Distributed Generation Offers Wide Economic, Environmental Benefits

It should come as no surprise that those who would protect their fossil-fuel-based energy interests at any cost have spread their attacks to target not only the Renewable Portfolio Standards (RPS, or renewable energy standards) established in nearly 30 states, but also the policies adopted by more than 40 states promoting distributed electricity generation.

Distributed generation is that electricity produced by users themselves, be it from solar panels or small wind turbines they install on and around their homes or from anaerobic digesters installed on their farms. This small-scale approach has served a critical role in the acceleration of renewable energy development and contributes to the share of clean, sustainable energy required under a state’s RPS.

What has come under attack in many states is the practice of utilities paying homeowners for the excess energy they produce that goes back into the grid. Utilities claim these people are “freeloading” by not contributing to what the utility has to pay to maintain the transmission facilities that serve all of its customers.

Of course, ignored in that argument is the fact that distributed generation facilities are playing an increasingly important role in the nation’s energy portfolio, being used to meet baseload power, peaking power, backup power, remote power, power quality as well as cooling and heating needs. Distributed electricity can mitigate congestion in transmission lines, reduce the impact of electricity price fluctuations, strengthen energy security and provide greater stability to the grid.

They offer low to no emissions, which make their environmental costs virtually non-existent when compared to carbon-spewing, fossil-fuel burning centralized power plants. They improve efficiency and actually lower energy costs. And it should be emphasized that distributed generation facilities actually support and strengthen utilities by helping meet the peak demands of local distribution feeder lines or major customers.

The installation of distributed scale solar panels and small turbines enables the employment of local tradespeople ‑ more than 90 percent of solar installers in the United States are in the residential, commercial, and industrial markets ‑ and it creates small businesses. It supports local financial markets – when local banks loan money for local projects, that money stays local.

By providing power that’s consumed exactly where it’s produced, the facilities actually lower a community’s impact on transmission lines, and may even avoid the need to build additional, environmentally-intrusive transmission lines.

And distributed generation facilities increase tax revenues through the uptick in sales revenue, payroll taxes and the profit taxes paid by small businesses. Those taxes, in turn, support local schools, roads, police and firefighters, and other crucial services.

Renewable advocates should raise these added benefits in their defense of policies that promote distributed generation. They will be principal talking points when the Oklahoma Public Service Commission takes up a proposal to impose a tariff on new home solar and wind installations – a levy authorized by a new state law passed with the support of the state’s major utilities. Gov. Mary Fallin had no sooner signed the bill into law before issuing an executive order calling for the state’s promotion of distributed generation facilities.

Last November, the Arizona Public Service Commission imposed on homeowners, by a 3-2 vote, a charge of 70 cents per kilowatt on installed solar capacity, though the commission declined to alter the rules that authorize net metering ‑ the sale of excess power back to the grid.

Other states are taking a more measured approach. The Minnesota Public Utilities Commission voted 3-2 last month in favor of a proposal that gives utilities an alternative to paying customers the retail electricity rate for their unused solar power, offering instead a rate based on the “value of solar” to their system, including cost-savings to other ratepayers and broader environmental benefits. And Louisiana and Mississippi are set to do cost/benefit analyses of home-installed solar facilities and net metering.

An Energy for Economic Growth Initiative sponsored by25x’25 is exploring how new business models might be used to accelerate economic development and distributed renewable energy generation through rural utilities and other power providers that serve agricultural communities.

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

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