A Blueprint for DG

Presenting a fair and simple distributed generation plan for utilities and policy-makers.

Distributed generation (DG) continues to face many institutional barriers erected before the technology emerged as an economic alternative. Chief among these barriers are existing rate and regulatory regimes, which fail to offer appropriate incentives to utilities and customers who might otherwise substitute DG facilities for distribution and generation.

DG as discussed here refers to small electricity generation facilities, up to 50 MW, located on the distribution system close to the point of consumption. DG facilities include micro-turbines, fuel cells, internal combustion engines and small gas turbines. These frequently are combined heat and power facilities.

This article addresses the rate treatment accorded these facilities and discusses changes that will enable distributed generation to compete head-to-head with traditional distribution facilities and central station generation, purely on the basis of the relative economics of each. Accordingly, rate proposals focus on methods that provide incentives to customers and utilities to install DG facilities whenever those facilities make economic sense.