Distributed Generation Gets a Boost

The announcement this week by Duke Energy that the utility had acquired a controlling interest in REC Solar accelerates what has already been a fast track for distributed energy generation, a means seen by the as a way to boost the development of renewable energy, as well as help the nation meet the 25x’25 goal.

Distributed energy consists of a range of smaller-scale and modular devices designed to provide electricity in locations close to consumers. They include solar panel arrays, generators that run on biogas and wind turbines, among other renewable energy technologies. Often those residences and commercial properties that employ distributed energy systems do not have to rely solely on a utility grid for all of their electricity needs.

The 25x’25 Energy for Economic Growth Initiative continues exploring how innovative business and financing models might be used to accelerate distributed renewable energy generation – and with it, economic development ‑ through rural electric utilities (REUs) and other power providers that serve rural communities. That work includes partnering with REUs in developing and testing these models and sharing the results with the REU community.

The acquisition of REC Solar by Duke Energy marks the embrace of distributed energy by the nation’s largest electrical utility. The California-based solar firm specializes in grid-tied solar designs and installations in the retail, manufacturing, agriculture, technology, government and nonprofit sectors across the country. Duke Energy said it will also invest up to $225 million in commercial solar projects developed by REC Solar and supported by long-term power purchase agreements.

Duke Energy’s acquisition of REC Solar is a development of significant magnitude, given that the North Carolina-based utility supplies energy to some 7.2 million U.S. customers in the Carolinas, the Midwest and Florida (Duke also has natural gas distribution services in Ohio and Kentucky). The move offers Duke Energy a wide range of distributed energy opportunities. The utility already has among its current assets 15 wind farms and 22 solar farms operating in 12 states and totaling about 1,800 megawatts in electric-generating capacity.

Given properly designed enabling policies, distributed energy facilities can also sell electricity to utilities, enhancing the security of the grid, a concept not lost on former Federal Energy Regulatory Commission (FERC) Commissioner Jon Wellinghoff. He recently said in an interview with RenewableEnergyWorld.com that the best assurance of grid security comes with a realignment of the grid so that rather than depending on less than a dozen nodes necessary for the system to operate, a network of hundreds of smaller, distributed grid systems should be implemented.

The current distribution system that requires central station generation “presents an array of vulnerabilities from a cyber and physical security standpoint,” Wellinghoff said. “We need to change the way the grid works…by shifting from a centralized to a distributed-grid architecture in which power generation is dispersed along the grid.”

A report released this week by the Interstate Renewable Energy Council (IREC) offers state utility regulators a number of policy recommendations that aims to better accommodate the growth of distributed energy within the existing grid system. Among the IREC recommendations is one that calls for the adoption of a ratemaking framework that incentivizes more distributed, environmentally sustainable electricity systems (as opposed to large capital investments), and another calling on regulators to promote the effective integration of distributed generation into the grid so the benefits of renewable energy technologies are maximized.

Meanwhile, the rural electric cooperatives and National Rural Electric Cooperative Association (NRECA) have undertaken a number of parallel but interrelated initiatives in an effort to insure a more stable and flexible grid to accommodate load generation and transmission from multiple sources with varying amounts of energy entering the lines. Among them is the distribution of technology and research information to member co-ops through the association’s smart grid demonstration project. The cooperative electric network also has a number of projects underway, including the participation of 14 member co-ops in the DOE SunShot Grant project (SUNDA), along with CRN (Cooperative Research Network) the research arm of NRECA and other cooperative finance, service and insurance providers as a means of lowering the soft costs and create business models for utility-owned and utility-controlled solar, much of which will be in the .25 MW to .5 MW to 1.0 MW range.

The association’s research arm is also working with its members to explore ways to integrate storage and solar photovoltaic energy, as well as developing tools, with DOE support, to model the distribution system in a way that determines the optimal places in the system to deploy voltage control, solar and other distributed generation arrays, storage and demand response, all with an eye toward optimizing the distributed grid. In addition, the co-ops and NRECA are researching a number of demand response projects to integrate load devices into the grid, investigating informational and operational technologies that facilitate both connection and disconnection from the grid. Development planning is underway for a transmission and distribution diagnostics center, and the association is developing microgrid applications and models.

Distributed generation has found a necessary place in this nation’s energy future and policy makers and regulators should not ignore its benefits. It is a crucial part of any policy that that promotes clean energy and economic development.

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