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DISTRIBUTED GENERATION FORUM
The Role of Distributed Generation in Competitive Energy Markets
Small power generation units (typically less than 30 MW) strategically located near consumers and load centers that provide benefits to customers and support for the economic operation of the existing power distribution grid.
This paper describes the role of distributed generation (DG) in current and emerging energy markets. The discussion focuses on the following topics:
DG Technologies 2 Applications for DG 5 Benefits of DG 8 Electric Industry Restructuring 10 Stakeholder Roles and Perspectives 13
When Thomas Edison
built the Pearl Street Power station to provide the first electric service to customers
in New York City, he was essentially following a strategy that today would be called distributed generation – building power generation within the localized area of use. As the young industry grew, many industrial facilities built their own power plants both to serve their own needs and to sell to customers around them, another example of distributed generation. Rapid technological development led to larger and more efficient generating plants built farther and farther from the end-user. Large regional power transmission networks delivered this power to the local distribution systems and finally to the end-user. The industry was regulated so
that these changes could occur efficiently without wasteful duplication of facilities, and the economic role of distributed generation became much more limited.
Since the 1970s, however, large central nuclear and coal- fired power stations have become increasingly expensive and more difficult to site and to build. At the same time, techno- logical development has improved the cost and performance
of smaller, modular power generation options – from 300 megawatt (MW) gas-fired combined cycle power plants down to individual customer generation of as little as a few kilowatts. The industry is also restructuring to allow customers to competitively select the optimum combination of energy resources to meet their needs.
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