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After honing in on technologies that might meet your goals, you'll need to examine state and local factors that could affect your choice of DER technologies.
State actions on DER could affect your choice of technologies and the system economics. For example, state environmental regulations may restrict your options; if net metering is available, it will improve the economics of grid-connected power sources, and may also be limited to certain technologies. Typically, renewable energy systems will qualify; sometimes combined heat and power systems, fuel cells, and microturbines will also qualify; and in some states, all generation types qualify.
However, most states that offer net metering limit it to a certain generation capacity — typically in the range of 10 kW to 100 kW, but in some cases as large as 1000 kW. If you wish to install a generation system larger than the size that qualifies for net metering in your state, you may want to pursue a power purchase agreement with your utility or power provider. Your utility may have a standard rate for such power purchases in its electric rate tariff.
It is also critical to investigate financial incentives available in your area — these could favor certain technologies, which could affect your choice.
Most states require distributed generation technologies to meet national standards established by the Underwriters Laboratory (UL), the Institute of Electrical and Electronics Engineers (IEEE), and the National Electrical Code (NFPA 70). Some states also require conformity to the National Electrical Safety Code. In particular, UL1741 addresses safety concerns related to grid-connected distributed generation. New York has also taken the unique approach of requiring that all grid-connected generators and inverters must be type-tested and approved by the state.
Finally, note that your local electric utility may place restrictions on grid-connected systems that could affect the economics of the installation. Many utilities require manual disconnects, special meters, isolation transformers, redundant breakers, and other devices, to ensure both the safety and reliability of the power grid. Many states, however, have set limits on what your utility can require for grid interconnection, so it is important to be aware of the legislation affecting your state.
Utility safety concerns generally focus on "islanding," which is the ability of distributed generation to keep distribution lines energized during a power outage, potentially threatening the safety of workers who are trying to restore power. However, systems that meet UL 1741 include anti-islanding features that eliminate this concern. Despite these standards, some utilities are also requiring expensive liability insurance for distributed generation systems, often with high limits that would meet a worst-case scenario of personal and property damage due to energized lines.
Utilities are also concerned with such reliability considerations as the power factor of the generating device and whether it will introduce harmonic distortions into the power grid. As just one example of the requirements that utilities may impose, see the 1999 Interconnection Guidelines for Distributed Generation in Texas, produced by the Public Utility Commission of Texas.
In some extreme cases, utilities have even charged customers for the cost of upgrading distribution lines and transformers to handle the increased current that could potentially be introduced by a distributed generation system. This should in most cases only include the cost of a transformer upgrade, but in remote rural locations, it is possible that the distribution system may be designed for a level of current below what you plan to produce. If so, the utility may charge you for line upgrades, which can be a significant expense. Again, it is important in such cases to be aware of the legislation in place in your state.
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