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Distributed Generation Drivers / Benefits

Drivers for DG
For the past 60 years, electricity production and supply have been performed by centralized, regulated electric utilities who owned and operated power generation facilities as well as the transmission and distribution lines. Investor-owned utilities are regulated by state public utility commissions (PUCs), while cooperative and municipal utilities are governed by local jurisdictions.

Since the 1970s, federal and state public policy has encouraged the opening of the electric power system to entities other than the electric utilities. This has created a competitive landscape for power generation and has opened the transmission system to access by paying users. A significant shift in the U.S. regulatory system began with the Energy Policy Act (EPAct) of 1992, which required interstate transmission line owners to allow all electric generators access to their lines. Many states today are at various stages of electric utility deregulation.

Utility deregulation is one reason for the high level of interest in distributed energy resources.

Other drivers for DG include:

  • Desire for alternative renewable resources such as solar and wind.
  • Need for higher quality power in some commercial and industrial facilities as a result of increased use of microelectronic devices.
  • Remote power applications and the desire to reduce the cost of transmission line upgrades.
  • Meets requirements for reduced emissions.

Benefits of DG
DG can provide many benefits, including:

  • More reliable power, especially for those in areas where outages are common.
  • The variety of DG equipment allows customers to choose the best solution for an individual location.
  • Some DG equipment is able to provide high-quality, premium power for sensitive applications.
  • DG equipment efficiency improvements are achieved when used in combination with combined heat and power equipment for heating, cooling, and dehumidification applications.
  • Cost savings can be realized by reducing the peak demand at a facility, therefore lowering demand charges.
  • DG equipment can provide power to remote applications where traditional transmission and distribution lines are not an option. Locations such as cellular towers, small remote towns or drilling platforms in the ocean are outside the electric grid and benefit from DG as a primary power source.
  • Environmental benefits of DG solutions include a reduction in emissions for some technologies (e.g., solar, wind, fuel cells).