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AMERICAN
<br /> PUBLIC
<br /> �RTM
<br /> ASSOCIATION
<br /> Powering Strong Communities
<br /> ISSUE BRIEF January 2017
<br /> Solar Distributed Generation
<br /> Summary each of which should be addressed at the local and state level.
<br /> In a shift from the traditional electric power paradigm,utili- For example,too much DG can create excess demand at a
<br /> ties and utility customers are installing distributed generation substation,causing power to flow from the substation to the
<br /> (DG) facilities that employ small-scale technologies to produce transmission grid and increasing the likelihood for high voltage
<br /> electricity closer to the end use of power.Driving this exponen- swings and other stresses on electric equipment.DG may
<br /> tial growth is the dramatic decrease in the price of solar panels, also contribute to lineworker safety issues such as"islanding,"
<br /> as well as state,federal,and utility incentives for solar panel when the DER continuously energizes a feeder even though
<br /> installations and state renewable portfolio standards(RPS). the utility is no longer supplying power due to an outage or
<br /> other cause.In addition, DG is more difficult to monitor and
<br /> Use of DG resources may offer numerous benefits,including
<br /> avoided generation capacity costs(e.g.,less need to build new may impact load forecasts,and,in rare circumstances,this may
<br /> generation),avoided transmission costs,less need for backup lead to outages and blackouts.Finally,DG may place increased
<br /> power,and neutral environmental impacts,but it may also pose strain on distribution systems since DG customers rely on the
<br /> operational and economic challenges to electric utilities and transmission,distribution,and generation systems more than
<br /> electric power customers.The American Public Power Associ- non-DG customers. Utilities will have to make capital invest
<br /> ation(Association or APPA)believes that solar DG can play ments to address these potential strains on the system,and these
<br /> an important role in helping meet energy needs and achieving costs may be borne by both DG owning and non-DG-owning
<br /> environmental goals so long as solar DG customers pay their electric customers.
<br /> fair share of the costs of keeping the grid operating safely and Along with the abovementioned operational problems,
<br /> reliably.Thus,the Association supports the integration of DG increased DG use may cause economic issues as well.Subject to
<br /> resources,including community solar projects,to meet custom- applicable state or local laws,most electric utilities compensate
<br /> er requests or utility goals. However,as rate design for DG must DG producers through net metering.Under a net metering
<br /> take into account a utility's technical limitations and geographic program,a utility will credit customers with on-site generation
<br /> considerations,the Association opposes attempts by Congress or for their kilowatt-hour(kWh) sales to the grid and charge them
<br /> federal agencies to federalize standards for DG implementation for periods when electricity consumption from the grid exceeds
<br /> or rate designs,both matters of state and local,retail regulation. their generation(or the net difference between consumption
<br /> and generation).Under most net-metering programs,the
<br /> customer is both charged and credited at the utility's full retail
<br /> Background rate of electricity,thus potentially over-compensating distribut-
<br /> Distributed energy resources(DER)include,among others, ed generators with a value of generation that is higher than the
<br /> solar photovoltaic(PV),small wind turbines, combined heat utility's avoided cost.Some states and non-regulated utilities
<br /> and power(CHP),fuel cells,and micro turbines. Use of DG have designed alternative compensation schemes to appropriate-
<br /> resources may reduce the need for new utility generation assets ly value the full costs associated with DG production,includ
<br /> and the procurement of ancillary services,allow utilities to avoid ing: increased customer charges for fixed costs,declining block
<br /> energy charge structure,residential demand charges according
<br /> higher transmission costs by reducing peak demand,reduce
<br /> air pollution emitted by traditional fossil fuel-fired generation, to peak kW usage,time based pricing,and standby rates.Still,
<br /> and assist utilities in hedging against widespread power outages. many regulators(states,localities,and non-regulated utilities)
<br /> Despite these potential benefits, DG may also create operational have not implemented compensation schemes that properly
<br /> and economic issues for electric utilities and power customers, account for certain fixed charges,and this may create aneco-
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