Connecting Distributed Energy Resources to the Grid: Their Benefits to the DER Owner etc. (2003)

The vision of the Distributed Energy Research Program (DER) program of the U.S. Department of Energy (DOE) is that the United States will have the cleanest and most efficient and reliable energy system in the world by maximizing the use of affordable distributed energy resources. Electricity consumers will be able to choose from a diverse number of efficient, cost-effective, and environmentally friendly distributed energy options and easily connect them into the nation's energy infrastructure while providing benefits to their owners and other stakeholders. The long-term goal of this vision is that DER will achieve a 20% share of new electric capacity additions in the United States by 2010, thereby helping to make the nation's electric power generation and delivery system more efficient, reliable, secure, clean, economical, and diverse in terms of fuel use (oil, natural gas, solar, hydroelectric, etc.) and prime mover resource (solar, wind, gas turbines, etc.). Near- and mid-term goals are to develop new technologies for implementing and operating DER and address barriers associated with DER usage and then to reduce costs and emissions and improve the efficiency and reliability of DER. Numerous strategies for meeting these goals have been developed into a research, development, and demonstration (RD&D) program that supports generation and delivery systems architecture, including modeling and simulation tools. The benefits associated with DER installations are often significant and numerous. They almost always provide tangible economic benefits, such as energy savings or transmission and distribution upgrade deferrals, as well as intangible benefits, such as power quality improvements that lengthen maintenance or repair intervals for power equipment. Also, the benefits routinely are dispersed among end users, utilities, and the public. For instance, an end user may use the DER to reduce their peak demand and save money due to lower demand charges. Reduced end user peak demand, in turn, may lower a distribution system peak load such that upgrades are deferred or avoided. This could benefit other consumers by providing them with higher reliability and power quality as well as avoiding their cost share of a distribution system upgrade. In this example, the costs of the DER may be born by the end user, but that user reaps only a share of the benefits. This report, the first product of a study to quantify the value of DER, documents initial project efforts to develop an assessment methodology. The focus of currently available site-specific DER assessment techniques are typically limited to two parties, the owner/user and the local utility. Rarely are the impacts on other stakeholders, including interconnected distribution utilities, transmission system operators, generating system operators, other local utility customers, local and regional industry and business, various levels of government, and the environment considered. The goal of this assessment is to quantify benefits and cost savings that accrue broadly across a region, recognizing that DER installations may have local, regional, or national benefits.