The Alternative-Energy Quandary

Alternative energy sources are all over the news these days as a means of achieving fossil fuel independence, while addressing global warming. Many issues must be addressed in order to enable sources, such as wind and solar, to make practical contributions to our supply of electricity. However, this cannot occur in isolation. Increasing the use of alternative electric-energy-producing technologies requires development of physical infrastructure and also the development of system architecture that includes technical, economic and regulatory strategies. If a variety of energy sources can provide our depended-upon electricity, there must be a strategy for integrating them as well as an entity with clear authority for implementing and managing the system.

A brief list of some of the important challenges follows:

• Both wind and solar derive their energy from natural events that vary in intensity, while at the same time, our electric supply has to be stable. Can power from these sources be economically stored and stabilized?

• Solar-derived electrical power—photovoltaics—is direct current (DC), so, in most cases it has to be converted to alternating current (AC) to be useful. The process of changing DC to AC is done using inverters, which must achieve efficiency comparable with producing electricity by traditional means using coal, oil or gas-fueled steam turbines.

• Should all alternatively produced electric power be connected to the grid? If not, what are the conditions for this decision and who makes that determination?

• How might energy generated by wind turbines or solar panels interconnect with the power grid?

• Should the electricity produced in these ways be small local installations sited near their users (distributed generation), or should they be large installations some distance away?

• What are some of the economic and regulatory considerations that must be addressed in order to incorporate alternative power sources as a significant portion of the national power supply system?


Some of these issues date back to the beginning of electrical energy generation and distribution. The first electricity--generating plant was Manhattan’s Pearl Street Station, opened by Thomas Edison in 1882. It produced 110V DC, which was used to illuminate one square mile of New York City, using Edison’s electric lamps. Four years later, George Westinghouse established the Westinghouse Electric Co. to compete with Edison. In 1888, he obtained the rights to the patents held by Nikola Tesla for generating polyphase AC electrical power.

AC made centralized power generation economically viable. A transformer could be used to increase the generated voltage to a high level. Since electrical power is voltage multiplied by current, large amounts of power could be transmitted at high voltage and low current. The advantage is that power lost in the copper transmission lines is proportional to the square of the current; therefore, high voltage at low current equals high power with low losses. Power in watts is volts times amps; energy is power totaled over a period of time, e.g., power of 1,000W generated—or consumed—for one hour would be energy of 1 kilowatt-hour. This means power could be sent over long distances and then transformed back to usable low-voltage power at its destination.

The Edison Electric Institute ( provides a brief history of the power industry. Electricity-generating plants were mostly built in urban areas. The high population density meant many rate-payers per unit area. Franchises were awarded to competing companies, resulting in a mix of different voltages and frequencies. In the early 20th century, entrepreneur Samuel Insull realized the way to maximize the financial returns from generating electricity was to have his company feed the maximum number of users, since his major expense was the initial cost of building the generating station. That dwarfed the cost of actually running the system. Therefore, the more customers, the faster the return on investment. This motivated the move toward centralized generation.

Another development was the invention of the demand meter, which became the uniform method for billing each customer according to usage. The next stage was the licensing and regulation of power companies by states and the granting of monopolies within designated geographic areas.

“By the 1920s, most urban areas were electrified,” according to EEI. Since 1935, the federal government has regulated interstate power, and state governments have regulated retail electric service, mergers, facility planning and siting. Because so much of the electric power industry is affected by government regulation, it becomes a crucial component in understanding the challenges of incorporating alternate energy technologies.

Distributed generation

The availability of small, nonpolluting alternative energy-generating facilities has the potential of reversing the trend toward ever-increasing centralization of electric power generation. It is now within the realm of possibility that distributed generation for some portion of our electricity needs might be viable.

One solution to the problem of fluctuating availability of wind and solar energy is to feed power back to the grid when the local source is generating more than can be used and drawing power from the grid when the local supply is insufficient. This is a somewhat tricky, but solvable, technical problem and an even trickier economic problem. Some of the important technological problems have to do with solving the economic and regulatory ones.

Federal regulation and economics

In the article “Upgrading the National Power Grid,” in the Fall 2004 issue of the Rutgers Computer & Technology Law Journal, Joshua Franklin traces the history of the regulations coordinating the electric power industry. Laws passed by Congress in 1935 gave the government the right to set utility rates so as to ensure power companies make a reasonable profit. In exchange for their monopoly and government-guaranteed profit, the power companies agreed to serve everyone in their area who was willing to pay the standard rates. The first change in this structure came in 1978 when the Public Utility Regulatory Policies Act (PURPA) was passed. One facet of this law was to deregulate the electric industry. It allowed nonutility-owned power generating plants to be created, which would connect their output to the grid. These were called qualifying small production facilities (QFs). The law required utilities to pay the QFs what it would have cost them to produce the same amount of energy. This ended the utilities’ government-guaranteed monopoly and encouraged the growth of small independent producers, who could generate power at a lower cost than the power they would receive from the utility. This was a disadvantage to the utilities since the larger portion of their expenses was not the cost of producing electricity, but rather was the amortized costs of building the large generating plants and the systems of transmission lines. However, since the utilities retained a natural monopoly of ownership of the transmission lines, QFs could not make independent deals with consumers.

The Energy Policy Act of 1992 was aimed at leveling the playing field between utilities and small producers. According to Franklin, this law and two subsequent rulings by the Federal Energy Regulatory Commission made it possible for nonutility-power producers to sell power to utilities and other end-users.

The Energy Policy Act of 2005 encourages the use of alternative-energy sources, but does not significantly modify the existing legislation as far as planning and control.

Study findings

A number of important studies of the overall strategies are being implemented by the U.S. Department of Energy (DOE) and the Electric Power Research Institute (EPRI) on the national level, and many regional studies and field experiments are being conducted by state governments, utilities and universities. The DOE’s Renewable Systems Interconnection Executive Report report was released in February 2008.

“DOE brought together a team of industry experts to address the technical, regulatory, and business issues that have the potential to limit the market uptake of distributed PV and other renewable technologies,” the report states. “One key finding of the RSI [renewable systems integration] study is that grid integration issues are likely to emerge much more rapidly than many analysts expect. In some regions of the United States, grid--integration-related barriers to future growth could emerge within the next five to 10 years.”

Among the many important findings, the report cites the necessity of developing uniform codes, standards and regulations.

“National requirements for power quality and active participation in power system operation must be developed,” it states.

EPRI, in its white paper titled, “Distributed Photovoltaics: Utility Integration Issues and Opportunities, August 2008,” states investment in photovoltaics comes with a great price but offers a great reward.

“Successful integration of substantial quantities of distributed PV will require grid modernization to maintain performance and reliability and to enable the communications, metering, and control functions needed for effective energy management, market access, service delivery, and grid operation,” the report states. “On the other hand, distributed PV will create opportunities for industry participants to serve consumers in different ways, develop new revenue streams, and meet societal objectives in a political, regulatory, and business climate likely to place an increasing premium on an intelligent grid capable of delivering clean energy and precision power in a reliable and secure manner. New business models, advanced technologies, and informed regulatory perspectives will help transform residential, commercial, and other distributed PV systems into grid assets.”

The road ahead

It is clear that there will be a major effort to incorporate alternative sources into our national electric power supply system. This movement has been underway since industry deregulation in 1978, and since then, there have been tremendous strides in the technology for production and control of renewable energy resources.

President Barack Obama has promised to make technology and the development of renewable energy resources major goals for his administration. There are many forces moving us in the direction of building and incorporating renewable energy that the only question is the rate of growth. This is an exciting moment filled with opportunities for forward-thinking people to play a major role. One of the predictions of the EPRI study is that PV units will become a standard component in much of our new construction. This is a business opportunity for electrical contractors who are willing to learn the technology and the existing code regulations and to get involved in planning for future developments.

BROWN is an electrical engineer, technical writer and editor. He serves as managing editor for SECURITY + LIFE SAFETY SYSTEMS magazine. For many years, he designed high-power electronics systems for industry, research laboratories and government. Reach him at

About the Author

Edward Brown

IBS Columnist and Freelance Writer
Edward Brown is an electrical engineer, freelance writer and editor who draws on his years of practical experience designing industrial processing and high-power electronics systems. In addition to writing the Integrated Building Systems column for E...

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