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DOE SAYS YES
TO CONSUMERS GENERATING
THEIR OWN ELECTRICITY

U.S. Secretary of Energy Bill Richardson recently released a comprehensive report that said for the first time,the marketplace barriers that prevent electric utility customers, developers and vendors from creating projects that would enable consumers to generate their own electricity no longer exist.

Added a DOE news release, "According to the . . . report, distributed power systems that produce electricity onsite can reduce the amount ofpower utility companies need during peak demand and help prevent power outages." Utility reliability is increasingly viewed as an important issueas states move forward in an uncoordinated way with restructuring of the utility industry.

"Hundreds of millions of dollars and hundreds of thousands of work hoursare lost each year due to power supply disruptions that could otherwise beavoided if the barriers to distributed electricity generation were removed," said Secretary Richardson. "When facilities such as hospitals and businesses with computers or other critical electronic technology can get power from either the grid or their own generating equipment, energy reliability and security will be greatly improved."

The report contains a 10-point action plan for reducing the technical,business practice and regulatory barriers that discourage inter connectionof distributed generation technologies to the electricity grid in theUnited States. The report, Making Connections: Case Studies of Barriers to Inter connection of Distributed Power, is the first to document the problemsthe developers of distributed electricity generation projects encounter while attempting to interconnect to the electric grid.

On-site generation, also known as distributed electricity generation,allows residential, commercial and industrial customers to produce their own electricity by using smaller, decentralized, electrical generation systems located at or close to their facilities. Power sources for distributed electricity generation systems include fuel cells, microturbines, photovoltaics, wind turbines and combined heat and powersystems. The technology reduces the need to build new large central generating plants or transmission and distribution lines. The report concludes that distributed power systems at industrial plants or commercialbuildings can be more energy-efficient and provide greater reliabilityon-site than conventional central generating stations.

DOE examined 65 distributed electricity generation projects. Of the 65case studies, only seven reported no major utility-related barriers. "However, in most cases," added the release, "substantial regulatory, technical and business-practice barriers exist which inhibit distributed generation inter connection to the grid in the UnitedStates. For example, 17 projects, more than 25% of the case studies, experienced delays greater than four months."

Barriers noted by the report include:

* Lack of a national consensus on technical standards for connecting equipment.

* Lengthy and costly approval process that hampers competition from smaller distributed generation projects.

* Unfamiliarity by utility companies in dealing with customer-generator inter connection requests.

* Costly regulatory appeals that prevent relatively small-scale distributed generation projects.

Although a handful of public utility commissions across the country have adopted rules on inter connection, the report concludes that removal of the barriers will require the participation of industry, utilities, developers,environmental groups and state and federal regulatory agencies. The report outlines an action plan for reducing barriers to distributed generation.Some of the recommendations include:

* Adoption of uniform technical standards for inter connecting distributed power to the electric grid.

* Acceleration of the development of distributed power control technology and systems.

* Development of tools for utilities to assess the value and impact of distributed power at any point on the grid.

* Establishment of new regulatory tariffs and utility incentives that help reduce regulatory barriers.

According to the report, many of the artificial market barriers todistributed generation grow out of long-standing regulatory policies andincentives designed to support monopoly supply. Distributed generation promises greater customer choices, efficiency advantages, improved reliability and a host of environmental benefits.

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Written by: Tom Starrs, Brent Alderfer and Monika Eldridge, DOE Distributed Power Program


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