Acceptance of Distributed Generation Not Just a State Problem

By Published On: December 15, 2003

While distributed-generation (DG) promoters have been complaining for years that California isn?t doing enough to get them into the mainstream, the problem extends nationwide despite progress on interconnection standards, according to proponents. Distributed generation is the use of small generation units close to the point of consumption. ?Until regulators grapple with DG as a serious topic, the economics are unfavorable,? said Joshua Meyer, manager of corporate development for Encorp, an Illinois distributed- generation producer. ?The stars have to be aligned? to get projects on line, Meyer noted at a recent Power-Gen Conference in Las Vegas. For one thing, utilities can dictate the price of interconnection fees as well as their location. Interconnection fees can be so steep or unpredictable that profits from self-generation evaporate. In the past, interconnection rules have often varied utility by utility. Gene Shlatz, Navigant consultant, reported that California, New York, and a few other states have adopted standard interconnection rules. Standard rules are essential, contended Shlatz, to avoid ?haphazard? planning. With standard rules, suppliers and designers know what to expect in the way of project timing, fees, technical requirements, and costs, said Shlatz. The Federal Energy Regulatory Commission has adopted standard interconnection rules, but they apply only to wholesale DG, which is a small sector of the market. Encorp?s Meyer expressed hope that FERC will take over jurisdiction of DG at the distribution level, where most DG is located. There is consensus among promoters that utilities historically have balked at distributed-generation development to protect their turf. But Gerald Dalke, representing Oklahoma-based Basler Electric, highlighted a more nuanced picture. DG providers ?don?t understand why they can?t connect [with utilities] next week,? said Dalke. Successful interconnection needs to factor in, among other things, whether DG will delay other projects. Then there is the thorny issue of who should pay for substation upgrades to accommodate the technology, said Dalke.

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