IEEE Power & Energy Magazine - May/June 2014 - 33

decreases and more applications emerge, storage will contend with strong competitors in the form of demand response
(Dr), flexible fossil fuel-based generation, and other emerging technologies. While there are no challenges in the operation or performance of the grid for which storage is the only
solution, applications where storage is the best technical and
most cost-effective alternative do exist.

Distributed Generation
electric power infrastructure originated over a century ago
when isolated small generators supplied nearby loads. as the
infrastructure rapidly evolved, the benefits of a system based
on centralized generation emerged. central generation within
interconnected systems produced benefits of scale, diversification of loads, improved energy resource flexibility, and
increased reliability. these outweighed the costs of the transmission and distribution infrastructure needed to connect the
central generation with distributed loads and set a trend that
evolved toward a large interconnected grid. more recently, regulatory changes, technical advancements, and environmental
impacts have led to a significant increase in DG applications.
the definition of DG is somewhat ambiguous. there is
presently no uniformly accepted industry definition, and
definitions can vary from nondispatchable solar Pvs located
on the customer side of the meter to cogeneration facilities at
large industrial sites with ratings of 100 mW or more. the
drivers behind most customer-owned DG applications can
be tied to one or more of the following:
✔ utilize a locally available energy source that cannot
be easily transported, such as biogas or sun.
✔ increase efficiency by generating electricity and using
exhaust for heating (chP).
✔ Provide lower-cost electricity than that of the local
utility. this may involve peak shaving for commercial
facilities billed for demand charges.
✔ take advantage of policy-driven economic incentives
such as feed-in tariffs, net-metering rules, and rebates
specific to DG.
✔ increased reliability to a facility where the DG is
located.
✔ Fulfill social and sustainability goals, including
the desire to be independent from the utility, create
microgrids for resiliency and security, and other similar values that cannot be measured purely in a proforma analysis.
independent power producers and utilities may choose to
connect at the distribution level when the scale of their development is small or when policy provides specific incentives
for distribution interconnection. in general, generation built
close to load, in locations that alleviate transmission congestion, will generate greater revenue in the wholesale market.
some utilities have also implemented strategies where DG
is used to alleviate localized overloads of existing distribution substation capacity, where the cost of the next substation
capacity step is excessive relative to the size of the overload.
may/june 2014

the value of DG in offsetting transmission and distribution capacity requirements, however, is much less, and more
indirect, than commonly perceived. to provide an effective
substitute for transmission and distribution assets, DG output must be available at the time of system peak. this usually requires that the DG be dispatchable and contractually
obligated to provide support when needed. also, because
individual generation equipment has a lower reliability and
availability than the utility service we receive at our homes,
DG redundancy needs to be considered. Where only a few
DG units are involved, the costs to provide reliable capacity
could be sizeable.
While wind generation and hydro power are presently
the largest renewable energy sources in the grid, solar Pvs
represent the most rapidly growing DG segment. in general, the unsubsidized cost of Pv is high relative to alternate forms of generation. When Pvs are connected "behind
the meter" on the roofs of customers, the electricity produced will displace the electricity typically provided by the
utility. Where net metering tariffs are in place, the effective value to the owner of the generated energy is equal to
the retail energy rate. today, many utilities recover their
fixed service costs through retail rates based entirely on
the energy provided to the customer. since the grid service will still be needed on the cloudy days when Pvs are
unable to entirely displace the utility electricity supply,
much of the fixed service costs remain unchanged. thus,
utilities may need to consider alternative tariff structures to
adequately recover these fixed costs without placing undue
burden on the customers who are not self-generating. these
alternatives could include demand charges, similar to those
experienced by industrial customers, or larger fixed service
charges. either will tend to decrease the energy-based electricity rates. While Pvs are approaching grid parity relative
to conventional volumetric (kWh-based) retail electricity
rates in some regions of the country, pricing mechanisms
may change to ensure that the true cost of electric service
is properly reflected in its price.
the aforementioned drivers for DG will continue to
increase their presence in the grid of the future. the dominant driver for DG in north america will be policy, particularly those that promote renewable generation and grid
resiliency. Distributed solar Pvs and chP will likely be the
most pervasive form of DG. While growth in DG will continue, there is a long-term cost savings driver toward a grid
comprised of centralized generation.

Managing Distributed Solar PV
solar Pvs have historically been applied as a small-scale distributed resource. however, in recent years, there has been
explosive growth in large utility-scale Pv power plants, with
some facilities currently planned to exceed several hundred
megawatts of capacity. unlike wind, solar Pvs do not suffer
a large cost penalty when scaled to a small size. thus, Pv
installations in the future are expected to be well divided
ieee power & energy magazine

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - May/June 2014

IEEE Power & Energy Magazine - May/June 2014 - Cover1
IEEE Power & Energy Magazine - May/June 2014 - Cover2
IEEE Power & Energy Magazine - May/June 2014 - 1
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IEEE Power & Energy Magazine - May/June 2014 - Cover3
IEEE Power & Energy Magazine - May/June 2014 - Cover4
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