By Richard Martin, Contributing Editor

As I’ve noted in this space before, the obstacles to creating a “New Energy Economy” of the sort envisioned by Gov. Bill Ritter include not only building enough generation capacity from renewable sources, but also getting that power to the people and businesses who use it. Current and projected loads on the nation’s energy grid far exceed transmission capacity, to say nothing of getting electricity from remote sources of renewable energy to market.

The federal Energy Information Administration has predicted that U.S. electricity demand will rise 30 percent by 2030, but power lines have only been expanded by 6 percent since 1996. That’s why the state’s two largest power companies, Xcel Energy and Tri-State Generation and Transmission, recently announced plans to develop a $180 million transmission system to bring electricity from the San Luis Valley to Pueblo, on the Front Range. It’s also why there’s a brewing conflict between the states and the federal government over who gets to plan, and determine the location of, new power lines.

One solution to this dilemma would be to distribute smaller renewable generation facilities closer to where the power will be consumed – a market known in industry circles as “renewable distributed energy generation,” or RDEG, presumably to avoid the acronym “DREG.” Indeed, small, dispersed renewable plants have been sprouting not only in the Western U.S. but around the world, according to a new report from Pike Research,  a newly formed cleantech research firm based in Boulder.  “The RDEG market will continue strong growth in the coming years, more than doubling in value to $60.6 billion by 2013,” predicts study author David Link. The vast majority of that will be small photovoltaic solar production, which is modular by nature and is finding new, government-subsidized markets atop both homes and businesses.

Headlining one of “the nation’s first and largest demonstrations of distributed generation,” Duke Energy plans to install as many 400 small-scale solar photovoltaic systems throughout North Carolina over the next two years Duke CEO Jim Rogers announced earlier this month. The big utility will place solar panels “on the roofs and grounds of homes, schools, office buildings, shopping malls, warehouses and industrial plants,” reports Renewable Energy World.

A similar program is getting underway in Arizona.

As you might guess, there’s a catch here: those distributed solar panels will feed electricity not directly to the high school, barber shop, or McMansion on which they’re situated, but directly back onto the power grid. The home- or business-owner avoids the upfront cost of installing solar, but also loses out on the savings of having a power plant on the roof. That means the transmission problem is not being solved, and “the utilities can treat the distributed solar resources as a power plant that they can control,” comments CNET Green Tech blogger Martin LaMonica.

So, while distributed renewable power is a concept whose time has surely come, it’s still a long way off. Don’t expect the cavalry, in the form of the federal government, to swoop in and change things: the strongest versions of the sweeping energy policy bills currently being considered by Congress (which will almost certainly be watered down ) include provisions for increasing solar power generation in this country by as much as 35 percent, and wind by 678 percent, according to a Dept. of Energy analysis.

“When you’re starting at 0.001 percent [of total U.S. energy production], 35 percent growth doesn’t amount to much,” remark Annie Carmichael and Jim Baak of the Vote Solar Initiative.

Nevertheless, small solar is catching on where it matters most: with end users. In Vail, for example, a solar rebate program offered by Holy Cross Energy has proven so popular with homeowners that the $1.09 million fund for 2009 have already been exhausted. “This will pretty seriously affect the amount of solar that is installed in the valley within the next seven months,” Megan Gilman, president of Active Energies, told the Vail Daily News.

The fact is that “today the economics of RDEG technologies do not stand on their Own,” the Pike Research study acknowledges. Speaking specifically of small wind-power installations, Link comments that, “In order for costs to come down, volumes will have to increase. However, in order for volumes to materialize, costs will need to be reduced substantially.”

That’s a dilemma that only government subsidies can overcome. For now, at least, those government subsidies are unlikely to be forthcoming.