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Distributed Generation – Removing Barriers and Interconnection Standards

In the early 20th century electricity generation and transmission technologies supported the idea that "big is better." As a result, regulatory rules encouraged the construction of centralized power plants and long distribution lines. In the 1990s the technological dynamic was reversed. Small power plants located closer to the customer were become increasingly competitive. This has occurred at the same time as most states, many cities, and the U.S. Congress are rewriting the rules that govern our electricity system. These interconnection rules (i.e. codes, standards, regulations, statutes) will encourage electricity customers to also become electricity producers.

With the passage of the federal Energy Policy Act of 2005 (EPAct 2005), section 1254 of EPAct requires states and "nonregulated" utilities to consider and make a determination on an interconnection standard based on the IEEE 1547 standard.  The folks at IREC are tracking these state level efforts.

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Rules

Distributed Generation Barriers Removed - California

  • State
    • As a result of the electricity crisis in California in 2001, initiatives to knock down the barriers to distributed power were enacted over subsequent years that can provide a model for other states to consider. More

    Natural Gas Price Breaks for Distributed Generation - New Jersey

  • State
    • New Jersey Natural Gas Company (NJNG) received approval in January 2003 from the New Jersey Board of Public Utilities (BPU) to offer a special pricing plan to residential and commercial customers who use natural gas to fuel distributed generation (DG) technologies like fuel cells or microturbines. Under the rates, commercial and residential DG projects could see savings of up to 50 percent on their fuel costs. More

    Value Decentralized Power by Getting the Prices Right

  • State
    • The objective of the future electricity system should be to optimize efficiency of the use, production and distribution of electricity. Regulators must quantify the benefits of dispersed power (and efficiency and storage) and develop pricing mechanisms that reflect the true costs of electricity distribution that encourage the siting of distributed generation resources when and where they are most needed. More

    Distributed Generation Interconnection Standards

  • State
  • Federal
    • Efforts are underway at the federal level and in many individual states to develop fair and uniform interconnection standards to help facilitate the deployment of distributed generation. A handful of states have already adopted interconnection standards that other states can modify for their circumstances. More

    Net Metering

  • Local
  • State
    • Net metering is a practice that encourages consumer investment in on-site electric generators - typically small-scale, renewable energy technologies. When electricity is being generated and none is being consumed, net metering typically allows customer/generators to spin their meter backwards, in effect paying the customer/generator the retail rate for the electricity they generate but don't immediately consume. If a customer generates more electricity than they consume over a period of time, they are typically paid for that net excess generation (NEG) at the utility's avoided cost, or the wholesale rate. Two states, Minnesota and Wisconsin, stand out from the crowd because their net metering rules allow participants to be paid the going retail rate for the net excess electricity they generate for each billing cycle. Some states like New Jersey and Colorado allow projects up to 2 MW to use net metering. More

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