Generating Renewable Energy Close To The Point Of Use With Distributed Generation

Daytime blue sky color outdoor photo of solar panels and wind turbines installed outdoors on green grass next to a large metropolitan city with multiple sky scrapers. Alternative energy source.

The U.S. power grid system suffers from several problems, from outdated equipment to challenges posed by extreme weather. But generating renewable energy close to the point of use with distributed generation helps solve several of these issues.

Generating renewable energy close to the point of use with distributed generation can help the U.S. power grid cope with increased energy demands, meet environmental policy goals, and reduce the infrastructure needed to reach consumers. Distributed generation refers to producing electricity at or near where it is used.

In this article, we will explore the importance of generating renewable energy close to the point of use with distributed generation. We will also discuss the challenges of this undertaking and the ways utility companies can increase their ability to provide renewable energy directly to consumers.

Why It’s Important To Generate Renewable Energy Close To The Point of Use With Distributed Generation

Color daytime blue sky with clouds photo of a power plant using renewable solar energy panels mounted over the blue water ocean.
Power plant using renewable solar energy panels mounted over the ocean.

Renewable and sustainable energy are similar, but not exactly the same things. They are both energy sources that don’t require limited or finite fuel sources for the U.S. and world’s electrical power supplies. Solar, hydrothermal, and wind power are all examples of these energy sources.

Distributed generation refers to generating electricity at or near where it will be used.

Although the U.S. has increased funding for renewable energy over the last few decades, only about 20% of the power produced in the U.S. comes from renewable sources. However, that number will rise and U.S. power generation from renewables is projected to increase from 21% in 2021 to 44% by 2050, according to the U.S. Energy Information Administration.

These increased numbers for the production of renewable energy are likely to increase. This is especially true over the coming decade, as the U.S. government incentives encourage utility companies to adopt sustainable energy systems.

But these renewable energy sources are less efficient when located in remote areas far from demand points (areas with high electricity demands). Distributed generation (also called on-site generation or decentralized generation) ‌ensures that sustainable energy systems are near demand points like cities, industrial areas, or housing..

By generating renewable energy close to the point of use, we reduce the need for new electrical transmission lines and improve the U.S. Power grids sturdiness, as well as the following:

  • Satisfies the increased demand for electricity
  • Meets environmental policy goals
  • Reduces the need for expensive infrastructure expansions

However, while there are many incentives and benefits related to installing and expanding renewable energy systems near demand points, there are also challenges that currently inhibit utility companies’ ability to generate renewable energy near high-demand areas.

Please see some of our other interesting articles on power like “Long-Term Power Blackout Coming Soon” and “What Happens if the American Power Grid Goes Down?”

Challenges of Generating Renewable Energy Close To The Point of Use Demand Points Through Distributed Generation

Color daytime photo facing the sky of a team of electrical linemen on power a pole working on high voltage power lines.
Team of electrical linemen on power a pole working on high voltage power lines.

Despite the importance of generating renewable energy close to the point of use, ensuring that demand points have consistent access to this type of energy poses several challenges to utility companies.

Some of the most notable challenges include:

  • The high expense of transitioning to renewable energy sources
  • Conflicts caused by investor-owned utility companies
  • The physical limitations of installing renewable energy sources near demand points

Let’s examine these challenges to understand their impacts on the ability of utility companies to generate renewable energy near demand points.

The Downside to Corporate Profits While Transitioning to Renewable Energy and Helping the Average Consumer

The precise amount of money it would cost to switch from petroleum and coal power plants to renewable energy systems varies, depending on the source.

However, the Yale School of the Environment cites that the change to renewable energy would cost the U.S. “an estimated $4.5 trillion.” Although federally funded energy incentives (grants and tax incentives) can help offset the “personal” costs utility companies would need to foot for this change, the change would still be pricey.

However, profitability may be the more imposing limitation for many investor-owned utility companies. After all, renewable energy costs far less over the long term, lowering the amount the average household would need to spend on electricity.

While this change to renewable energy is a boon for the average consumer, it spells lower profits for utility companies.

Unfortunately, this potential decline in profitability makes some utility companies unwilling to invest in renewable energy systems, even if those systems are integral to maintaining energy supply at demand points.

The Conflicts of Investor-Owned Utility Companies

If you’ve ever managed a business or a stock portfolio (or perhaps both), you likely understand how crucial increased profitability is to the integrity of your business.

For better or worse, several investor-owned utility companies that rely on fossil fuels to generate energy make sizable investments in coal, petroleum, and natural gas. These investments currently ensure that their companies remain profitable.

Because of this, generating renewable energy would be a vote against the investor-owned utility companies and their own current investments in fossil fuels with the change of technology. These highly profitable, privately owned utility companies can also exercise significant political power because of their financial success. 

This fossil fuel utility lobbying consortium slows any potential progress toward creating renewable energy systems, especially near point of use high-demand areas (which can remain exceptionally profitable when reliant on fossil fuels).

The Physical Limitations of Generating Energy Close To Demand Points

The issue of physical limitations in generating renewable energy close to the point of use with distributed generation is big. It currently takes millions of miles of electrical power lines across the United States according to the EPA and the U.S. Energy Information Administration (EIA) to get electricity to and through our cities and towns.

Many renewable energy systems require plenty of open, uninhabited land to function at full capacity. For example, wind turbines are less efficient when installed near tall buildings, and industrial-sized solar panel systems can consume acres of land.

So, although the concept of generating renewable energy near demand points (i.e., large cities and densely populated areas) is worth pursuing, the logistical aspects are complex and pose several challenges to engineers and utility companies.

Fortunately, as renewable energy systems continue to improve and become more efficient, the physical limitations of producing “green” energy near the point of use with distributed generation may lessen.

How Utility Companies Can Generate More Renewable Energy Close To The Point Of Use With Distributed Generation

Vector image of men and women city planners dark silhouettes working over a city planning map.
City planners working with utility companies designing renewable energy close to the point of use with distributed generation.

Although there are significant challenges to generating renewable energy close to demand points, utility companies aren’t without options. 

For example, by working closely with city planners, collaborating with automakers, and lobbying for increased infrastructure funding, utility companies can accelerate renewable energy projects aimed at providing energy near point of use with distributed generation.

But how can these actions boost renewable energy availability in high-demand areas? Let’s explore each option to find out.

Utility Companies Can Work Closely With City Planners

One of the initial challenges of generating renewable energy close to demand points is predicting where point of use areas will be located. This is especially true of developing towns and cities.

However, by working closely with city engineers and planners who use current energy consumption data to calculate electricity usage estimates, utility companies can gain practical insight to help them narrow down the best possible installation locations for renewable energy systems.

Collaborating with city officials and governments when designing future energy systems is also an excellent way for utility companies to offer input about upcoming city design changes. 

For example, utility companies looking to increase energy availability at current or prospective demand points could sway the decisions of city planners to allow for greater infrastructure to access that energy. 

This partnership benefits city planners, utility companies, and current (and future) consumers.

Utility Companies Can Collaborate With Automakers and Charging Station Companies

Apart from households and large office buildings, one of the most significant examples of a high-energy demand point is an electric vehicle (EV) charging station. 

Rapid-charging stations can quickly drain the local grid of stored electricity, so ensuring that these stations have direct connections to high-producing renewable energy systems is vital to public utility companies, their customers, and the future of the EV market.

Consequently, the collaboration between automakers (or charging station companies) and utility companies is extremely practical and beneficial. Still, utility companies would likely need to persuade automakers to apportion some of the funding aimed at developing EVs to ensure that charging stations (demand points) are near renewable energy sources.

Please see some of our other articles on “Why The U.S. Power Grid Isn’t Ready For Electric Cars” and “Power Rationing When Everybody Has Electric Cars.”

Utility Companies Can Lobby for Increased Infrastructure Funding and Support

The Bipartisan Infrastructure Law has allocated more than $300 billion to infrastructure improvements, but many of these funds are primarily focused on improving roadways, bridges, and other highway projects. 

Although energy systems (such as power lines and transformers) are also considered under the umbrella term “infrastructure,” utility companies might not receive a significant portion of the funds from this law. 

However, revamping the U.S. electrical grid systems is a costly process. This is especially true when transitioning away from fossil fuel energy sources and investing in renewable energy. 

For this reason, utility companies will need plenty of funding to generate sustainable energy at demand points. Lobbying for increased funding and federal aid is one of the most effective ways to ensure that the federal government’s energy-conscious incentives and demands become a reality.

Final Thoughts

Color green and whit vector image with the word ecology showing solar panels, wind turbines, and high voltage electrical lines with a nature back drop.

Generating renewable energy close to the point of use with distributed generation is essential to keep up with rising energy demands while complying with environmental policies. But physical limitations, funding issues, and investor-related roadblocks pose challenges to this endeavor.

Still, utility companies can collaborate with city planners, work with automakers, and lobby for increased infrastructure funding to ensure renewable energy becomes more readily available at or near demand points across the U.S.


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John Mortensen

As a kid I wanted to be an astronaut, geologist, or scientist. I became a project manager which is involved with many of those things. I am a project manager and tech writer who researches the latest alternative and green technologies. We write helpful articles about green electronics and green technology products. AI, extreme weather, electric vehicles, are all in our future and we want to know the best way to deal with the effects of these on the power grid and emergency preparedness.

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