Currently the industry is in a reactive mode to the growth of distributed generation (DG) and this needs to change to proactive, argues Naimish Patel, CEO of Gridco Systems, in an Engerati studio interview at European Utility Week 2014.
Impacts of DG
Patel says there are two impacts of DG on the electricity system. One is on the technology, with a new class of devices required for real-time voltage monitoring to replace the traditional electromechanical devices, which are unable to operate on the rapid timescales required. The second is on the revenue model of the distribution utility, which is now required to manage supply and demand and is seeing a growing disparity between costs and revenue.
“Technically it is possible to address this but without a regulatory change with economic incentives, it will be difficult to address the problem at scale,” says Patel.
New market design
Patel suggests the DG market will need both a capacity type long-term market and a short-term market for day-to-day utilization based on time and location. However, he sees a “cultural inertia” toward achieving a new market design and suggests that it would be preferable to architect and adopt a new system before a crisis point – such as reliability problems – is reached.
“If we step back and look at the system as a real system and design the economic and technical solutions to address it, I think we will find an equilibrium to have a very high penetration of DG.”