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Value of the Grid to DG Customers



Some advocates of distributed generation (DG) claim that the DG customer derives no benefit from being connected to the host utility’s distribution system. While it is easy to say that a DG customer is “free from the grid,” that is simply not true – even for a DG customer (or a micro- grid) that produces the exact amount of energy that it consumes in any given day or other time interval.

This paper describes how a DG customer (or a micro grid) that is connected to the host utility distribution system 24/7 utilizes grid services on a continuous, ongoing basis. The point is to recognize the value of these grid services and to develop a methodology for the DG customer to pay for using the services. The utility cost of providing grid services consists of at least four components – the typical fixed costs associated with: (i) transmission, (ii) distribution, (iii) generation capacity, and (iv) the costs of ancillary and balancing services that the grid provides throughout the day for the DG customer.

Lisa V. Wood

Executive Director, Institute for Electric Efficiency - The Edison Foundation

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