Is Small Powerful? An Evaluation of the Ecological, Economic, and Social Aspects of the Decentralized Energy Transformation

Overview
The energy sector as a main contributor to greenhouse gas emissions needs to undergo a large and rather quick transition in order to adjust for the Paris Agreement and to limit global warming to 1.5 or at least two degrees. Moving from conventional to renewable energy generation might also shift the place of installation, especially for small-scale end-users (i.e. citizens). We recognize that the current regulatory set-up in Europe results in large distributional effects of costs: high income households are more likely to own properties and therefore generation technologies while low-income households co-finance the installations and the system via taxes, levies and fees, leading to an increase in their costs (Borenstein and Davis 2016; Lüth, Weibezahn, and Zepter 2020). However, there is large potential to install generation technologies at smaller capacities, but the latest development has shown that more emphasis is put on the development of large-scale renewable energy installations, i.e. onshore and offshore wind farms or open-space PV (BMWi 2019). In an urban context, there is a limitation of space for highcapacity installations, yet high, centralized electricity demand.
However, decentralized residential and small-scale technologies that combine generation and storage in the vicinity of the end-user in one location have not been regarded as one of the main influential parts of the transformation to sustainable energy. On the one hand, we find studies that emphasize the potential of residential and urban renewable energy technologies (Fraunhofer ISE 2020), but also see reports, on the other, that present the downsides of the approach to roll-out small-scale technology (Mathiesen et al. 2017). Considering rooftop PV, some studies show that costs for the technology, installation, and maintenance are much higher than for PV parks (Fraunhofer ISE 2018). Arguing based on pure system costs, we see a limitation in the approach (acatech, Akademienunion, and Leopoldina 2020) and formulate the hypothesis that decentralized generation in an urban high demand area is equally important for a successful energy transition as the large-scale deployment onshore and offshore. This follows earlier, established theories of decentralization (Schumacher 1973; Weizsäcker, Lovins, and Lovins 1997).
In order to address monetary and non-monetary aspects of a large and small-scale technology deployment, we develop an alternative assessment scheme based on ecological, economic, and social criteria to qualitatively contrast the value of large-scale and small-scale renewable energy technologies. We apply this method to the context of the Global North and the Global South context to evaluate and identify advantages and current barriers as well as disadvantages of each approach from both a system and societal perspective.