Rooftop Solar Installed at AEP’s Athens Service Center
The issue
Distributed energy resources (DER) refers to generation or energy storage devices located at or near the customer load, in contrast to the typical central station generation plant. Types of distributed generation, sometimes referred to as customer-owned generation, can range from large-scale combined heat and power (CHP) systems to back-up diesel generators to commercial and residential rooftop solar. Likewise, energy storage ranges from megawatt sized utility-scale storage located at distribution substations to community energy storage devices located near the customer home.
The benefits
The proximity of distributed energy resources to end users provides benefits over central station generation:
Sodium Sulfur (NaS) Battery Installation in Bluffton, OH
- quick response to local needs and conditions for greater service reliability
- fewer line losses (energy lost along the transmission and distribution grid)
- relieves stress off the aging transmission and distribution grid
In addition to the benefits of proximity, energy security is enhanced through dispersed generation with a diverse fuel mix.
Finally, distributed energy resources support renewable energy goals. From rooftop solar to small wind, utilities can partner with customer-generators and aggregators to meet renewable standards. Energy storage projects, whether utility or customer owned, can turn intermittent renewables into resources dispatchable to load on demand.
The challenges
The biggest challenge for distributed energy resources is the cost. Although many large commercial and industrial CHP systems are economic, most distributed renewable energy and storage is not. With current costs per kilowatt-hour far exceeding most utility rates (and even utility scale renewable projects), residential and small commercial solar and wind are progressing more for societal and political reasons than for cost-benefit.
In addition to the higher cost, distributed resources pose integration challenges to grid operators. Because customer-owned generation is not controlled by the utility, it can present challenges in maintaining delivery voltage levels within industry specifications. The intermittent nature of distributed solar and wind further aggravates the challenges for grid operators to maintain reliable electric service.
Community Energy Storage (CES)
Community Energy Storage (CES), located near residential customers, could offer much higher service reliability because of its close proximity to the load. CES could become a low-cost storage solution by using the same batteries as electric cars and leveraging the automated metering infrastructure (AMI) for control of multiple small storage units at one time, making it function like a larger storage unit.
Net Metering and Feed-in Tariffs
As legislators and regulators have sought ways to support distributed renewable generation, two types of utility tariffs have developed to allow customer-generators to feed power back into the grid.
Details vary by state, but net metering generally allows qualifying customer-generators to feed excess power back to their utility and receive credits to net out power received from the utility.
Feed-in tariffs gained popularity in Europe and are gaining traction in the U.S. Unlike net metering, all the power generated is sold to the utility (not netted out against usage). Rates are typically set by statute or regulatory authority at the cost of the generation by type. Because distributed solar and wind are more expensive than traditional or renewable utility based generation, increased costs are socialized among customers through rate increases.
AEP position
AEP is a strong proponent of distributed resources. AEP offers net metering in all our jurisdictions and is a leader in utility and community based energy storage.
