Part Two
Benefits of Distributed Resources

Download Part Two excerpt (PDF-445k)

2.1 Introduction

For the reasons and as part of the historical processes described in Part One, market actors choosing from the electrical resource menu summarized in Section 1.2.2 are under-going a radical shift from a short menu of the most centralized resources toward a large and diverse menu favoring more appropriate scale. A simple, though partial, explanation of this shift is the desire to minimize regret1—either at what one did that one wishes one hadn't done, or at what one didn't do that one wishes one had done.

In a world of increasingly rapid technological and social change, minimizing regret is greatly aided by picking options that are relatively small, fast, modular, and cheap. Sections 2.2, "System Planning," and 2.3, "Construction and Operation," describe how this way of managing risk so as to minimize regret can yield important and measurable economic benefits. Subsequent sections describe distributed benefits related to T&D (the grid); to system operation; to the quality of electrical services provided; and to social and environmental factors. Implications of these principles, barriers to their adoption, and recommendations for further action are then surveyed in Part Three.

We are now ready to explore these approximately 207 kinds of distributed benefits as systematically as current understanding and published results allow. However, three general caveats are important first:

  1. The total value of distributed benefits depends strongly on technology- and site-specific details.

  2. The total value also depends on which benefits are counted. In general, assessments that find relatively modest gains from counting distributed benefits, such as one 1994 survey's 4–46% gain (over central-station generation) for photovoltaics or 2–78% for wind (54), omit many significant classes of benefits. A basic lesson of Part Two will be that the harder you look, the more distributed benefits you are likely to find, and that though many of those benefits are individually small, they are so numerous that they can still be collectively large.

  3. Because such limited resources have been applied to codifying and quantifying distributed benefits, the explanations and evidence we can present, especially on how much each benefit is worth, vary widely in type (estimates, formal calculations, field examples, etc.); in application to particular places, systems, and times; and in their accuracy and rigor.
It is not yet possible to present a neat package of analytic solutions, practical examples, lookup tables, and the rest of the toolkit that a planner would like to take off the shelf and apply. The art and science of understanding distributed benefits are far too immature for that—certainly in the open literature, and probably also even if all the proprietary literature were available. However, we have presented summary boxes and other guideposts to help clarify the relationship of the different benefits; and to avoid cluttering the narrative flow with tutorials, definitions, examples, and technical notes, we have boxed these separately as labeled sidebars.

We can only hope that this assemblage of descriptions and examples, from many disparate places and with often wildly differing levels of detail and precision, will stimulate others with greater skills and resources to expand and refine this exploration with the level of effort it merits. We trust that such improvements will focus on putting the greatest care into refining the precision of the most valuable terms, rather than seeking spurious or needless precision in unimportant terms—mindful of Aristotle's terse admonition that in addressing any problem, educated people "seek only so much precision as its nature permits or its solution requires." (13)

1 This valuable phrase was coined by Group Planning at Royal Dutch/Shell in London.

(End of excerpt)

Download Part Two excerpt (PDF-445k)

Get Adobe Acrobat Reader - click here to download
Get Adobe Acrobat Reader

Site Map

Grants from the Shell Foundation, The Energy Foundation, and The Pew Charitable Trusts
partially supported the research, editing, production, and marketing of this publication, and are gratefully acknowledged.

For general inquiries about Small Is Profitable please contact
To report technical problems with this site, please contact

To find out more about the cornucopia see:

This site is sponsored by: