Distributedgeneration projects, small scale onsite and/or dispersed power projects, face a number of barriers to increasing their penetration in the electric power marketplace. From limited consideration or inclusion in regulatory decisionmaking to innumerable technical and economic barriers in interconnecting to existing electric utilty distribution and transmission system. Despite a lengthy list of environmental and economic benefits that DG projects can provide, they still represent a small portion of the overall power system in the United States.
Sincethe energy crises of the early 21st century, some of the barriers are being dismantled. Most of the action is happening at the state level but Congress got involved more heavily with the passage of the Energy Policy Act of 2005. This act targeted DG by requiring that states adopt interconnection and net metering policies to support the development of small scale DG projects.
California has been out in front as it often is on energy issues. As a result of the electricity crisis in California in 2001, initiatives to knock down the barriers to distributed power were enacted over subsequent years that can provide a model for other states to consider. Some examples include:
- State energy policy aims to incorporate DG into utility procurement and DG into distribution planning processes.
- Renewables Portfolio Standard (RPS) exists.
- Incentives (subsidies, tax credits, low interest loans) are in place to promote clean DG. California Solar Initiative program seeks to install 3,000 MW of photovoltaics across the state.
- Rules and regulations (e.g. interconnection rules, net metering, and exemptions from standby charges) have been changed to benefit some or all DG.
- California PUC section on Distributed Generation and a section on the California Solar Initiative
- California Energy Commission section on Distributed Generation and a section on Renewable Energy
- Report: Distributed Generation and Cogeneration Policy Roadmap for California – California Energy Commission, March 2007