Thursday, December 8, 2011

Digital Technology & Distributed Generation

At the beginning of the semester, we read a McKinsey article called “Clouds, big data, and smart assets: Ten tech-enabled business trends to watch.” One trend that was discussed was how distributed cocreation is moving into the mainstream. While they were talking about web communities like Wikipedia, we can see how this can also be applied to distributed generation. In distributed cocreation and generation, “individuals” are contributing small pieces that eventually make something larger. In the case of distributed cocreation, individual people might be contributing their ideas in order to create a comprehensive article on Wikipedia. In distributed generation, individual sites are generating energy in order to power the grid. In both cases, larger organizations are spared from large expenses (either paying authors and publishers to create a whole piece of work or investing capital to build a new and expensive power plant). As with cocreation, distributed generation is becoming “mainstream.” According to the Congressional Budget Office, distributed generation has grown from representing 0.5% to 14% of energy in the US since 2000. We believe that as long as individuals are given proper incentives by either the government or utilities, distributed generation will continue to grow.

The same McKinsey article also discussed the trend of “wiring for a sustainable world.” The article talked about how IT’s share of the world’s environmental footprint is growing rapidly because of the increased demand for IT services and capacity. We believe that this will be a key factor in encouraging the spread of distributed generation. In our previous paper, we speculated that we would see a large jump in the number of commercial buildings (like data centers) being used for distributed generation. We think that many companies, but IT companies specifically, cannot only save money from participating in distribution generation, but they can drastically improve their reputations in an increasingly environmentally conscious society.

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