What Is Distributed Energy and How Does It Work?

As electricity prices rise and instances of rolling blackouts increase, energy experts are questioning the current power grid structure. While consumers can choose their electricity provider in certain states like Texas, the ability to select or switch to a different power grid is often limited. Distributed energy resources (DERs) offer more options by drawing power from multiple sources, potentially reducing outage frequency compared to a centralized system. This includes the possibility for consumers to install their own home generators or energy storage systems.

What Is Distributed Energy?

Distributed energy involves an electricity generation system with multiple small-scale devices rather than a centralized power plant. Traditional power plants, such as coal and nuclear ones, are often distant from population centers, requiring complex transmission systems. These large grids are prone to failure and expensive to maintain. Distributed energy resources (DERs) encompass small-scale generators under 1 megawatt (MW) and utility-scale generators up to 10 MW. DERs can function independently as microgrids or contribute energy to the central electric grid.

What Are Examples of Distributed Energy?

Distributed energy resources encompass a diverse array of electricity generation devices and facilities, capable of operating on either conventional fossil fuels or sustainable, clean energy sources. Illustrative examples of distributed energy systems encompass:

1. Wind turbines
2. Hydropower plants
3. Waste-to-energy facilities
4. Solar photovoltaic panels
5. Natural gas fuel cells
6. Backup generators

It’s important to note that distributed energy resources primarily refer to small-scale installations, like rooftop solar panels, situated at residential homes or industrial facilities. Contrarily, large-scale solar arrays and wind turbines exceeding a capacity of 10 megawatts typically fall outside the classification of distributed energy resources (DERs).

How Does Distributed Energy Work?

Distributed energy generation operates similarly to industrial power generation but on a smaller scale. These resources, such as microturbines or solar panels, directly supply electricity to local facilities or communities, contributing excess energy to the main power grid. This decentralized approach eliminates the need for energy to pass through a regional distribution system. For instance, a small business installing a microturbine on-site can act as a primary or backup power source, leading to potential cost savings, as seen in a case study where a McDonald’s in Chicago saved $1,500 per month on electricity by utilizing a natural gas-powered microturbine.