Disruption by Decentralization

How are localized networks changing our food, finances, and energy?

Change frequently starts small. As problems plague our aging energy grid, those looking for a solution shouldn’t be surprised to find one in a small, agricultural town: the city of Gonzales.

The city, with a population just over 8,500, is building a $70 million microgrid to provide round-the-clock renewable power for the town’s industries. A 40 hour rolling-blackout in 2019 had prompted enormous losses for the city’s businesses, which process $5 million worth of perishables at any given time.

Up north in Humboldt County, success has been seen with the Blue Lake Rancheria Microgrid. During the blackout in the same year, the microgrid provided power to 10,000 nearby residents, and saved 4 patients by powering life-saving medical equipment. Humboldt is now building another microgrid for $11.5 million, being funded by county and state energy commissions.

These small counties are paving the way for energy independence, and raising important questions about the distribution authority and cybersecurity measures that come along with these projects. Despite being recently adopted for energy, decentralization has already touched many other crucial industries.

In the food production sector, decentralization has been accelerated by the effects of climate change. A centralized system has massive inefficiencies: environmental issues like enormous water and transportation needs, and economic downside as countless middlemen add costs without any value. Centralized farming is more susceptible to natural disasters, and monoculture crops can be completely eradicated by a single disease. The rise of the farm-to-table movement, with its localized food hubs and an emphasis on locally-grown produce, is evidence of this trend.

In the finance world, the hype around cryptocurrency and blockchain technologies has fueled interest in decentralized finance or DeFi. Peer-to-peer relationships reduce costs and provide cheaper and equitable access to financial services, eliminating centralized institutions like banks and insurers that keep most of the profits. Data is recorded and securely spread across thousands of nodes, eliminating any single points of failure. Similarly, the sudden popularity of non-fungible tokens (NFTs) deployed via blockchain, is allowing artists and musicians to generate income directly without any middlemen.

Decentralization will keep affecting more industries, like transportation and mobility, but it’s hardly a novel concept. Can you imagine a future where our energy grid reaps the same benefits of resilience, cost competition, and sustainability like these sectors?

This is the second post in a recurring series of ElectricFish insights around the transition to a modern electricity infrastructure. Stay tuned for our upcoming posts!

References

https://www.greentechmedia.com/articles/read/california-town-tests-new-model-for-microgrids-as-a-service https://www.zocalopublicsquare.org/2021/02/16/gonzales-california-microgrid-future-of-energy/ideas/connecting-california/

https://microgridknowledge.com/blue-lake-rancheria-microgrid-outages/

https://www.greentechmedia.com/squared/dispatches-from-the-grid-edge/the-elusive-microgrid-tariff-begins-to-emerge-in-california

Co-Founder - ElectricFish | Ex- ORNL, BMW, Volvo-Trucks | Ignite- Stanford GSB | MSME - Michigan Tech | BSME - BIT Mesra