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Distributed Generation: Who Benefits?

Distributed Generation
Fortnightly Magazine - March 2005

would both improve understanding of all the issues and put hard numbers on the benefit values wherever possible. This study began by gathering available data for a large number of DER sites and talking to many of the owners or opeators. A few case studies that are more detailed were collected as part of this initial effort. The examination then progressed to a load-dispatch study for a selected region and a parametric evaluation of central station displacement-with particular attention to the question of whether DER displaces current and future combined-cycle plants. 4,5,6 This article focuses on the results from the initial review and the associated case studies.

The initial review was designed to query a broad spectrum of current DER users/owners about the benefits they derive from their DER systems. Although we do not claim that our review was a statistically representative sample of the DER population, it did cover 162 installations with a variety of equipment types and ownership classes located as shown in Figure 1. Forty-nine of these installations were subsidized technology demonstration units, typically fuel cells or microturbines. These installations have provided invaluable performance data for the newer technologies but were less useful in this examination of DER benefits. The remaining 113 installations were used to extract the information discussed in this article. Figures 2 and 3 provide an overview of the technology types and ownership classes covered in the review. As expected, most of the facilities use either a gas turbine (alone or in a combined-cycle configuration) or a reciprocating engine (fueled by either diesel or natural gas). Utilities and third-party generators made up the bulk of the installed capacity in the review, but there were also 60 customer-owned DER sites producing a total of 600 MW. As Figure 2 indicates, 21 of the records were incomplete in that they failed to report either the technology used, the installed capacity, or both. As indicated in Figure 3, the ownership of the DER unit was not specified for 10 sites.

Some of these installations fall into the "early adopter" category, such as customers with loads that are extraordinarily sensitive to the quality and continuity of their energy service. These customers included the usual suspects: computer server centers, where power quality problems or brief outages can cause extensive business disruptions; hospitals, where back-up generators already are required to protect human lives; and types of industrial plants (, electronics, food) in which a process interruption can result in significant product loss and cleanup. One unexpected customer in this class was a zoo, where animal lives were at risk because of local power problems. The more conventional customers ranged from a car wash to a convention center, along with industrial sites, hospitals, and college campuses.


We asked many system operators why they had installed a DER system, using this response as an indicator of the perceived benefits. Note that the electricity market rules in most of the United States today do not permit DER operators to participate in the ancillary services market, and so there are no price signals to reveal