Chapter 8 - Market Design Issues of Distributed Generation

Abstract

This chapter provides a brief description of various types of distributed generation (DG) and technical regulations related to interconnecting DGs into the distribution grid. It also includes a review of the current status of compensation schemes available to DGs. Then, it the author describes obstacles and challenges that prevent DGs from participating on a level playing field with other conventional generators in both the traditional utility and the current electricity markets. Potential solutions to overcome these challenges are then discussed. For example, one of the challenges is that most of the DGs are located at the distribution system level, while the wholesale markets operate at the transmission level. One of the potential solutions discussed is a market mechanism to properly account for the energy output from DGs, as opposed to out-of-market mechanisms such as behind-the-meter generators.