Distributed generation

Distributed generation, also distributed energy, on-site generation (OSG),[1] or

district/decentralized energy, is electrical generation and storage performed by a variety of
small, grid-connected or distribution system-connected devices referred to as distributed
energy resources (DER).[2]

Conventional power stations, such as coal-fired, gas, and nuclear powered plants, as well as
hydroelectric dams and large-scale solar power stations, are centralized and often require electric
energy to be transmitted over long distances. By contrast, DER systems are decentralized,
modular, and more flexible technologies that are located close to the load they serve, albeit having
capacities of only 10 megawatts (MW) or less. These systems can comprise multiple generation
and storage components; in this instance, they are referred to as hybrid power systems.

DER systems typically use renewable energy sources, including small hydro, biomass, biogas, solar
power, wind power, and geothermal power, and increasingly play an important role for the electric
power distribution system. A grid-connected device for electricity storage can also be classified as a
DER system and is often called a distributed energy storage system (DESS). By means of an
interface, DER systems can be managed and coordinated within a smart grid. Distributed
generation and storage enables the collection of energy from many sources and may lower
environmental impacts and improve the security of supply.

One of the major issues with the integration of the DER such as solar power, wind power, etc. is
the uncertain nature of such electricity resources. This uncertainty can cause a few problems in the
distribution system: (i) it makes the supply-demand relationships extremely complex, and requires
complicated optimization tools to balance the network, and (ii) it puts higher pressure on the
transmission network,[3] and (iii) it may cause reverse power flow from the distribution system to
transmission system.[4]

Microgrids are modern, localized, small-scale grids,[5][6] contrary to the traditional, centralized
electricity grid (macrogrid). Microgrids can disconnect from the centralized grid and operate
autonomously, strengthen grid resilience, and help mitigate grid disturbances. They are typically
low-voltage AC grids, often use diesel generators, and are installed by the community they serve.
Microgrids increasingly employ a mixture of different distributed energy resources, such as solar
hybrid power systems, which significantly reduce the amount of carbon emitted.

Contents
Overview
Grid parity
Technologies
Cogeneration
Solar power
Wind power
Hydro power
Waste-to-energy
Energy storage
Integration with the grid
Mitigating Voltage and Frequency Issues of DG integration
Stand alone hybrid systems
Cost factors
Microgrid
Communication in DER systems
Legal requirements for distributed generation
See also
References
Further reading
External links

Overview
Historically, central plants have been an integral part of the electric grid, in which large generating
facilities are specifically located either close to resources or otherwise located far from populated
load centers. These, in turn, supply the traditional transmission and distribution (T&D) grid that
distributes bulk power to load centers and from there to consumers. These were developed when
the costs of transporting fuel and integrating generating technologies into populated areas far
exceeded the cost of developing T&D facilities and tariffs. Central plants are usually designed to
take advantage of available economies of scale in a site-specific manner, and are built as "one-off,"
custom projects.

These economies of scale began to fail in the late 1960s and, by the start of the 21st century,
Central Plants could arguably no longer deliver competitively cheap and reliable electricity to more
remote customers through the grid, because the plants had come to cost less than the grid and had
become so reliable that nearly all power failures originated in the grid. Thus, the grid had become
the main driver of remote customers’ power costs and power quality problems, which became
more acute as digital equipment required extremely reliable electricity.[7][8] Efficiency gains no
longer come from increasing generating capacity, but from smaller units located closer to sites of
demand.[9][10]

For example, coal power plants are built away from cities to prevent their heavy air pollution from
affecting the populace. In addition, such plants are often built near collieries to minimize the cost
of transporting coal. Hydroelectric plants are by their nature limited to operating at sites with
sufficient water flow.

Low pollution is a crucial advantage of combined cycle plants that burn natural gas. The low
pollution permits the plants to be near enough to a city to provide district heating and cooling.

Distributed energy resources are mass-produced, small, and less site-specific. Their development
arose out of:

1. concerns over perceived externalized costs of central plant generation, particularly

environmental concerns;
2. the increasing age, deterioration, and capacity constraints upon T&D for bulk power;
3. the increasing relative economy of mass production of smaller appliances over heavy
manufacturing of larger units and on-site construction;
4. Along with higher relative prices for energy, higher overall complexity and total costs for
regulatory oversight, tariff administration, and metering and billing.
Capital markets have come to realize that right-sized resources, for individual customers,
distribution substations, or microgrids, are able to offer important but little-known economic
advantages over central plants. Smaller units offered greater economies from mass-production
than big ones could gain through unit size. These increased value—due to improvements in
financial risk, engineering flexibility, security, and environmental quality—of these resources can
often more than offset their apparent cost disadvantages.[11] Distributed generation (DG), vis-à-vis
central plants, must be justified on a life-cycle basis.[12] Unfortunately, many of the direct, and
virtually all of the indirect, benefits of DG are not captured within traditional utility cash-flow
accounting.[7]

While the levelized cost of DG is typically more expensive than conventional, centralized sources
on a kilowatt-hour basis, this does not consider negative aspects of conventional fuels. The
additional premium for DG is rapidly declining as demand increases and technology
progresses,[13][14] and sufficient and reliable demand may bring economies of scale, innovation,
competition, and more flexible financing, that could make DG clean energy part of a more
diversified future.

DG reduces the amount of energy lost in transmitting electricity because the electricity is
generated very near where it is used, perhaps even in the same building. This also reduces the size
and number of power lines that must be constructed.

Typical DER systems in a feed-in tariff (FIT) scheme have low maintenance, low pollution and
high efficiencies. In the past, these traits required dedicated operating engineers and large
complex plants to reduce pollution. However, modern embedded systems can provide these traits
with automated operation and renewable energy, such as solar, wind and geothermal. This reduces
the size of power plant that can show a profit.

Grid parity

Grid parity occurs when an alternative energy source can generate electricity at a levelized cost
(LCOE) that is less than or equal to the end consumer's retail price. Reaching grid parity is
considered to be the point at which an energy source becomes a contender for widespread
development without subsidies or government support. Since the 2010s, grid parity for solar and
wind has become a reality in a growing number of markets, including Australia, several European
countries, and some states in the U.S.[15]

Technologies
Distributed energy resource (DER) systems are small-scale power generation or storage
technologies (typically in the range of 1 kW to 10,000 kW)[16] used to provide an alternative to or
an enhancement of the traditional electric power system. DER systems typically are characterized
by high initial capital costs per kilowatt.[17] DER systems also serve as storage device and are often
called Distributed energy storage systems (DESS).[18]

DER systems may include the following devices/technologies:

Combined heat power (CHP),[19] also known as cogeneration or trigeneration

Fuel cells
Hybrid power systems (solar hybrid and wind hybrid systems)
Micro combined heat and power (MicroCHP)
Microturbines
Photovoltaic systems (typically rooftop solar PV)
 Reciprocating engines
Small wind power systems
Stirling engines
or a combination of the above. For example, hybrid photovoltaic, CHP and battery systems
can provide full electric power for single family residences without extreme storage
expenses.[20]

Cogeneration

Distributed cogeneration sources use steam turbines, natural gas-fired fuel cells, microturbines or
reciprocating engines[21] to turn generators. The hot exhaust is then used for space or water
heating, or to drive an absorptive chiller[22][23] for cooling such as air-conditioning. In addition to
natural gas-based schemes, distributed energy projects can also include other renewable or low
carbon fuels including biofuels, biogas, landfill gas, sewage gas, coal bed methane, syngas and
associated petroleum gas.[24]

Delta-ee consultants stated in 2013 that with 64% of global sales, the fuel cell micro combined heat
and power passed the conventional systems in sales in 2012.[25] 20.000 units were sold in Japan
in 2012 overall within the Ene Farm project. With a Lifetime of around 60,000 hours for PEM fuel
cell units, which shut down at night, this equates to an estimated lifetime of between ten and
fifteen years.[26] For a price of $22,600 before installation.[27] For 2013 a state subsidy for 50,000
units is in place.[26]

In addition, molten carbonate fuel cell and solid oxide fuel cells using natural gas, such as the ones
from FuelCell Energy and the Bloom energy server, or waste-to-energy processes such as the Gate
5 Energy System are used as a distributed energy resource.

Solar power

Photovoltaics, by far the most important solar technology for distributed generation of solar
power, uses solar cells assembled into solar panels to convert sunlight into electricity. It is a fast-
growing technology doubling its worldwide installed capacity every couple of years. PV systems
range from distributed, residential, and commercial rooftop or building integrated installations, to
large, centralized utility-scale photovoltaic power stations.

The predominant PV technology is crystalline silicon, while thin-film solar cell technology
accounts for about 10 percent of global photovoltaic deployment.[28]: 18, 19  In recent years, PV
technology has improved its sunlight to electricity conversion efficiency, reduced the installation
cost per watt as well as its energy payback time (EPBT) and levelised cost of electricity (LCOE),
and has reached grid parity in at least 19 different markets in 2014.[29]

As most renewable energy sources and unlike coal and nuclear, solar PV is variable and non-
dispatchable, but has no fuel costs, operating pollution, as well as greatly reduced mining-safety
and operating-safety issues. It produces peak power around local noon each day and its capacity
factor is around 20 percent.[30]

Wind power

Wind turbines can be distributed energy resources or they can be built at utility scale. These have
low maintenance and low pollution, but distributed wind unlike utility-scale wind has much higher
costs than other sources of energy.[31] As with solar, wind energy is variable and non-dispatchable.
Wind towers and generators have substantial insurable liabilities caused by high winds, but good
operating safety. Distributed generation from wind hybrid power systems combines wind power
with other DER systems. One such example is the integration of wind turbines into solar hybrid
power systems, as wind tends to complement solar because the peak operating times for each
system occur at different times of the day and year.

Hydro power

Hydroelectricity is the most widely used form of renewable energy and its potential has already
been explored to a large extent or is compromised due to issues such as environmental impacts on
fisheries, and increased demand for recreational access. However, using modern 21st century
technology, such as wave power, can make large amounts of new hydropower capacity available,
with minor environmental impact.

Modular and scalable Next generation kinetic energy turbines can be deployed in arrays to serve
the needs on a residential, commercial, industrial, municipal or even regional scale. Microhydro
kinetic generators neither require dams nor impoundments, as they utilize the kinetic energy of
water motion, either waves or flow. No construction is needed on the shoreline or sea bed, which
minimizes environmental impacts to habitats and simplifies the permitting process. Such power
generation also has minimal environmental impact and non-traditional microhydro applications
can be tethered to existing construction such as docks, piers, bridge abutments, or similar
structures.[32]

Waste-to-energy

Municipal solid waste (MSW) and natural waste, such as sewage sludge, food waste and animal
manure will decompose and discharge methane-containing gas that can be collected and used as
fuel in gas turbines or micro turbines to produce electricity as a distributed energy resource.
Additionally, a California-based company, Gate 5 Energy Partners, Inc. has developed a process
that transforms natural waste materials, such as sewage sludge, into biofuel that can be combusted
to power a steam turbine that produces power. This power can be used in lieu of grid-power at the
waste source (such as a treatment plant, farm or dairy).

Energy storage

A distributed energy resource is not limited to the generation of electricity but may also include a
device to store distributed energy (DE).[18] Distributed energy storage systems (DESS)
applications include several types of battery, pumped hydro, compressed air, and thermal energy
storage.[33]: 42  Access to energy storage for commercial applications is easily accessible through
programs such as energy storage as a service (ESaaS).

PV storage

Common rechargeable battery technologies used in today's PV systems include, the valve
regulated lead-acid battery (lead–acid battery), nickel–cadmium and lithium-ion batteries.
Compared to the other types, lead-acid batteries have a shorter lifetime and lower energy
density. However, due to their high reliability, low self-discharge (4–6% per year) as well as
low investment and maintenance costs, they are currently the predominant technology used
in small-scale, residential PV systems, as lithium-ion batteries are still being developed and
about 3.5 times as expensive as lead-acid batteries. Furthermore, as storage devices for PV
systems are stationary, the lower energy and power density and therefore higher weight of
lead-acid batteries are not as critical as for electric vehicles.[34]: 4, 9 
 However, lithium-ion batteries, such as the Tesla Powerwall, have the potential to replace
lead-acid batteries in the near future, as they are being intensively developed and lower
prices are expected due to economies of scale provided by large production facilities such
as the Gigafactory 1. In addition, the Li-ion batteries of plug-in electric cars may serve as
future storage devices, since most vehicles are parked an average of 95 percent of the time,
their batteries could be used to let electricity flow from the car to the power lines and back.
Other rechargeable batteries that are considered for distributed PV systems include,
sodium–sulfur and vanadium redox batteries, two prominent types of a molten salt and a
flow battery, respectively.[34]: 4 

Vehicle-to-grid

Future generations of electric vehicles may have the ability to deliver power from the battery
in a vehicle-to-grid into the grid when needed.[35] An electric vehicle network has the
potential to serve as a DESS.[33]: 44 

Flywheels

An advanced flywheel energy storage (FES) stores the electricity generated from distributed
resources in the form of angular kinetic energy by accelerating a rotor (flywheel) to a very
high speed of about 20,000 to over 50,000 rpm in a vacuum enclosure. Flywheels can
respond quickly as they store and feed back electricity into the grid in a matter of
seconds.[36][37]

Integration with the grid

For reasons of reliability, distributed generation resources would be interconnected to the same
transmission grid as central stations. Various technical and economic issues occur in the
integration of these resources into a grid. Technical problems arise in the areas of power quality,
voltage stability, harmonics, reliability, protection, and control.[38][39] Behavior of protective
devices on the grid must be examined for all combinations of distributed and central station
generation.[40] A large scale deployment of distributed generation may affect grid-wide functions
such as frequency control and allocation of reserves.[41] As a result, smart grid functions, virtual
power plants [42][43][44] and grid energy storage such as power to gas stations are added to the
grid. Conflicts occur between utilities and resource managing organizations.[45]

Each distributed generation resource has its own integration issues. Solar PV and wind power both
have intermittent and unpredictable generation, so they create many stability issues for voltage
and frequency. These voltage issues affect mechanical grid equipment, such as load tap changers,
which respond too often and wear out much more quickly than utilities anticipated.[46] Also,
without any form of energy storage during times of high solar generation, companies must rapidly
increase generation around the time of sunset to compensate for the loss of solar generation. This
high ramp rate produces what the industry terms the duck curve that is a major concern for grid
operators in the future.[47] Storage can fix these issues if it can be implemented. Flywheels have
shown to provide excellent frequency regulation.[48] Also, flywheels are highly cyclable compared
to batteries, meaning they maintain the same energy and power after a significant amount of
cycles( on the order of 10,000 cycles).[49] Short term use batteries, at a large enough scale of use,
can help to flatten the duck curve and prevent generator use fluctuation and can help to maintain
voltage profile.[50] However, cost is a major limiting factor for energy storage as each technique is
prohibitively expensive to produce at scale and comparatively not energy dense compared to liquid
fossil fuels. Finally, another necessary method of aiding in integration of photovoltaics for proper
distributed generation is in the use of intelligent hybrid inverters. Intelligent hybrid inverters store
energy when there is more energy production than consumption. When consumption is high, these
inverters provide power relieving the distribution system.[51]

Another approach does not demand grid integration: stand alone hybrid systems.

Mitigating Voltage and Frequency Issues of DG

integration
There have been some efforts to mitigate voltage and frequency issues due to increased
implementation of DG. Most notably, IEEE 1547 sets the standard for interconnection and
interoperability of distributed energy resources. IEEE 1547 sets specific curves signaling when to
clear a fault as a function of the time after the disturbance and the magnitude of the voltage
irregularity or frequency irregularity.[52] Voltage issues also give legacy equipment the opportunity
to perform new operations. Notably, inverters can regulate the voltage output of DGs. Changing
inverter impedances can change voltage fluctuations of DG, meaning inverters have the ability to
control DG voltage output.[53] To reduce the effect of DG integration on mechanical grid
equipment, transformers and load tap changers have the potential to implement specific tap
operation vs. voltage operation curves mitigating the effect of voltage irregularities due to DG.
That is, load tap changers respond to voltage fluctuations that last for a longer period than voltage
fluctuations created from DG equipment.[54]

Stand alone hybrid systems

It is now possible to combine technologies such as photovoltaics, batteries and cogen to make
stand alone distributed generation systems.[55]

Recent work has shown that such systems have a low levelized cost of electricity.[56]

Many authors now think that these technologies may enable a mass-scale grid defection because
consumers can produce electricity using off grid systems primarily made up of solar photovoltaic
technology.[57][58][59] For example, the Rocky Mountain Institute has proposed that there may
wide scale grid defection.[60] This is backed up by studies in the Midwest.[61]

Cost factors
Cogenerators are also more expensive per watt than central generators. They find favor because
most buildings already burn fuels, and the cogeneration can extract more value from the fuel .
Local production has no electricity transmission losses on long distance power lines or energy
losses from the Joule effect in transformers where in general 8-15% of the energy is lost[62] (see
also cost of electricity by source).

Some larger installations utilize combined cycle generation. Usually this consists of a gas turbine
whose exhaust boils water for a steam turbine in a Rankine cycle. The condenser of the steam cycle
provides the heat for space heating or an absorptive chiller. Combined cycle plants with
cogeneration have the highest known thermal efficiencies, often exceeding 85%.

In countries with high pressure gas distribution, small turbines can be used to bring the gas
pressure to domestic levels whilst extracting useful energy. If the UK were to implement this
countrywide an additional 2-4 GWe would become available. (Note that the energy is already being
generated elsewhere to provide the high initial gas pressure - this method simply distributes the
energy via a different route.)
Microgrid
A microgrid is a localized grouping of electricity generation, energy storage, and loads that
normally operates connected to a traditional centralized grid (macrogrid). This single point of
common coupling with the macrogrid can be disconnected. The microgrid can then function
autonomously.[63] Generation and loads in a microgrid are usually interconnected at low voltage
and it can operate in DC, AC, or the combination of both. From the point of view of the grid
operator, a connected microgrid can be controlled as if it were one entity.

Microgrid generation resources can include stationary batteries, fuel cells, solar, wind, or other
energy sources. The multiple dispersed generation sources and ability to isolate the microgrid
from a larger network would provide highly reliable electric power. Produced heat from generation
sources such as microturbines could be used for local process heating or space heating, allowing
flexible trade off between the needs for heat and electric power.

Micro-grids were proposed in the wake of the July 2012 India blackout:[64]

Small micro-grids covering 30–50 km radius[64]

Small power stations of 5–10 MW to serve the micro-grids
Generate power locally to reduce dependence on long distance transmission lines and cut
transmission losses.

GTM Research forecasts microgrid capacity in the United States will exceed 1.8 gigawatts by
2018.[65]

Micro-grids have seen implementation in a number of communities over the world. For example,
Tesla has implemented a solar micro-grid in the Samoan island of Ta'u, powering the entire island
with solar energy.[66] This localized production system has helped save over 380 cubic metres
(100,000 US gal) of diesel fuel. It is also able to sustain the island for three whole days if the sun
were not to shine at all during that period.[67] This is a great example of how micro-grid systems
can be implemented in communities to encourage renewable resource usage and localized
production.

To plan and install Microgrids correctly, engineering modelling is needed. Multiple simulation
tools and optimization tools exist to model the economic and electric effects of Microgrids. A
widely used economic optimization tool is the Distributed Energy Resources Customer Adoption
Model (DER-CAM) from Lawrence Berkeley National Laboratory. Another frequently used
commercial economic modelling tool is Homer Energy (https://www.homerenergy.com/),
originally designed by the National Renewable Laboratory. There are also some power flow and
electrical design tools guiding the Microgrid developers. The Pacific Northwest National
Laboratory designed the public available GridLAB-D tool and the Electric Power Research
Institute (EPRI) designed OpenDSS to simulate the distribution system (for Microgrids). A
professional integrated DER-CAM and OpenDSS version is available via BankableEnergy (https://
www.bankableenergy.com/). A European tool that can be used for electrical, cooling, heating, and
process heat demand simulation is EnergyPLAN from the Aalborg University, Denmark.

Communication in DER systems

IEC 61850-7-420 is published by IEC TC 57: Power systems management and associated
information exchange. It is one of the IEC 61850 standards, some of which are core Standards
required for implementing smart grids. It uses communication services mapped to MMS as per
IEC 61850-8-1 standard.
OPC is also used for the communication between different entities of DER system.
 Institute of Electrical and Electronics Engineers IEEE 2030.7 microgrid controller standard.
That concept relies on 4 blocks: a) Device Level control (e.g. Voltage and Frequency Control),
b) Local Area Control (e.g. data communication), c) Supervisory (software) controller (e.g.
forward looking dispatch optimization of generation and load resources), and d) Grid Layer
(e.g. communication with utility).
A wide variety of complex control algorithms exist, making it difficult for small and residential
Distributed Energy Resource (DER) users to implement energy management and control
systems. Especially, communication upgrades and data information systems can make it
expensive. Thus, some projects try to simplify the control of DER via off-the shelf products and
make it usable for the mainstream (e.g. using a Raspberry Pi).[68][69]

Legal requirements for distributed generation

In 2010 Colorado enacted a law requiring that by 2020 that 3% of the power generated in Colorado
utilize distributed generation of some sort.[70][71]

On 11 October 2017, California Governor Jerry Brown signed into law a bill, SB 338, that makes
utility companies plan "carbon-free alternatives to gas generation" in order to meet peak demand.
The law requires utilities to evaluate issues such as energy storage, efficiency, and distributed
energy resources.[72]

See also
Autonomous building
Demand response
Energy harvesting
Energy storage as a service (ESaaS)
Electranet
Electric power transmission
Electricity generation
Electricity market
Electricity retailing
Energy demand management
Energy efficiency
Energy storage
Flywheel energy storage
Future energy development
Green power superhighway
Grid-tied electrical system
Hydrogen station
IEEE 1547 (Standard for Interconnecting Distributed

Resources with Electric Power Systems)

Islanding
Local flexibility markets
Microgeneration
Microgrid
Net metering
Peak shaving
Relative cost of electricity generated by different sources
Renewable energy development
 Smart meter
Smart power grid
Solar Guerrilla
Stand-alone power system
Sustainable community energy system
Trigeneration
World Alliance for Decentralized Energy

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Further reading
Brass, J. N.; Carley, S.; MacLean, L. M.; Baldwin, E. (2012). "Power for Development: A
Review of Distributed Generation Projects in the Developing World" (https://doi.org/10.1146%2
Fannurev-environ-051112-111930). Annual Review of Environment and Resources. 37: 107–
136. doi:10.1146/annurev-environ-051112-111930 (https://doi.org/10.1146%2Fannurev-environ
-051112-111930).
Gies, Erica. Making the Consumer an Active Participant in the Grid (https://www.nytimes.com/2
010/11/29/business/energy-environment/29iht-rbogferc.html?pagewanted=all&_r=0&gwh=402
884C2E19C695EA255CCF207D8BB22), The New York Times, 29 November 2010. Discusses
distributed generation and the U.S. Federal Energy Regulatory Commission.
 Pahl, Greg (2012). Power from the people : how to organize, finance, and launch local energy
projects (https://archive.org/details/isbn_9781603584098). Santa Rosa, Calif: Post Carbon
Institute. ISBN 9781603584098.

External links
MIGRIDS -Worldwide Business and Marketing Microgrid Directory (http://www.migrids.com/)
The UK District Energy Association - advocating the construction of locally distributed energy
networks (http://www.ukdea.org.uk/)
Decentralized Power as Part of Local and Regional Plans (https://web.archive.org/web/200306
22211043/http://www.newrules.org/electricity/planningfordg.html)
IEEE P1547 Draft Standard for Interconnecting Distributed Resources with Electric Power
Systems (http://grouper.ieee.org/groups/scc21/1547/1547_index.html)
World Alliance for Decentralized Energy (http://www.localpower.org)
The iDEaS project by University of Southampton on Decentralised Energy (http://www.ideaspr
oject.info)
Biofuels and gas pressure energy recovery (http://www.abc.net.au/rn/scienceshow/stories/200
7/2010598.htm)
Microgrids projects and DER Optimization Model at Berkeley Lab (http://building-microgrid.lbl.g
ov/)
DERlab (http://www.der-lab.net)
Center for Energy and innovative Technologies (http://www.cet.or.at)
Decentralized Power System (DPS) in Pakistan (https://web.archive.org/web/2013061013095
4/http://ezine.pk/?Decentralized-Power-System-DPS-in-Pakistan&id=381)
Distributed Generation—Educational Module, Virginia Tech (http://www.dg.history.vt.edu/index.
html)
What are distributed energy resources (DER) and how do they work? (https://arena.gov.au/blo
g/distributed-energy-resources/), Australian Renewable Energy Agency (ARENA).

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