Distributed Generation To Supply a Third of US Power

The utility sector needs to effectively incorporate distributed energy resources to offer energy efficiency and power reliability.
Published: Tue 18 Feb 2014

Distributed energy resources are set to make up about 33% of the US’s total electricity supply by 2020. This is according to findings by former Southern California Edison smart grid chief and Cisco connected grid CTO Paul De Martini.

According to the research, while rooftop solar PV and demand response technology for the home is definitely growing, the largest portion of this distributed energy resource is actually combined heat and power systems, as well as back-up generators.

The research also points out that customer-sited, rather than utility-scale, power projects are expected to account for most of the growth in generation capacity during the remainder of the decade.


The growth of home-based distributed energy resources will create a lot of work with regulators to establish pathways to integrate all of the distributed energy resources into their grid planning and business operations. Distributed solar PV challenges have already presented a number of issues- net-metering policy struggles in California and Arizona initiated state-by-state debates over how solar-equipped customers and utilities should share the costs and benefits of incorporating this fast-growing resource into the energy landscape.

Foundation of microgrid systems

Currently, the larger amounts of distributed energy capacity represented by combined heat and power systems and backup generators are not being use effectively when it comes to grid integration. The reason for this is because these systems are mostly built to supply customers with their own off-grid power. It normally forms part of a university campus or facility-wide energy efficiency scheme in the case. Backup generators are normally used as a source of emergency power when the grid shuts down.

Combined heat and power systems can play a much bigger role in the microgrid system. It is able to offer constant power consumption flexibility to utilities and grid operators, as well as assist during off-grid during emergencies. Most of the large-scale microgrid systems that kept running during grid outages during Hurricane Sandy were heavily reliant on combined heat and power systems.

To create more storm-resilient microgrids, New York and Connecticut are already looking to invest millions of dollars.

Backup generators make up a major part of the portfolios of many demand response aggregators such as EnerNOC. The generators also play a major part in national programs like the U.K.’s Short-Term Operating Reserve (STOR). The generators are only really used during critical grid needs, during local congestion or peaking energy prices.

In our article Microgrids-More Than Just a Back-Up Plan, we discuss how microgrid investments can be structured to be more economically viable.

Environmentally-friendly and energy efficient

There are concerns that diesel-field generators and natural gas-fired microturbines may not be altogether green. However, more environmentally-friendly systems are being developed by big combined heat and power system providers such as Tecogen and big backup generator companies such as Generac. These systems are meeting strict air-quality standards.

These systems are also proving to be very useful in mitigating the intermittency of solar and wind power. The power comes in “bite-sized” versus conventional-generation megawatt-scale increments. Because of this, the systems don’t lose large amounts of power to transmission and distribution line losses.

Opportunity for the utility

This poses a clear opportunity for utilities to manage these growing demand energy resources. In addition, the smart grid technology sector stands to benefit as a combination of new smart grid technology developments, such as distribution operations “hubs” or “transactive energy” constructs that merge customer-owned energy assets to existing transmission grid and energy market structures.

We covered the market opportunities in our article Distributed Generation Opens a Floodgate of Opportunity.

California, Japan and Germany are already harnessing its benefits.

One thing is certain, distributed energy sources is a sector that the power industry does not want to ignore. Utilities need to find a cost-effective and efficient way of integrating it in to the overall energy infrastructure.

Further Reading:

Paul de Martini-Distributed Energy Resources-EEI Strategic Issues