Distributed Generation

Distributed generation describes electricity produced at or near the point of consumption. This can be done through a number of different methods, such as solar panels, wind turbines, and microCHP systems. Distributed generation provides a number of benefits for both the electric grid and the individual owners of these systems. For the electric grid, distributed generation helps to improve system reliability and security, while also reducing greenhouse gas emissions. For the individual owner, distributed generation can provide lower electricity costs and a more reliable source of power.

Basically, any electricity production that takes place at the site of use or apart from the main electric grid is distributed generation (DG).  DG is healthy for an electric grid because it provides redundancy and can take some of the strain off the main grid, especially during times of high demand.    For owners of DG it provides them with a means of energy self-sufficiency and redundancy of power sources.

Distributed generation in Texas

In Texas, there are specific definitions of distributed generation as defined by both ERCOT and the Texas PUC.  Owners of distributed generation resources may be required to register depending on the size of their capacity and their intent.

Owners of more than 1 MW of distributed generation

If the electricity is not intended to be sold to the wholesale electricity market, the owners must register with the PUC as a self-generator.

If the electricity generated from a DG source is intended to be sold to the wholesale market, the owner must register with the PUC as a power-generation electric company.

ERCOT categorizes distributed generation into 3 groups

  • Unregistered distributed generation – Mostly solar roof top systems.  Some of these have the ability to push power back onto the grid but because of their small size they don’t have to be registered with ERCOT.  They can, however, participate in solar buyback programs if their retail electric provider supports it.
  • Settlement Only DGs – Backup or supplemental power supplies usually owned by businesses.  These resources have a capacity of over 1 MW and are registered by ERCOT.  They can be compensated by ERCOT for the electricity they sell back to the grid.
  • Distribution Generation Resources (DRGs) –  These are stand alone entities that are registered with ERCOT.  They can be dispatched by ERCOT when needed and will be compensated for the power they provide to the grid.

Distributed Generation resources of less than 10 megawatts may also be registered with ERCOT to provide Ancillary Services.