Distributed generation


Distributed generation, also distributed energy, on-site generation, 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.
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 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. 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: it makes the supply-demand relationships extremely complex, and requires complicated optimization tools to balance the network, and it puts higher pressure on the transmission network, and it may cause reverse power flow from the distribution system to transmission system.
Microgrids are modern, localized, small-scale grids, contrary to the traditional, centralized electricity grid. 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.

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 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. Efficiency gains no longer come from increasing generating capacity, but from smaller units located closer to sites of demand.
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 achieved greater economic benefits through mass-production than larger units gained from their size alone. The increased value of these resources—resulting from improvements in financial risk, engineering flexibility, security, and environmental quality—often outweighs their apparent cost disadvantages. Distributed generation, vis-à-vis central plants, must be justified on a life-cycle basis. Unfortunately, many of the direct, and virtually all of the indirect, benefits of DG are not captured within traditional utility cash-flow accounting.
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, 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 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.

Cybersecurity

Vulnerabilities in control systems from a single vendor used at thousands of installations of given source can result in hacking and remotely disabling all these sources by a single attacker, thus largely reversing the benefits of decentralised generation, which has been demonstrated in practice in case of solar power inverters and wind power control systems. In November 2024 Deye and Sol-Ark inverter manufacturer remotely disabled in some countries due to alleged regional sales policy dispute. The companies later claimed the blockage was not remote but due to geofencing mechanisms built into the inverters.
EU NIS2 directive expands the cybersecurity requirements to the energy generation market, which has faced backlash from renewable energy lobby groups.

Grid parity

occurs when an alternative energy source can generate electricity at a levelized cost 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.

Technologies

Distributed energy resource systems are small-scale power generation or storage technologies 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. DER systems also serve as storage device and are often called Distributed energy storage systems.
DER systems may include the following devices/technologies:
Distributed cogeneration sources use steam turbines, natural gas-fired fuel cells, microturbines or reciprocating engines to turn generators. The hot exhaust is then used for space or water heating, or to drive an absorptive chiller 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.
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. 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. For a price of $22,600 before installation. For 2013 a state subsidy for 50,000 units is in place.
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.