I’ve written about Sankey diagrams before, and Professor Kevin Anderson appeals to them to promote demand reduction as a powerful pathway to reducing Carbon emissions. But the overheads associated with transmission and distribution affect large scale generation of solar and wind energy, too.

In particular, there are hidden advantages to having energy generated close to point of use, with the individual home being as close as you can get. And the numbers from U.S. DOE’s NREL and others for 2014 have just come out (hat tip to CleanTechnica), and they suggest that “economies of scale” are misleading as a notion for energy, because of Joule losses, conversions, and the need to update distribution grids.

The key figure is shown below.

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In fact, if all the costs needed to update a grid or the central utility for “reliable generation”, rather than taking the same monies and subsidizing homes and local towns, as well as the recurring costs incurred for extra generation to compensate for Joule losses, it isn’t at all clear that centralized generation is a win. At least it means that obtaining levelized costs is trickier than it might otherwise seem, and that arguments saying subsidies for residential solar are somehow profligate have a lot to answer.

It also means that whether or not net metering is removed, or SRECs are removed, people who invest in local energy on their own will laugh all the way to the bank, because they don’t have to pay for the transmission and distribution to get their energy. In fact, as I’ve written and said elsewhere, maneuvers to try to force them to pay for such costs simply spur grid abandonment, both as incentives for individuals, and in technological innovation.

Utilities are dying.

As they should.