed energy faces several challenges:
- Infrastructure update: Conventional distribution networks need to be adapted to support the connection and management of multiple small generators, while also avoiding congestion and the risk of disconnection.
- Storage and variability: Renewables, which are the foundation of the distributed model, present uncertainty (the sun doesn't always shine, nor does the wind blow every day). Therefore, it is essential to have storage solutions, such as batteries or alternatives like green hydrogen.
- Regulation and standards: Until recently, regulations did not favor the development of distributed generation. Currently, countries like Spain have eliminated obstacles such as the "sun tax," created tax incentives, and regulated the compensation of surplus energy discharged into the grid.
- Initial investment cost: Despite the drop in technology prices, the initial investment in self-consumption equipment can still be a barrier, although there are increasingly more financing options.
- Awareness and training: It is necessary to inform and educate the public about these systems to increase the adoption and proliferation of self-consumption projects and energy communities.
The role of regulation and incentives
Legislation is an essential factor for the takeoff of distributed generation. In Spain and other countries, recent years have seen significant regulatory advances that eliminate tolls and charges for self-consumption energy, promote tax incentives, facilitate financing, and simplify the process for small installations.
In addition, two modalities are regulated: one that doesn't generate surpluses (total self-consumption) and one that feeds surplus energy into the grid, with a financial compensation system. All of this has boosted the implementation of clean energy in homes, businesses, and communities.
Practical examples and new trends
The applications of distributed generation are increasingly varied. From private homes with solar panels, to local energy communities from shared facilities and efficiency, to rural electrification through microgrids and the integration of electric vehicles with bidirectional capacity to store and inject energy.
Furthermore, the "Internet of Energy" is emerging as the future of energy management: a digitalized infrastructure where producers and consumers interact automatically, balancing the system and enabling maximum penetration of renewables.
Green hydrogen as an ally of distributed generation
Green hydrogen is poised to be an ideal complement to distributed generation. It allows for the storage of renewable surpluses and covers demand in sectors that are difficult to electrify, such as heavy transport or industrial processes. The hybridization of renewable facilities with hydrogen production plants and storage systems will contribute to creating a much more robust, flexible, and sustainable system. Spain, for example, is already planning to install hundreds of megawatts of electrolyzers at points close to consumption in the coming years.
Distributed energy is laying the foundations for a cleaner and more efficient energy model, where producers and consumers become active participants. The development of digital technologies, energy storage, favorable regulations, and society's drive toward sustainability are accelerating this transition. This is a profound transformation that impacts the economy, the environment, and social organization itself, with the real potential to transform our cities, businesses, and homes into more autonomous and energy-responsible spaces.