Distributed Generation (DG) is a buzzword for many companies looking at a distributed energy profile that primarily incorporates renewable energy. But what is it exactly, and how can it help businesses meet their alternative energy goals?

First, it's helpful to understand some of the terminology that's out there. Distributed Generation, also known as "Distributed Energy Generation" or "On-Site Generation (OSG)", is energy generated at a site and then used and stored in the form of electric power and heat. Another term that is often used is “behind the meter” or “customer-sited”, which refers to energy being generated directly by the user – usually at the user’s location – on the user side of the electric utility’s meter. A user site can perform distributed generation using renewable energy sources such as solar photovoltaic, micro-wind turbines, and other fossil-fueled energy sources like combined heat and power units, fuel cells and combustion turbines. DG can include a storage component too, which can maximize the effectiveness of renewable energy sources. These generation and storage devices that are incorporated in a distributed generation scheme are also commonly referred to as Distributed Energy Resources (DERs).

A collection of DERs in a distributed generation scheme for consumption at a user site is called a microgrid. A microgrid contains energy loads at a user site that is controlled and coordinated from the aspects of generation, storage and usage either while connected to the main power network or as a stand-alone system.

Implementing a distibuted generation system has several advantages.

1. Cost savings. It's a potentially cheaper way to access high-quality, sustainable and reliable energy sources at user site.
2. Use of renewable energy. DER technology has become simpler, widely demonstrated and less expensive, which makes DG a relatively easy way for companies to enter the renewable energy space.  
3. Reliability. DG offers a reliable source of energy. The occurrence of natural disasters and grid outages is increasing and since microgrids run off the utility grid, they offer greater resilience to interruptions. This is especially important for DG installed at mission-critical sites.

Companies considering distributed generation are usually driven by a desire to reduce energy spend, increase their use of renewable energy, and/or achieve greater levels of energy resilience and reliability. DG designers, financiers and installers should understand all their client’s business drivers to ensure that the final system meets the specific business needs of the client.

Diode Ventures develops distributed energy assets for commercial, industrial and technology companies. Contact us if you have questions about developing or managing your energy portfolio for your enterprise.