By Andrew L. Shapiro
FORTUNE -- In his highly anticipated speech on climate change Tuesday, President Obama promised to limit power plant emissions, accelerate clean energy deployment, and bolster resilience to extreme weather shocks. These efforts are critically important, yet they will take time to implement and are already facing political opposition.
Meanwhile, nature isn't waiting and neither is the market. The good news is that a transformation is already occurring that could not only make our electric power cleaner, but also cheaper and more reliable.
The key driver of this shift is the ability of individuals -- as well as communities and organizations -- to generate their own electricity on-site, rather than relying solely on centralized power generation. Thanks to innovations in technology and finance, Americans can play a greater role in their energy future, and our public policy should support this.
Solar is the fastest growing source of distributed power generation. Rooftop installations for homes and businesses have grown rapidly due to falling solar panel prices, which have decreased nearly 60% over the last two years, and no-money-down leases from installation companies like SolarCity and Sungevity that guarantee customer savings.
Solar in the U.S. grew 75% last year. If this growth rate continues for five years, emissions-free power from the sun could produce about 10% of our electricity. Combined with wind and other renewable energy, and the boom in natural gas from shale (which, at current low prices, is displacing coal), the U.S. could dramatically reduce its carbon footprint. Already, our greenhouse gas emissions in 2012 were the lowest in two decades.
Reliability is another key benefit of distributed energy. Following the electrical outages from Hurricane Sandy, there have been renewed efforts to expand on-site power ranging from traditional diesel generators to natural gas micro-turbines to cleaner biogas systems. Battery storage startups are also getting funding from the likes of Bill Gates, who perhaps sees similarities to the shift he led from centralized mainframe computing to PCs (and ultimately tablets and smart phones). Distributed generation could similarly empower individuals.
Other energy innovations are also giving consumers more control while reducing emissions: Smart thermostats allow homeowners to automate heating and cooling, adjust settings remotely, and participate effortlessly in money-saving efficiency programs, while electrical vehicle owners can jettison high gasoline prices and inconvenient fill-ups, as well as tailpipe emissions.
The Edison Electric Institute, a utility trade group, recently published a report, "Disruptive Challenges," warning its members that they need to adapt to these changes. Otherwise, the group noted, utilities could face the same threat that the telecom industry has experienced as mobile phone uptake has led customers to cancel their home phone lines.
Can utilities pivot to a new paradigm? Some of the largest appear to be testing the waters. NextEra recently acquired Smart Energy Capital, a developer of commercial rooftop solar systems. Edison International invested in Clean Power Finance, a marketplace for financing distributed solar. And NRG (NRG), the largest independent power producer, has launched its own residential solar business.
Nick Akins, CEO of American Electric Power (AEP), one of the largest U.S. utilities, captured the rationale well: "If it's truly a disruptive technology, you better have a part in it."
While it's unlikely that many Americans will go completely off the grid anytime soon, even partial on-site generation could make a big impact environmentally and financially -- if technology and business models continue to advance and supportive government policies such as solar subsidies remain in place. Surprisingly, President Obama made no mention of distributed energy in his speech.
However, the President did note that his ambitious climate plan "will require all of us to do our part." Innovations in distributed energy will make it easier for each household and business to do just that.
Andrew L. Shapiro is founder and partner of Broadscale Group, an investment firm focused on accelerating energy innovation.
Alaska Senator Lisa Murkowski on climate change, the Keystone pipeline, and how technology can make us energy independent.
By Brian Dumaine, senior editor-at-large
FORTUNE -- Lisa Murkowski is one Republican senator who wants to do something about climate change. Catching up with her after she gave the keynote at the Bloomberg New Energy conference in New York City on her new Energy 20/20 plan, Fortune's Brian Dumaine discussed with this third-generation MOREApr 23, 2013 9:23 AM ET
Energy expert Daniel Yergin talks about the impact fracking will have on renewables.
Interview by Brian Dumaine, senior editor-at-large
FORTUNE -- Daniel Yergin, author of the new bestseller The Quest: Energy, Security, and the Remaking of the Modern World, is one of the planet's foremost thinkers about energy and its implications. He received a Pulitzer Prize for his previous book, The Prize: The Epic Quest for Oil, Money, and Power. Yergin is MOREApr 17, 2012 5:00 AM ET
America's most profitable company now produces about as much natural gas as it does oil. CEO Rex Tillerson thinks the fracking party has just begun.
By Brian O'Keefe, assistant managing editor
FORTUNE -- For Rex Tillerson fracking is more than a revolutionary approach to drilling oil and gas -- it's part of his personal history. Simply mention the word to the CEO of Exxon Mobil (XOM) and he starts reminiscing about his MOREApr 16, 2012 5:00 AM ET
Deep-sea drilling and fracking are helping to unearth abundant supplies of oil and gas. The coming energy renaissance could be just the elixir the U.S. economy needs.
By Richard Martin, contributor
FORTUNE -- Thursday night in South Texas, and the parking lot at the Texas Roadhouse, on Highway 287 outside Port Arthur, is jammed. Big-shouldered Sierra trucks jostle with shiny Rams, F-150s, and Tundras, with a pearl-white, freshly polished Dodge Challenger sports MOREApr 12, 2012 5:00 AM ET
It's a brave new world for the future of autos: Electric cars will finally take off and drive themselves -- but don't say good-bye quite yet to fossil fuels.
By Anne VanderMey, reporter
FORTUNE -- While we're not going to see flying cars for a long, long while, the global automobile industry is indeed undergoing an epic transformation. The rising price of gas, stricter mileage requirements, and concerns about global warming are MOREApr 2, 2012 5:00 AM ET
FORTUNE -- In March, the U.S. Senate narrowly defeated a bill that would have provided billions of dollars in tax credits to boost deployment of natural-gas-powered vehicles. That won't stop billionaire energy magnate T. Boone Pickens, who championed the plan. He still believes natural gas is the best way to help America reduce its dependence on foreign oil. Some 112,000 natural-gas vehicles -- mostly trucks and buses -- already occupy MOREApr 2, 2012 5:00 AM ET
FORTUNE -- Despite rising gas prices, all-electric cars haven't sold as well as manufacturers had hoped. Range anxiety, a scarcity of charging stations, and the high cost of lithium-ion batteries have turned off many consumers. Says Mike Omotoso, a senior manager at the research firm LMC Automotive: "When families look at the big picture, gas-powered cars are still a lot cheaper than electric ones."
But the landscape is changing. The number MOREApr 2, 2012 5:00 AM ET
FORTUNE -- The global auto market is huge -- some 1 billion vehicles ply the roads today. Electrics and hybrids constitute only a small fraction of the total, and it will be decades -- if ever -- before they become a dominant technology. In the meantime, engineers are boosting the efficiency of gasoline and diesel engines to meet increasingly strict mileage standards. In the U.S. an automaker's fleet must average MOREApr 2, 2012 5:00 AM ET
|GM's recalled Cobalt was a failure from the start|
|Pope Francis challenges the free market - The Buzz|
|How young tech millionaires invest|
|Americans have fallen in love with real estate once again|
|Your Internet security relies on a few volunteers|