Distributed-Energy Sources Raise Costs, Vulnerability to Outages, Study Finds

Published April 10, 2017

In a comprehensive analysis of the dramatic changes sweeping through global electricity markets, a team of researchers at the Massachusetts Institute of Technology (MIT) has concluded distributed renewable-energy resources, such as rooftop solar systems, raise costs and make electric systems more vulnerable to emergencies and terrorist-related outages.

The December 2016 study, titled “The Utility of the Future: An MIT Energy Initiative Response to an Industry in Transition,” explores the impact of emerging technologies on the distribution of electric power worldwide—including distributed generation, energy storage systems, and smart electronics—on electric power systems.

“These technologies are being deployed amidst several broad drivers of change in power systems, including growth in the use of variable renewable-energy sources, such as wind and solar energy; efforts to decarbonize the energy system as part of global climate change mitigation efforts; and the increasing interconnectedness of electricity grids and other critical infrastructure, such as communication, transportation, and natural gas networks,” the authors wrote.

As power systems become less centralized, older ways of managing electricity generation, distribution, and consumption will have to change, the MIT study says. The authors warn the new possibilities raised by changing energy technologies, including distributed-energy generation, should not lead consumers, energy providers, legislators, or regulatory agencies to ignore economic realities.

Economies of Scale

“Economies of scale matter, even for distributed energy resources,” the authors wrote. “For resources that can be deployed at multiple scales, such as solar [photovoltaic] and battery energy storage, incremental costs associated with failing to exhaust economies of unit scale can outweigh locational value, … making distributed deployment of these resources inefficient.

“For resources that exhibit significantly higher unit costs at smaller scales, such as solar [photovoltaic] and battery energy storage, distributed deployment is likely to be inefficient in many locations,” wrote the study’s authors.

Vulnerability to Cyber Attacks

Of even greater concern to the MIT researchers are the vulnerabilities created by the increased digitalization of power systems.

“Protecting a nation’s electricity grid from cyber attacks is a critical national security issue and an important priority for electric utilities,” the study says.

The authors say over the next decade, vulnerability will increase “as utility systems deploy more digital controls and as operations, metering and resource-management systems become more interconnected and complex. … The widespread connection of solar, wind, demand response, and other distributed energy resources with two-way digital controls increases cyber vulnerability and requires more widespread and intensive cybersecurity protection.”

Jay Lehr, science director at The Heartland Institute, which publishes Environment & Climate News, says economic realities may solve these problems.

“The study assumes government subsidies will keep wind and solar alive forever,” said Lehr. “I believe within 10 years the absurdity of wind and solar as substitutes for plentiful, affordable fossil fuels will bring people to the recognition they are being bilked by the renewable-energy industry’s powerful lobby.

“The best part of this somewhat-academic study is the recognition that security at power stations is becoming increasingly more important,” Lehr said.

‘Can Do Incalculable Harm’

Craig Rucker, executive director of the Committee for a Constructive Tomorrow, says the increased cybersecurity threat is another powerful argument against government policies pushing renewables.

“In addition to the unreliability and unaffordability of wind and solar power, we now know renewable energy poses a serious threat to cybersecurity,” said Rucker. “Cyberattacks on the electric grid can do incalculable harm to society. This is where our obsession with renewable energy can lead.”

Tim Benson, a research fellow at The Heartland Institute, says legislators and power companies should pay greater attention to these cybersecurity threats.

“Because the electricity supply is critical to national security, cybersecurity needs to receive more time, thought, and resources from power generators and government officials at the state and federal levels,” Benson said. “The MIT study makes clear the unique and expensive security difficulties a large push towards renewable electricity generation creates.”

Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.


Ignacio Pérez-Arriaga et al., “The Utility of the Future: An MIT Energy Initiative Response to an Industry in Transition,” The Massachusetts Institute of Technology, December 15, 2016: https://heartland.org/publications-resources/publications/the-utility-of-the-future-an-mit-energy-initiative-response-to-an-industry-in-transition