Distributed Generation As Alternative Togrid Capacity Enhancement

Distributed Generation as Alternative toGrid Capacity Enhancement

Rahmatallah Poudineh, Heriot-Watt University, +44(0)1314513273,

Tooraj Jamasb,Departmnet of Economics, Durham University Business School,

Tooraj Jamasb, Heriot-Watt University, +44 (0) 131 451 3482,

[Other Author’s Name, Affiliation, Phone, email]

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Overview

Traditionally, the operating mode of transporting electricity has been to injects large amounts of power into the transmission grid, where it is transported to passive distribution networks, which isthen delivered to the end consumers. Electricity distribution networks are set to play a key role in the future configuration of power systems. This is because these networks are entering a new era in which decentralised generation sources will be an important part of the emerging paradigm of electrical power system. This change is being driven by the sustainable energy policies along with reliability and affordability and reliability of supply objectives.

Thus, the future sustainable power system will need to balance and combine conventional generation plants with distributed generation (DG) sources. Integration of distributed generation introduces new challenges and opportunities that need innovative technical, economic and regulatory solutions to overcome barriers and utilise possibilities. This is to allow DG to compete with other alternatives in providing network and non-network services to the DNOs. In the context of non- network solutions there is an ample opportunity for replacing network reinforcement by meeting the demand locally through deployment of DGs. This implies changing operational philosophy from passive to an active distribution network paradigm that manages and controls a combination of distributed energy resources comprising of generators and storages.

Methodology

This paper analyses the concept of DGs integration as an alternative to the distribution grid reinforcement and discusses the advantages as well as the economic and regulatory issues facing these innovative solution. We examine implications of regulatory framework in the UK for the uptake of DGs as a non-network solution to grid expansion. A market-based solution to identify the value of DG for distribution network operators (DNO) is proposed. We also present a new business model for DNOs that includes demand response and storage technologies.

Results

Most current incentive regulation schemes do not encourage DNOsto utilise innovative solutionsand rather place higher emphasis on cost saving. Furthermore, benefits and costs alignment between DG developer and DNO is not properly addressed in the current regulatory framework. Unbundling of networks prevents DNO from owning generation units which in turn reduces controllability of distributed generation resources.This potentially increases barriers for DNOs to implement smart solutions and makes them to leave out the operational benefits of DGs and choose the conventional network reinforcement to the disadvantages of efficient operation of network.

Conclusions

DG can be employed as an alternative to the grid capacity enhancement to the benefits of optimal operation of networks. This requires the current incentive regulation to correctly address the issues arise as a result of DG uptake in the low distribution network. Our analysis shows that there arepotential benefits in revisiting the business and regulatory models of DNOs and increase of their revenue in the new operating paradigm. Moreover we show that there is a market solution for realizing the the value of DG for DNO.

References

Hoff, T.E., Wenger, H.J, and Farmer, B.K. (1996) “Distributed Generation: An Alternative to Electricity Investments in System Capacity” Energy Policy 24(2): 137–47

Miri-Larimi, S.M. and Haghifam, M.R (2012) “Determination of Minimum Guaranteed Purchasing Price From Renewable Sources At Distribution Network Buses With Consideration Investment Dynamics” CIRED Workshop, Lisbon, 29-30 May.

Mendez, V.H., Rivier, J., de la Fuente, J.I, Gomez,T., Arceluz, J. Marin, J., Madurga, A. (2006) “Impact of Distributed Generation on Distribution Investment Deferral” Electrical Power and Energy Systems 28:244–252.

Piccolo, A. and Siano, P. (2009)” Evaluating the impact of network investment deferral on distributed generation expansion”, IEEE Transactions on Power System, 24( 3):1559 – 1567..