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Interconnected distributed energy resources (DER) have the potential to provide many benefits. However, for these to be realized, a number of challenges must first be addressed. These include:
- Varying interconnection requirements and processes discourage the integration of DER by increasing costs and extending the time to interconnect.
At present, interconnection requirements vary greatly from state to state, town to town, utility to utility, and even project to project. This variability can make the process of securing interconnection approval time-consuming and expensive.
Because utilities own the power lines through which electricity is routed to homes and businesses, they have a strong interest in protecting the safety and reliability of those lines. Utilities must consider many factors when deciding whether and how to allow a DER to interconnect. Considerations include the type of DER, its size, and its type as well as the type of line with which it will interconnect and the number of other such units on that line. In addition, state and local codes and requirements must be met.
To allow for the development of a robust national market for distributed resources, several efforts have aimed to create uniform interconnection standards for DER. Standardized interconnection requirements would minimize engineering and design costs, streamline the installation and operation of distributed systems, and increase safety by promoting the use of simple, reliable, and consistent protective technologies.
Similar efforts have focused on providing a means of certification for generation technologies.
- The electric power system was not designed to accommodate DER and two-way power flow.
The intricate system of transmission and distribution lines—now many decades old—was not designed for the type of two-way power flow needed to support high penetrations of interconnected DER. For DER to fulfill their potential, new technologies must enable their full integration into the electric power system.
Also complicating matters, the regulations that govern these systems were developed around a central-station generation model in which all such assets were owned by monopoly providers. The market adoption of DER technologies will require regulators to take into account the many significant changes in these assumptions.
- Power markets do not justly reward DER for their contributions.
Power markets were also designed around the assumption of central station generation. Because DER are comparatively small, they do not always meet the minimum capacity requirements to compete in electricity markets. For DER to be justly rewarded, these markets must be restructured or DER owners must find ways to aggregate their resources to allow them to compete.
- Electricity tariffs discourage DER by injuring their economics.
Electricity tariffs, also based on the central station generation model, add expenses to DER projects. These tariffs place burdens on DER operations that can make them unprofitable. Existing tariffs must be reconsidered if DER are to succeed.
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