5.2 Necessity and Potential of Distributed Energy
Resources
A distributed energy resource (DER) system refers to the utilization of on-site energy
sources to provide electricity and other energy to one or more buildings or facilities.
Generally, DER is installed for one or more of the following applications (Huang
et al. 2007; Kari and Arto 2006; Soderman and Pettersson 2006):
1. Overall load reduction: reducing overall electricity consumption by using highly
efficient power generators in lieu of grid-purchased power.
2. Energy independence: using on-site power generation to meet all energy needs
(usually to improve power reliability and quality).
3. Standby power: using a generator as a backup electricity source to ensure power
availability during grid outages.
4. Peak shaving: using on-site generation intermittently to avoid purchasing grid
power during expensive peak time. Peak shaving also refers to using on-site
generation during periods of maximum electricity consumption, expressly for
lowering the energy demand component of a given billing period (applies only for
tariff structures with demand charge).
5. Net energy sales (net metering): generating more electricity than needed and
selling the surplus to the grid.
6. Combined heat and power (CHP): using waste heat from a power generator
directly (e.g., manufacturing processes, space heating, water heating) or through
a thermally activated device (e.g., absorption chillers, dehumidifiers, bottoming
cycles).
7. Grid support: installed by power companies to support transmission, distribution,
and feeder systems for a wide variety of reasons, including meeting highest peak
loads without having to overbuild infrastructure, postponing system upgrades,
maintaining power quality, and maintaining uninterruptible power during
planned outages.
8. Premium power: mitigates or otherwise corrects frequency variations, voltage
transience, surges, dips, or other disruptions from grid power, which can trip
sensitive digitally controlled motors, drives, and computer systems.
Table 5.2 shows the characteristics of various DER installation types, of which
low costs and fixed maintenance are the most important. In contrast, thermal output
and emissions are considered less important by various applications. Although
environmental issues are increasingly important, economics is the most prioritized
factor when introducing distributed energy systems. Therefore, we focus mainly on
the economic aspects of distributed energy systems. Nevertheless, as awareness of
environmental problems increases, environmental aspects will become more important and are sometimes transferred to economic indexes through the introduction of
carbon taxes, for example.
Figure 5.2 illustrates an example of a distributed energy system. Generally, a
DER system is composed of energy production devices, local energy consumption,
108
H. Ren et al.
Resources
A distributed energy resource (DER) system refers to the utilization of on-site energy
sources to provide electricity and other energy to one or more buildings or facilities.
Generally, DER is installed for one or more of the following applications (Huang
et al. 2007; Kari and Arto 2006; Soderman and Pettersson 2006):
1. Overall load reduction: reducing overall electricity consumption by using highly
efficient power generators in lieu of grid-purchased power.
2. Energy independence: using on-site power generation to meet all energy needs
(usually to improve power reliability and quality).
3. Standby power: using a generator as a backup electricity source to ensure power
availability during grid outages.
4. Peak shaving: using on-site generation intermittently to avoid purchasing grid
power during expensive peak time. Peak shaving also refers to using on-site
generation during periods of maximum electricity consumption, expressly for
lowering the energy demand component of a given billing period (applies only for
tariff structures with demand charge).
5. Net energy sales (net metering): generating more electricity than needed and
selling the surplus to the grid.
6. Combined heat and power (CHP): using waste heat from a power generator
directly (e.g., manufacturing processes, space heating, water heating) or through
a thermally activated device (e.g., absorption chillers, dehumidifiers, bottoming
cycles).
7. Grid support: installed by power companies to support transmission, distribution,
and feeder systems for a wide variety of reasons, including meeting highest peak
loads without having to overbuild infrastructure, postponing system upgrades,
maintaining power quality, and maintaining uninterruptible power during
planned outages.
8. Premium power: mitigates or otherwise corrects frequency variations, voltage
transience, surges, dips, or other disruptions from grid power, which can trip
sensitive digitally controlled motors, drives, and computer systems.
Table 5.2 shows the characteristics of various DER installation types, of which
low costs and fixed maintenance are the most important. In contrast, thermal output
and emissions are considered less important by various applications. Although
environmental issues are increasingly important, economics is the most prioritized
factor when introducing distributed energy systems. Therefore, we focus mainly on
the economic aspects of distributed energy systems. Nevertheless, as awareness of
environmental problems increases, environmental aspects will become more important and are sometimes transferred to economic indexes through the introduction of
carbon taxes, for example.
Figure 5.2 illustrates an example of a distributed energy system. Generally, a
DER system is composed of energy production devices, local energy consumption,
108
H. Ren et al.