Distributed Generation: Who Benefits?
In the first of three articles, experts at Oak Ridge National Laboratory examine the technical obstacles, deployment, and economic issues surrounding distributed generation.
The existing electric power delivery system is a critical part of this country's economic and societal infrastructure, and proposals to increase the role of distributed energy resources (DER) within this system are welcomed by few in the utility industry. Such resistance to change in our electrical power system is not new.
Utilities view DER as a potential threat because it tends to reduce utility revenues. More important, many utilities view DER as a source of safety and protection problems, especially as the amount of DER connected to the circuit grows. For example, an energized DER system can continue to feed short-circuit faults, such as a tree shorting a distribution circuit, and can therefore pose a safety problem for utility crews. In addition, DER can feed back into the distribution circuit, offsetting the circuit current feed during a fault and possibly fooling existing protection schemes. In spite of these issues, the potential societal benefits of widespread DER, especially cogeneration, which includes cooling applications, are beginning to be recognized. These include:
Improved generation efficiency due to local use of waste heat; Reduced transmission and distribution losses; Increased energy security; Localized voltage and reactive power support; and Overall environmental improvements.
However, an interest in the common good is seldom sufficient justification for such a large investment. Investment in DER is more often based on an assessment of measurable cost savings and a consideration of other, less tangible advantages, such as improvement in local power quality. A number of publications have discussed the traditional cost-benefit analysis for a customer-owned DER installation. 1,2 But many DER benefits-including reduced electric line losses; reduced upstream congestion; grid investment deferment; improved grid asset utilization; improved grid reliability; and ancillary services such as voltage and reactive power support, contingency reserves, and black start capability-have no clearly assigned value in today's markets. In fact, one report was dedicated to an assessment of just how difficult it is to calculate these values. 3
Why is it important to define the economic value of all these DER benefits? First, a comprehensive examination of the benefits can be used both to attract new DER owners and to highlight those market and technical factors that could be improved by DER deployment. Second, given that utilities traditionally have considered DER a revenue-reducing competitor, we need to quantify the benefits to utilities that could counter that point of view. Third, we need to go beyond the fuzzy descriptions of societal benefits that have been used to date (such as greener power and increased efficiency). A well-founded quantification of those benefits will be much more effective in attracting public and industry support for the technology. This information also will be useful in prioritizing future research, development, demonstration, and deployment programs into those areas where the future payoff is clear and significant.
Responding to these needs, the U.S. Department of Energy (DOE) Distributed Energy (DE) program commissioned a focused examination of DER benefits that