New energy systems bring power generation closer to home

Key Takeaways

As American technology and manufacturing industries grow, the demand and cost of electricity is on the rise. To meet the need, communities across the country are turning to locally sited power systems known as distributed energy resources or DERs. The flexibility and modularity of modern DERs make them a popular choice for consumers looking to lower energy costs and increase energy independence. 

As the name implies, DER systems are interconnected to the electric grid at distribution voltage levels where most consumers draw power from the grid. Usually under 10 megawatts (MW) in size, DERs can be electricity generation, storage or load-management technologies, located close to the point of consumption. 

Common examples include rooftop and ground-mounted solar, battery storage systems, small wind turbines, biomass facilities and natural gas generators. Energy storage plays an increasingly important role, allowing power generated during low-cost periods to be used later when demand is higher.

Because DERs are scalable and flexible, they are often deployed by individual customers, institutions or communities seeking to lower electricity costs or increase control over their energy supply. 

Differences from traditional power systems 

The conventional grid is like a one-way street, generating energy at one place and delivering it to consumers somewhere else. Grid-connected DERs make it a two-way street by sending excess energy out into the grid and drawing energy from the grid when needed. 

Before long-distance transmission became widespread, electricity systems were local by necessity. As transmission expanded, large centralized power plants could then serve distant population centers. Distributed energy represents a return to early electric systems, augmented by modern controls and advanced technology. DERs interconnect at the same voltage levels used by homes and businesses, allowing electricity to flow both to and from the grid. 

DER systems often include renewables such as solar, wind, biomass and geothermal, paired increasingly with energy storage, thanks to availability of both the resources and the technology. Theoretically, a DER system can just as easily be a coal-powered plant or hydroelectric plant. 

But practically, not every site has a waterfall, and conventional technologies like coal are not feasible at smaller scale. 

Solar and battery storage currently dominate the market, thanks to declining costs, the availability of the resource almost everywhere and the relative ease of deployment at different scales. Other technologies — wind, biomass, geothermal energy and natural gas generators — are also used in distributed applications where local conditions allow. Some emerging technologies, including small modular nuclear reactors, loom as potential future distributed resources, though they are not widely deployed today. 

Microgrids 

Microgrids are localized energy systems that combine one or more DER with controls that allow them to operate either independently in “island mode” or in combination with the grid. Microgrids may serve a single building, such as a hospital or emergency operations center, or a larger area such as a campus or neighborhood. They often pair generation with energy storage to maintain stable power during disruptions. Increasingly, microgrids are seen as an alternative to the conventional grid by large loads like data centers that are facing utility delays. 

DER system benefits 

For system owners, grid-connected DERs can lower the electricity purchased from the grid through a bidirectional “net meter.” In some jurisdictions, customers are compensated for surplus energy exported to the grid, although net meter laws and rates vary significantly by state and utility. Some states or utilities allow for community-based distributed generation that allow multiple users to share ownership and economic benefits of the project. 

Beyond economic benefits, DERs offer decentralized, clean backup power that can keep essential facilities running even under prolonged grid failures. They also serve to reduce strain on the grid, especially during periods of high demand. 

County role in DER regulation 

DER projects, which are smaller in scale than utility scale projects, often fall under county or local jurisdictions. Local governments are often responsible for reviewing sites, establishing setback and safety requirements and ensuring compatibility with surrounding land uses. 

County-owned land and buildings – including offices, water treatment facilities and even brownfields – present hosting opportunities for distributed energy projects. In addition to offering significant cost savings, such projects allow for community leadership and learning opportunities. For example, New York state’s community distributed generation (CDG) law has resulted in several county-managed projects on county-controlled landfills. 

DER technology options are also more varied and evolve fast because of their smaller scale. Creating ordinances or guidelines that are easily adaptable can ensure projects are installed with the latest safety features.   

Utility company’s role in DER permitting

Utility companies are the authority having jurisdiction over the electrical interconnection aspects of grid-connected DERs. Their technical review includes comprehensive engineering studies to develop the electrical, cost and infrastructure impact of projects. Since the cost of upgrades is usually borne by the DER system owner, they can strongly influence project viability. As DER adoption increases, the time needed to review projects and complete infrastructure upgrades has increased dramatically. 

Utilities are generally not involved in standalone microgrid projects, since they operate independently of the grid.   

How do state, federal policies affect DER projects? 

State energy goals and federal incentive programs shape where and how distributed energy projects are built. Long-standing programs, including production and investment tax credits and U.S. Department of Agriculture’s Rural Energy for America Program, have supported renewable energy projects for decades. Such funding programs also come with intensive environmental reviews and due diligence which serve to reduce risk for projects. Recent federal changes, however, have altered funding and permitting landscape of different technologies significantly. Staying updated on policy shifts can help counties anticipate future projects and inform responsible planning. 

Looking ahead 

As distributed energy technologies continue to mature and policy incentives evolve, local governments are likely to see more proposals at the community scale. How counties prepare—through permitting, coordination with utilities and public engagement — may shape the reliability of local power systems for decades to come.