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variety of DER options including energy storage.
In the area of energy supply, central-station plants will continue to be the least-cost energy supply options for most utilities. Over the next 10 years, however, generating companies will undertake a key transition of the current fleet to a new, more advanced fleet of supply-side generation options, and the cost structure to generate power is expected to increase considerably due to rising fuel costs, and environmental and security costs. Utilities face issues of how best to make the transition, how best to retire plants, and how to determine if there is a role for larger DER systems. The "distributed utility model" may help some utilities meet future peak power needs through a combination of DER, energy efficiency, and active demand control options. The pathways of DER into the future are likely to also build on past trends in the development of renewable wind and biomass systems and certain "in-city" natural gas generation assets.
In addition, in many cases, opportunities exist for joint applications-to meet both end-use and grid support needs, or for both energy supply and grid support. DER can be placed at strategic locations within the utility distribution system that can serve both end-use needs as well as offer support to the grid when it approaches its system limits. If incentives are offered to the end-user to install and operate the DER for grid support, then grid support applications have the potential to increase the market for end-use applications by helping defray capital or operating cost. Currently, incentives for DER in distribution system grid support applications are being explored in New York in California.
In sum, absent near-term breakthroughs in DER technologies, the appropriate integration of DER (especially energy storage systems) in the layout, design, and implementation of the new "future distribution grid" holds the most promise for DER in the long term for increased reliability and energy efficiency.
1. Energy Information Administration, Form 860, 2003.
2. The assumptions and models underlying these cost calculations are detailed in : Aug. 16, 2004, Energy and Environmental Economics, San Francisco, Calif.: 2004.
3. The Potential U.S. Market for Distributed Generation, Resource Dynamics Corp., Vienna, Va., June 2004.
Bridging the Gap on DER
EPRI recommends the following actions be considered to close the technological and policy gaps to achieve the future DER pathways.
R&D. Continued R&D is needed to lower the total capital installed cost, improve reliability, and enable fuel flexibility. Advances are needed to improve the cost and performance of energy storage technologies. Advances also are needed to develop improved integrated packages specifically to meet end-user market applications. For example, standardized energy solution packages are needed for CHP, back-up power, peak shaving, and UPS markets; research is needed to develop low-cost meters and a low-cost plug-and-play interconnection device for larger kVA DER options, especially for CHP and peak-shaving applications. Grid Support. Economic tools and best practices are needed to help evaluate and justify the technical and economic feasibility of incorporating DER into the T&D planning process. But because today's grid never really was designed for