Fuel Efficient Distributed Generation

About Distributed Generation

Distributed generation refers to a variety of technologies that generate electricity at or near where it will be used, such as solar panels and combined heat and power. Distributed generation may serve a single structure, such as a home or business, or it may be part of a microgrid (a smaller grid that is also tied into the larger electricity delivery system), such as at a major industrial facility, a military base, or a large college campus. When connected to the electric utility’s lower voltage distribution lines, distributed generation can help support delivery of clean, reliable power to additional customers and reduce electricity losses along transmission and distribution lines.

In the residential sector, common distributed generation systems include:

• • Solar photovoltaic panels
  • Small wind turbines
  • Natural-gas-fired fuel cells
  • Emergency backup generators, usually fueled by gasoline or diesel fuel

In the commercial and industrial sectors, distributed generation can include resources such as:

• • Combined heat and power systems
  • Solar photovoltaic panels
  • Wind
  • Hydropower
  • Biomass combustion or cofiring
  • Municipal solid waste incineration
  • Fuel cells fired by natural gas or biomass
  • Reciprocating combustion engines, including backup generators, which are may be fueled by oil

Distributed Generation in the United States

The use of distributed generation units in the United States has increased for a variety of reasons, including:

• • Renewable technologies, such as solar panels, have become cost-effective for many homeowners and businesses.
  • Several states and local governments are advancing policies to encourage greater deployment of renewable technologies due to their benefits, including energy security, resiliency, and emissions reductions.
  • Distributed generation systems, particularly combined heat and power and emergency generators, are used to provide electricity during power outages, including those that occur after severe storms and during high energy demand days.
  • Grid operators may rely on some businesses to operate their onsite emergency generators to maintain reliable electricity service for all customers during hours of peak electricity use.

Distributed generation systems are subject to a different mix of local, state, and federal policies, regulations, and markets compared with centralized generation. As policies and incentives vary widely from one place to another, the financial attractiveness of a distributed generation project also varies.

As electric utilities integrate information and communications technologies to modernize electricity delivery systems, there may be opportunities to reliably and cost-effectively increase the use of distributed generation.