Are distributed energy resources the future? What to know for an MBA in Energy Management

April 17, 2018

Could centralized energy production facilities start playing a supporting role to distributed energy? Here's what you need to know for an MBA in Energy Management.

A row of semi-detached houses

Traditionally, electricity generation has been the domain of massive facilities specializing in a particular technology, such as hydroelectric dams, nuclear power plants, and coal fired power plants. Today, however, so-called "distributed" generation technology is becoming increasingly common.

Smaller solar installations, geothermal systems, wind farms, and other forms of energy production are popping up around the world. Unlike the systems of old, these aren't meant to provide energy to huge chunks of a region or population, but rather to cater to the needs of smaller areas. Approaching energy production and distribution in this manner offers pros and cons, and will likely be subject to much debate and study in the coming years.

Interested in learning more about this concept? Here is what you need to know about distributed energy production.

The Efficiency Benefits of a Distributed Energy System

Typically, large energy production facilities are located far from the densely populated areas that represent the greatest demand for their power. From a number of standpoints—space requirements and pollution being two of the more prominent— this makes good sense. There is a cost, however, in that running electricity over a great distance leads to a significant amount of energy being converted to heat in the process of transmission.

An industrial field with lots of smoke and high chimneys
Traditional power generation takes places outside of populated areas, which leads to lost production

With distributed energy plants, which tend to be smaller and based on renewable energy technology, it becomes easier to address all of these concerns at once. The plants can be small enough to situate near a city, they produce little or no pollution, and the shorter distance allows for more of the energy produced to actually be used. In an era where efficiency is a great concern of energy producers and governments, graduates of MBA degree programs specializing in energy management may find this an important point in favour of distributed energy.

MBA degree holders may appreciate distributed energy systems' modular nature

One of the problems with relying on a few centralized energy generation facilities is that it makes upgrading a difficult and costly prospect. Outdated infrastructure is common in the energy production space in large part for this reason.

With centralized energy production, upgrades or maintenance could well result in a widespread shutdown of essential services. However, because distributed energy resources are typically responsible for powering a smaller area, this issue is greatly diminished when any one distributed center needs attention. This could make it easier to engage in regular maintenance work that will allow for a longer functional lifespan and more optimal performance.

Energy security is expected to be a great concern in the years ahead, so executives with an MBA in energy management may want to pay close attention to preliminary exploration in distributed energy taking place around the world. With their deep understanding of energy business strategy and economics, they will be in an ideal position to assess whether distributed energy systems live up to their promise of reparability.

Two workers installing a solar panel
Ongoing maintenance projects are easier to complete with distributed energy systems

MBA graduates may need to deal with new challenges in distributed energy

Though they have their benefits, distributed energy resources can also present new challenges. In large part, this relates to two points:

  • Distributed energy resources may be replacing older, centralized systems
  • Distributed energy resources are often based on renewable technology

The crux of the problem is that renewable energy can be intermittent. The sun only shines for part of the day, and even then could be obscured by clouds or fog; wind is strongest only at certain times of the day; etc. In using this type of energy to replace older-style facilities like coal or nuclear generation, which can offer a more regular output, there is a risk of periodic deficiency.

Solutions do exist. Some experts recommend implementing backup generators running on fossil fuels to meet peak demand when distributed resources can't, while others look to battery technology to create stores of surplus energy to be drawn from when distributed plants are not producing enough to meet demand.

Budget and regulatory considerations will be large influences in determining how exactly this problem might be addressed, and experts in the politics and business of global energy will be required to steer the way. Completing an MBA program in energy management could help you develop the skills necessary to take this work on yourself.

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