Distributed Energy: A Burgeoning Market

It's not particularly easy to find reliable and detailed statistics on the deployment of distributed energy systems. One reason is that a lot of distributed energy is installed behind-the-meter. As a result, the power generated by distributed energy systems doesn't get tallied by utilities the way traditional generation does. In short, many distributed energy systems are not visible to power companies and grid operators because the systems simply reduce customers' demand. Furthermore, there are a growing number of systems that are off-grid, and there are some people who quite frankly don't want their energy usage tracked. Another factor weighing on sound calculations is that distributed energy encompasses a pretty broad spectrum of technologies and deciding which to include or exclude is difficult even for the experts.

For example, in a February 2017 report on distributed energy resources, the North American Electric Reliability Corp. (NERC)-the not-for-profit regulatory authority whose mission it is "to assure the effective and efficient reduction of risks to the reliability and security" of the North American power grid-defines distributed energy resources as "any resource on the distribution system that produces electricity and is not otherwise included in the formal NERC definition of the Bulk Electric System (BES)." Of course, to determine what that includes, a person must understand the BES definition. BES includes all transmission elements of 100-kV or greater, and real power and reactive power resources connected at 100 kV or more. However, to accurately identify BES elements, there are also specific inclusions and exclusions that must be applied. Consequently, NERC issued a 98-page "Reference Document" to assist the industry in applying the definition. So, let's just say, it's kind of complicated.

Nonetheless, it's widely acknowledged that the capacity of distributed energy systems is growing rapidly in the U.S. and other parts of the world. The enthusiasm for these systems is increasing as concern for climate change grows, passion for renewable energy expands, desire for self-sufficiency increases, and, most importantly, the cost of systems declines.

Great Interest in Distributed Generation

The success of POWER's inaugural Distributed Energy Conference (DEC), held in Golden, Colorado, October 15-17, is another strong indicator of the fervor surrounding distributed generation. Several attendees and vendors alike remarked that the industry needed a conference like DEC to share best practices and success stories with folks looking for distributed energy solutions. Among the highlights this year were what could be called a "Distributed Energy 101" workshop; sessions on policy issues, evolving business models, microgrid case studies, commercial and industrial solutions, and presentations on several other pertinent topics; an off-site reception at the Red Rocks Park and Amphitheatre, which is a phenomenal natural setting for performances such as U2's memorable concert video "Under a Blood Red Sky"; and a tour of the Energy Systems Integration Facility located on the National Renewable Energy Laboratory's main campus. From all accounts, the event "hit the nail on the head" for most attendees.

Going forward, DEC is expected to grow and expand. It's likely that additional tracks will be added to cover more combined heat and power (CHP), energy storage, demand response, and community aggregation solutions. The event may also incorporate electric vehicle technology into the mix to help users and power providers better understand how widespread adoption of electric transportation could alter the energy landscape. There is a lot of excitement around all these technologies, but there is also uncertainty on how best to implement solutions.

Where Is Distributed Energy Thriving?

According to data compiled by the Solar Energy Industries Association, the national trade association for the U.S. solar industry, 58.3 GW of solar capacity existed in the U.S. at the end of June. Of that, nearly 23 GW was installed at 863,266 installations in California, the nation's top solar energy producing state by far. Arizona had the second-most installations with 122,668, while New York ranked third with 102,508. North Carolina ranked second in solar power capacity with 4,491 MW, but it had only 8,381 installations, suggesting more utility-scale solar farms are connected to the grid in that state. Other states that ranked high in numbers of installations included New Jersey (94,510), Massachusetts (82,964), Hawaii (80,390), Maryland (58,358), and Colorado (48,150).

When most people think of wind energy, they often imagine large utility-scale wind farms where groups of sometimes hundreds of turbines generate electricity for distant end-users, but there are also distributed wind power projects that produce behind-the-meter electricity. The U.S. Department of Energy has been funding an annual report published by the Pacific Northwest National Laboratory specifically focused on the distributed wind market.

The most recent report, released on August 29, says 3,311 units with a combined capacity of 83.7 MW were added in the U.S. last year. Of those, 98.7% were turbines with a capacity of less than 100 kW. Although there are more than 81,000 distributed wind turbines installed in the U.S., the cumulative capacity was only 1,076 MW at the end of 2017. In other words, it's pretty negligible. Growth is possible as larger turbines improve economics, but policies also factor in. Tax credits have bolstered the market in the short term, but as they expire, a downturn is likely.

Microturbines are the last thing I'll touch on. The market for these small-scale power generators that burn either gaseous or liquid fuel is expected to increase at a compounded annual growth rate of more than 8% through 2025, according to a report issued by Transparency Market Research, a global market intelligence company. The company said microturbines "are an essential part of distributed generation technology" and "have great potential for CHP application." Industrial end-users were said to be driving the microturbine market, and Capstone Turbine Corp. was cited in the report as the dominant supplier. a-

-Aaron Larson is POWER's executive editor.

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