Editing Distributed generation (section)

== Overview ==

Historically, central plants have been an integral part of the electric grid, in which large generating facilities are specifically located either close to resources or otherwise located far from populated [[Distribution board|load centers]]. These, in turn, supply the traditional transmission and distribution (T&D) grid that distributes bulk power to load centers and from there to consumers. These were developed when the costs of transporting fuel and integrating generating technologies into populated areas far exceeded the cost of developing T&D facilities and tariffs. Central plants are usually designed to take advantage of available economies of scale in a site-specific manner, and are built as "one-off", custom projects.

These [[economies of scale]] began to fail in the late 1960s and, by the start of the 21st century, Central Plants could arguably no longer deliver competitively cheap and reliable electricity to more remote customers through the grid, because the plants had come to cost less than the grid and had become so reliable that nearly all power failures originated in the grid. {{Citation needed|date=February 2012}} Thus, the grid had become the main driver of remote customers' power costs and power quality problems, which became more acute as digital equipment required extremely reliable electricity.<ref name="DOE 2007">DOE; The Potential Benefits of Distributed Generation and Rate-Related Issues that May Impede Their Expansion; 2007.</ref><ref>Lovins; Small Is Profitable: The Hidden Economic Benefits of Making Electrical Resources the Right Size; Rocky Mountain Institute, 2002.</ref> Efficiency gains no longer come from increasing generating capacity, but from smaller units located closer to sites of demand.<ref>Takahashi, et al; Policy Options to Support Distributed Resources; U. of Del., Ctr. for Energy & Env. Policy; 2005.</ref><ref>Hirsch; 1989; cited in DOE, 2007.</ref>

For example, [[Fossil fuel power station|coal power plants]] are built away from cities to prevent their heavy air pollution from affecting the populace. In addition, such plants are often built near [[Colliery|collieries]] to minimize the cost of transporting coal. [[Hydroelectricity|Hydroelectric]] plants are by their nature limited to operating at sites with sufficient water flow.

Low pollution is a crucial advantage of combined cycle plants that burn [[natural gas]]. The low pollution permits the plants to be near enough to a city to provide [[district heating]] and cooling.

Distributed energy resources are mass-produced, small, and less site-specific. Their development arose out of:
# concerns over perceived externalized costs of central plant generation, particularly environmental concerns;
# the increasing age, deterioration, and capacity constraints upon T&D for bulk power;
# the increasing relative economy of mass production of smaller appliances over heavy manufacturing of larger units and on-site construction;
# Along with higher relative prices for energy, higher overall complexity and total costs for regulatory oversight, tariff administration, and metering and billing.

Capital markets have come to realize that right-sized resources, for individual customers, distribution substations, or microgrids, are able to offer important but little-known economic advantages over central plants. Smaller units achieved greater economic benefits through mass-production than larger units gained from their size alone. The increased value of these resources—resulting from improvements in financial risk, engineering flexibility, security, and environmental quality—often outweighs their apparent cost disadvantages.<ref>Lovins; Small Is Profitable: The Hidden Economic Benefits of Making Electrical Resources the Right Size; Rocky Mountain Institute; 2002</ref> Distributed generation (DG), vis-à-vis central plants, must be justified on a life-cycle basis.<ref>Michigan (Citation pending)</ref> Unfortunately, many of the direct, and virtually all of the indirect, benefits of DG are not captured within traditional utility [[Cash flow|cash-flow]] accounting.<ref name="DOE 2007"/>

While the [[levelized cost of electricity|levelized cost]] of DG is typically more expensive than conventional, centralized sources on a kilowatt-hour basis, this does not consider negative aspects of conventional fuels. The additional premium for DG is rapidly declining as demand increases and technology progresses,<ref>{{Cite web |url= https://www.businessinsider.sg/solar-power-cost-decrease-2018-5/|title=One simple chart shows why an energy revolution is coming – and who is likely to come out on top|last=Berke|first=Jeremy |date=2018-05-08|website=Business Insider Singapore|language=en-US|access-date=2018-12-18}}</ref><ref>{{Cite web|url=https://insideevs.com/bloomberg-predicts-rapidly-falling-battery-prices/|title=Bloomberg's Latest Forecast Predicts Rapidly Falling Battery Prices|date=2018-06-21|website=Inside EVs|language=en-US|access-date=2018-12-18}}]</ref> and sufficient and reliable demand may bring economies of scale, innovation, competition, and more flexible financing, that could make DG clean energy part of a more diversified future.{{Citation needed|date=February 2012}}

DG reduces the amount of energy lost in transmitting electricity because the electricity is generated very near where it is used, perhaps even in the same building. This also reduces the size and number of power lines that must be constructed.

Typical DER systems in a [[feed-in tariff]] (FIT) scheme have low maintenance, low pollution and high efficiencies. In the past, these traits required dedicated operating engineers and large complex plants to reduce pollution. However, modern [[embedded system]]s can provide these traits with automated operation and [[renewable energy]], such as [[Solar energy|solar]], [[Wind power|wind]] and [[Geothermal power|geothermal]]. This reduces the size of power plant that can show a profit.

=== Cybersecurity ===
Vulnerabilities in control systems from a single vendor used at thousands of installations of given source can result in hacking and remotely disabling all these sources by a single attacker, thus largely reversing the benefits of decentralised generation, which has been demonstrated in practice in case of solar power inverters<ref>{{Cite news |date=2024-12-12 |title=Hacking Rooftop Solar Is a Way to Break Europe's Power Grid |url=https://www.bloomberg.com/news/articles/2024-12-12/europe-s-power-grid-vulnerable-to-hackers-exploiting-rooftop-solar-panels |access-date=2024-12-12 |publisher=Bloomberg News |language=en}}</ref><ref>{{Cite web |date=2024-08-19 |title=The gigantic and unregulated power plants in the cloud |url=https://berthub.eu/articles/posts/the-gigantic-unregulated-power-plants-in-the-cloud/ |access-date=2024-12-12 |website=Bert Hubert's writings}}</ref> and wind power control systems.<ref>{{Cite web |last=Tam |first=Kimberly |date=2024-09-05 |title=How cyberattacks on offshore wind farms could create huge problems |url=https://theconversation.com/how-cyberattacks-on-offshore-wind-farms-could-create-huge-problems-238165 |access-date=2024-12-12 |website=The Conversation |language=en-US}}</ref> In November 2024 Deye and Sol-Ark inverter manufacturer remotely disabled in some countries due to alleged regional sales policy dispute. The companies later claimed the blockage was not remote but due to [[Geofence|geofencing]] mechanisms built into the inverters.<ref>{{Cite web |last=online |first=heise |date=2024-11-30 |title=Photovoltaics: Deactivated Deye and Sol-Ark inverters in the USA |url=https://www.heise.de/en/news/Photovoltaics-Deactivated-Deye-and-Sol-Ark-inverters-in-the-USA-10183716.html |access-date=2024-12-12 |website=heise online |language=en}}</ref>

EU NIS2 directive expands the cybersecurity requirements to the energy generation market,<ref>{{Cite web |title=Energy |url=https://nis2directive.eu/energy/ |access-date=2024-12-12 |website=The NIS2 Directive |language=en-US}}</ref> which has faced backlash from renewable energy lobby groups.<ref>{{Cite web |last=O’Sullivan |first=Alexander Lipke, Janka Oertel, Daniel |date=2024-05-29 |title=Trust and trade-offs: How to manage Europe's green technology dependence on China |url=https://ecfr.eu/publication/trust-and-trade-offs-how-to-manage-europes-green-technology-dependence-on-china/ |access-date=2024-12-12 |website=ECFR |language=en-GB}}</ref>

=== Grid parity ===

[[Grid parity]] occurs when an [[alternative energy]] source can generate electricity at a levelized cost ([[LCOE]]) that is less than or equal to the end consumer's retail price. Reaching grid parity is considered to be the point at which an energy source becomes a contender for widespread development without [[subsidy|subsidies]] or government support. Since the 2010s, grid parity for solar and wind has become a reality in a growing number of markets, including Australia, several European countries, and some states in the U.S.<ref name=wp-grid-parity-2014>{{cite news
 |last1=McFarland
 |first1=Matt
 |title=Grid parity: Why electric utilities should struggle to sleep at night
 |url=https://www.washingtonpost.com/blogs/innovations/wp/2014/03/25/grid-parity-why-electric-utilities-should-struggle-to-sleep-at-night/
 |newspaper=The Washington Post
 |access-date=14 September 2014
 |archive-url=https://web.archive.org/web/20140818111118/http://www.washingtonpost.com/blogs/innovations/wp/2014/03/25/grid-parity-why-electric-utilities-should-struggle-to-sleep-at-night/
 |archive-date=18 August 2014
 |date=25 March 2014
 |url-status=dead
}}</ref>{{Update inline|date=August 2024}}