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REGULATORY ASSISTANCE PROJECT | ISSUESLETTER JULY 2003 | WWW.RAPONLINE.ORG

July 2003

Output-Based Emissions Standards for I Distributed Generation

nnovations in technology, changes in the economics of the electric industry, and a variety of regulatory reforms have combined to create new opportunities for small-scale, distributed generation (DG). Microturbines, diesel gen-sets, fuel cells, solar panels, gas reciprocating engines, wind turbines, and other DG can further transform the nature of the electric network, offering additional ways to capture production cost savings and bene ts.

Seeing the value in uniformity and the avoidance of duplicative effort, the Regulatory Assistance Project convened a working group of state utility regulators, state air pollution regulators, representatives of the distributed re- sources industry, environmental advocates, and federal of cials to develop model DG emissions regulations. Approximately thirty people came together over a two-year period to develop a rule designed to foster the deployment of dis- tributed generation and other resources in ways that are both environmentally sustainable and economically ef cient. In October 2002 the group came to a broad consensus on the rule, which is printed in its entirety as an insert to this Issuesletter.

The Emissions Challenge: A Basis for Standards

Distributed generation, like central gen- eration, comes in many different technolo- gies, sizes, and fuel types. Each has particular strengths and weaknesses: some, such as diesel reciprocating engines, have quick start capa- bilities that make them ideal for emergency service; others, such as gas turbines, perform well in more extended operations. Each has its

With these opportunities come challenges. Extensive deployment of DG could, if unregu- lated, have signi cant environmental impacts. Yet if DG is overregulated, valuable, ef cient, and clean technologies could be sti ed. For

air regulators, DG raises particular concerns, because diesel and natural gas combustion technologies make up the lion’s share of instal- lations. If DG is to bene t electric systems across the country, states will need to tackle the emissions question head on.1

Although developers may rankle at the idea of regulation, far more frustrating to them would be a hodgepodge of inconsistent and even incompatible rules, each state setting its own standards, timing, and compliance re- quirements. In the long run, the industry, the electric system, and the environment will be better served by a set of like rules across states and regions.

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Other issues need to be dealt with, too, such as interconnec- tion, stand-by rates, demand response, and the role of DG among other distributed resources (e.g., end-use ef ciency). Emissions regulations are only one component of an inte- grated package of policies needed to support cost-effective, environmentally sustainable distributed resources.

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