Introduction to Distributed Generation (DG)

What is Distributed Generation?

Distributed generation is an approach that employs small-scale technologies to produce electricity close to the end users of power. DG technologies often consist of modular (and sometimes renewable-energy) generators, and they offer a number of potential benefits. In many cases, distributed generators can provide lower-cost electricity and higher power reliability and security with fewer environmental consequences than can traditional power generators.

In contrast to the use of a few large-scale generating stations located far from load centers--the approach used in the traditional electric power paradigm--DG systems employ numerous, but small plants and can provide power onsite with little reliance on the distribution and transmission grid. DG technologies yield power in capacities that range from a fraction of a kilowatt [kW] to about 100 megawatts [MW]. Utility-scale generation units generate power in capacities that often reach beyond 1,000 MW.

Classic Electricity Paradigm--Central Power Station Model

central-power-stationcentral-power-stationThe current model for electricity generation and distribution in the United States is dominated by centralized power plants. The power at these plants is typically combustion (coal, oil, and natural) or nuclear generated. Centralized power models, like this, require distribution from the center to outlying consumers. Current substations can be anywhere from 10s to 100s of miles away from the actual users of the power generated. This requires transmission across the distance.

This system of centralized power plants has many disadvantages. In addition to the transmission distance issues, these systems contribute to greenhouse gas emission, the production of nuclear waste, inefficiencies and power loss over the lengthy transmission lines, environmental distribution where the power lines are constructed, and security related issues.

Many of these issues can be mediated through distributed energies. By locating, the source near or at the end-user location the transmission line issues are rendered obsolete. Distributed generation (DG) is often produced by small modular energy conversion units like solar panels. As has been demonstrated by solar panel use in the United States, these units can be stand-alone or integrated into the existing energy grid. Frequently, consumers who have installed solar panels will contribute more to the grid than they take out resulting in a win-win situation for both the power grid and the end-user.



Benefits of Distributed Generation

What are the Potential Benefits of DG Systems?

Consumer advocates who favor DG point out that distributed resources can improve the efficiency of providing electric power. They often highlight that transmission of electricity from a power plant to a typical user wastes roughly 4.2 to 8.9 percent of the electricity as a consequence of aging transmission equipment, inconsistent enforcement of reliability guidelines, and growing congestion. At the same time, customers often suffer from poor power quality—variations in voltage or electrical flow—that results from a variety of factors, including poor switching operations in the network, voltage dips, interruptions, transients, and network disturbances from loads. Overall, DG proponents highlight the inefficiency of the existing large-scale electrical transmission and distribution network. Moreover, because customers’ electricity bills include the cost of this vast transmission grid, the use of on-site power equipment can conceivably provide consumers with affordable power at a higher level of quality. In addition, residents and businesses that generate power locally have the potential to sell surplus power to the grid, which can yield significant income during times of peak demand.


Industrial managers and contractors have also begun to emphasize the advantages of generating power on site. Cogeneration technologies permit businesses to reuse thermal energy that would normally be wasted. They have therefore become prized in industries that use large quantities of heat, such as the iron and steel, chemical processing, refining, pulp and paper manufacturing, and food processing industries. Similar generation hardware can also deploy recycled heat to provide hot water for use in aquaculture, greenhouse heating, desalination of seawater, increased crop growth and frost protection, and air preheating.

Beyond efficiency, DG technologies may provide benefits in the form of more reliable power for industries that require uninterrupted service. The Electric Power Research Institute reported that power outages and quality disturbances cost American businesses $119 billion per year. In 2001, the International Energy Agency (2002) estimated that the average cost of a one-hour power outage was $6,480,000 for brokerage operations and $2,580,000 for credit card operations. The figures grow more impressively for the semiconductor industry, where a two hour power outage can cost close to $48,000,000. Given these numbers, it remains no mystery why several firms have already installed DG facilities to ensure consistent power supplies.

Perhaps incongruously, DG facilities offer potential advantages for improving the transmission of power. Because they produce power locally for users, they aid the entire grid by reducing demand during peak times and by minimizing congestion of power on the network, one of the causes of the 2003 blackout. And by building large numbers of localized power generation facilities rather than a few large-scale power plants located distantly from load centers, DG can contribute to deferring transmission upgrades and expansions—at a time when investment in such facilities remains constrained. Perhaps most important in the post-September 11 era, DG technologies may improve the security of the grid. Decentralized power generation helps reduce the terrorist targets that nuclear facilities and natural gas refineries offer, and—in the event of an attack—better insulate the grid from failure if a large power plant goes down.

Environmentalists and academics suggest that DG technologies can provide ancillary benefits to society. Large, centralized power plants emit significant amounts of carbon monoxide, sulfur oxides, particulate matter, hydrocarbons, and nitrogen oxides. The Environmental Protection Agency has long noted the correlation between high levels of sulfur oxide emissions and the creation of acid rain. Because they concentrate the amount of power they produce, large power plants also focus their pollution and waste heat, frequently destroying aquatic habitats and marine biodiversity. On the other hand, recent studies have confirmed that widespread use of DG technologies substantially reduces emissions: A British analysis estimated that domestic combined heat and power technologies reduced carbon dioxide emissions by 41% in 1999; a similar report on the Danish power system observed that widespread use of DG technologies have cut emissions by 30% from 1998 to 2001. Moreover, because DG technologies remain independent of the grid, they can provide emergency power for a huge number of public services, such as hospitals, schools, airports, fire and police stations, military bases, prisons, water supply and sewage treatment plants, natural gas transmission and distribution systems, and communications stations. Finally, DG can help the nation increase its diversity of energy sources. Some of the DG technologies, such as wind turbines, solar photovoltaic panels, and hydroelectric turbines, consume no fossil fuels, while others, such as fuel cells, microturbines, and some internal combustion units burn natural gas, much of which is produced in the United States. The increasing diversity helps insulate the economy from price shocks, interruptions, and fuel shortages.

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