Overview

PRESENTER: For most of human history, energy production and consumption has occurred in situ. Basically, you have amount of biomass moving very short distances to the places where they're going to be turned into energy. In some ways, we're returning to those roots by using a number of different technologies in which the production of energy, for example solar arrays, occurs in the same place that you're going to be using that energy, for example, turning that into hot water.

With all of that in mind, when do we gain from centralizing, and when do we gain from decentralizing our systems? Well, if you are looking at something as complex as producing electricity through a dam, it is very clear that we want to centralize. That it makes sense to pool the expertise, to pool the amount of resources in one location where the maintenance can take place by experts in the area, where the everyday management does not fall within a pretty small number of hands.

So that was the main reason to go from the initial very decentralized model of energy production to putting everything in one single location. Of course, when you produce this electricity, you have to transport it to the urban centers or to the particular households that are going to be using them. And how you transport the energy is you pass them through resisters.

So now is where the problem lies. When you pass energy through a resister, you're going to lose energy through heat. And that is where taking all of this energy a long way from where it is produced is not going to make all that great sense.

So if you think about concentrated units where you have a high population, having a concentrated and centralized form of energy production makes the most sense. When you have areas that have very low population density and are very far apart, that's when decentralization starts to make the biggest gains.