Since the earthquake and resulting tsunami in Japan, much of the energy conversation has centered around the question of the safety of nuclear power. Though this is an important issue, especially in such extreme circumstances as the events at the Fukushima nuclear plant, it ignores a larger concern.

Centralized energy itself is notoriously vulnerable to disruption from natural disasters, and whether nuclear or otherwise, a decentralized energy future is much better suited to preparing us for the next big natural event.  Until recently, major barriers existed in the areas of financing, regulation, and technology toward the creation of functional distributed generation power. In the past few years, though, developments in decentralized energy (mostly at the hands of American companies) are enabling communities and businesses to better disaster-proof their power supply.

Centralized power’s largest asset is also its major weakness: its sheer size. The economic efficiency achieved by creating all of an area’s energy in one place and then distributing it across a wide range of consumers multiplies the risk of disruption. In theory alone, a big system inherently has more points of possible failure. In reality, the types of forces involved in a natural disaster (high winds, flood waters, shaking ground) focus enormous pressure on the most vulnerable part of the power system: distribution. When one felled tree can deprive whole metropolitan areas of power, it’s hard to make a claim that the system is prepared for disaster.

Decentralized energy eliminates this threat by creating redundancies in the power system. A microgrid, powered by a Combined Heat and Power (CHP) unit, can disconnect from a grid experiencing an outage and run disruption free until the main grid is back online. From the perspective of the energy consumer (whether it’s a business park, a hospital, or a small town), this removes the choke point on which their power used to depend.

Another unfortunate outcome of centralized energy’s unwieldy size is its inability to differentiate end users. A hospital gets the same amount and quality of energy as someone charging their iPod.  In a disaster situation, what this means is that it becomes incredibly difficult to perform triage, supplying power to the most critical infrastructure. A centralized grid, with limited variation, can only be on or off -- everyone gets power or no one does. This makes recovering in an emergency situation a much larger endeavor. Decentralized power reduces the obstacles to disaster recovery by allowing the focus to shift first to critical infrastructure and then to flow outward to less integral outlets.

The flaws that are literally built into the brittle bulk of centralized power were on full display in the aftermath of Hurricane Katrina. The grid went down, and the only institutions with any power were those equipped to generate their own. Even diesel generators proved unreliable in many cases. On the other hand, Mississippi Baptist Hospital, equipped with its own CHP-based microgrid, didn’t experience a single minute without power.  When making choices about how to rebuild, other hospitals in the area took note of the lessons from Katrina, and since the disaster, there has been a marked increase in the number of area hospitals developing CHP generation systems.

As noted earlier, the ability to proactively create a decentralized power system is a relatively new one. In fact, at the time of the earthquake (and resulting centralized power grid collapse) Japan’s microgrid research capabilities were perhaps the most advanced in the world. However, problems around technology and funding were delaying the creation of a meaningful decentralized power grid in that country. Along with regulatory hurdles, financing and technology are the three major obstacles -- both in America and abroad -- that are impeding widespread implementation of distributed generation. Fortunately, there are now advances being made in each of these areas of concern.

On the financial side, microgrids certainly represent a much more scalable investment than creating a new source of centralized energy.  Even with that being said, there are some new financial incentives taking shape that are driving forward the creation of new decentralized power systems. ARA has been showing some movement, and the Military Energy Security act proposed by Rep. Heinrich (with whom we have worked on this issue) has drawn much-needed attention to decentralized power as it relates to our nation’s security.

As far as the regulatory framework is concerned, for the first time we’re seeing microgrid companies close the space between themselves and the incumbent utility companies. This mirrors the emergence of decentralized telecommunications and the internet, where critical mass was reached once disruptive technology companies such as Cisco and MCI closed space and reached working arrangements with the centralized-system incumbent such as IBM and AT&T.

Finally, technology has in some ways caught up with our imaginations. It has always been an ideal to perfect how a decentralized power source could fully interact with the main grid.  Seeking to enable true peer-to-peer “plug and play” with the central grid, Pareto Energy’s GridLink is one of several promising new developments helping to streamline interconnectivity, and has been approved by Connecticut Light and Power and PEPCO.

These changes represent just the beginning, the potential for building a stronger and more resilient energy future. As Japan begins the long dialogue about the reconstruction process, we hope there is room in the conversation for discussion about decentralized power. The unfortunate reality is that, whether for Japan or another region, the presence of natural disasters is not an “if” but a “when.”  We know that in the future we’ll be facing similar threats -- now that we have the ability to be better prepared, we owe it to ourselves to make the most of the opportunity.


Guy Warner is the founder and CEO of Pareto Energy.