WASHINGTON – When it comes to electric power generation and distribution, in developed countries we are used to this basic model. Large power plants produce electricity. From these sites, relying on a complex network of power lines, electricity is delivered to customers, be it industrial plants, offices or individual homes. The fuel used for generation can be coal, gas, nuclear or hydro. More recently we have developed wind, solar and biomass.
A new model
Well, in the not so distant future, this complex architecture founded on several large sources of generation from which transmission lines deliver electricity to the end users may become obsolete. A The Wall Street Journal story opens a window on a possible and completely different future, a future that can soon become reality, assuming that technologies keep improving and costs keep going down.
Simply stated, soon enough we shall be able to have our own miniature power plant at home, no longer relying on electricity coming to us through a grid, care of the local utility company. We are clearly not there yet. But we may get there soon, probably sooner than we think.
Miniature solar power plants in your own home
In America we have plenty of power generation. Going forward, the new shale gas boom guarantees that there will be plenty of gas-fired power plants. Still, at the same time, solar power generation, while still relying on subsidies and tax breaks, is becoming more efficient, its cost are going down.
According to industry and many experts, we will soon get to a point in which it will be cheaper for individual users to install their own domestic solar power plant (based on solar panels that generate electricity) rather than pay a monthly bill to the utility.
When we get to that tipping point, this will signal the beginning of a revolution that will have a number of large and important consequences. The first one will be the growth of the solar panels industry and of all the services associated with it. The second one will be that individual households as well as industrial plants, office complexes and commercial centers will be energy independent. The third one will be that most of the complex national and regional regulations that have been created to manage power generation and distribution will essentially become obsolete. The fourth one will be the death of the large power plants, along with the death of all the industries that support them: think of coal mining, storage and transportation, for instance.
More broadly, locally produced affordable power will improve basic economic conditions. Households will no longer have to pay electricity bills that include the cost of maintaining an expensive grid. Overall, affordable energy will be a boost for many energy intensive industries.
Biggest impact in developing countries
But, while this technological innovation will radically change the economies of developed countries, the biggest transformation will occur in emerging markets. Indeed, tens of thousands of rural communities in Africa, India and elsewhere that currently have no electricity will no longer have to wait for governments to invest in power generation and transmission so that electricity will come to them. They will be able to produce their own, on site, without any recurring fuel costs. This will be a real revolution. Sunlight is free.
No development without power
It is a painful reality that without power these villages are essentially cut off from any meaningful economic progress. If you think about it, there is no hope for real development without electricity. Not much is possible without it. At dark, almost everything has to stop. People cannot read at night. Besides, medical facilities cannot store medications. Shops cannot refrigerate food. You cannot have workshops or small factories. Power tools cannot be used. And forget about basic amenities like street lights, cinemas, bars and restaurants.
But if, indeed, on the basis of the experience in more developed countries, local communities in emerging economies will be able to install affordable solar power generation on site, electricity would create an incredibly important short cut to development.
Right now the key obstacle for any plan to bring power to emerging countries, especially to isolated, off grid communities within them, is the large capital cost of building power plants, plus the cost of fuel, and the high cost of constructing transmission lines.
Well, if truly cost-effective solar power can be deployed at the village level, no need to focus on huge investments in large-scale power generation and distribution.
Hundreds of millions will step into modernity
Look, I am not even remotely suggesting that all this is happening right now. But it looks as if it is just beginning to happen. As technology keeps getting better and costs keep going down, it should become realistic to think of business models that will allow scaling up affordable renewable energy solutions for the hundreds of millions of Indians who have no power. Likewise, even city dwellers in Pakistan, Nigeria or Zambia who are used to frequent power cuts due to unreliable supplies will have a chance to break off from the grid and finally have their own uninterrupted power supply.
It is impossible to have basic development without the support of reliable and affordable electricity. Until now not much has been done to create adequate electricity generation in many poor countries because of the very high cost of this effort.
If new solar technologies will radically change the model, while bringing down cost for individual users, then a huge barrier to development will also come down.
And life will change for hundreds of millions around the planet.