When Sir Adam Beck brought his vision for “People’s Power” to fruition in Ontario, his efforts were limited by the technology of the day. Due to economies of scale and the generation technologies available, power needed to be generated at large power stations, often far away from the loads they were built to serve. High voltage transmission lines brought power from generators to loads, traversing vast distances that inherently resulted in more electrical power loss.
This centralized distribution system has been effective and is still used today because the economy of scale, generating huge amounts of energy in fewer locations, has been worth it. But the energy landscape is changing, as we increasingly rely on electricity, digital advancements enable connected networks, and large capital costs challenge the financial viability of big projects. New technologies and decentralized distribution models are playing increasingly important roles in reliably generating power near the point of use and effectively delivering it throughout power networks.
What is Distributed Generation?
Although large power generation stations and transmission lines still drape across the Canadian landscape, there is increased uptake of distributed energy resources (DERs), which are smaller-scaled electricity generation and storage systems. Distributed generation (DG) is the generation component of DER systems and is built around the concept of producing electricity where it is needed. This multi-source, multi-directional, smaller-scaled system strikes a significant contrast to the traditional concept of one-way, high-voltage power flow from large, central generating stations — including coal, gas, and nuclear-powered plants, hydroelectric dams, and large solar stations.
Most renewable and fueled power sources are suitable for DG and can now be cost effective at smaller scales when they are connected directly to the distribution grid at low voltage levels; you don’t need high-voltage stations and lines, and you don’t need to cover such large distances to get to the grid. Renewable sources primarily include hydropower, wind, solar and biomass, while fueled options mostly include natural gas and liquid fuels that may be part of efficient Combined Heat and Power (CHP) installations, supplying both electricity and heat.
The electricity generated at this grid distribution level can be sourced (1) from a small-scale energy producer-and-user who sells their excess electricity back to the grid in an arrangement known as load displacement, or (2) through facilities specifically selling electricity back to the grid in a contracted-to-sell arrangement.
Schematic of a distributed generation grid (left) and traditional generation grid (right)
What does Distributed Generation offer?
DG represents an evolution in the design and operation of an electric system that has remained relatively unchanged since its development over a century ago. DG is gaining momentum because it can be:
- Efficient. By their nature, DG systems are often installed near the loads they are intended to serve, reducing the losses that are otherwise incurred when power is transmitted over long distances.
- Quick to deploy. Although still sometimes controversial, the DG project approval process can be shorter than the approval process for a large generating station that must consider more costs and uncertainties. For example, a solar-powered generation station connected in a DG model can potentially be set up in months as opposed to the 10-15 years it can take to develop a traditional generation plant.
- Cost-effective. DG projects may have a lower connection cost due to their smaller scale and lower distribution voltage levels. They can also share existing electrical infrastructure and may defer some distribution investment, in theory reducing the project transmission and distribution costs.
- Robust. In the future, multiple sources of electricity built into a distribution grid should improve reliability.
- Palatable. In contrast to large utility-scaled generation, the smaller size of DG installations has the potential for lower impact on and presence in communities, and may increase community acceptance.
Why now?
These advantages make DG a generally attractive option for the Canadian electric grid, but they also offer solutions to some specific challenges that we are facing now and are anticipating in the near future.
- The reliability and resiliency in DG schemes offer an attractive robustness. As we increasingly rely on electricity and as our climate conditions become more tumultuous, service disruptions could become more impactful and frequent. The decentralized nature of DG, with multiple, smaller-scaled generation sites, means that this model may one day fare better than a large, centralized system if there is an outage.
- DG offers energy reliability as aging traditional generators begin to falter. Close to 300 remote Canadian communities currently rely on power generating infrastructure that limits energy security, environmental health, and economic growth. Compared to a traditional central power generator, the faster process of approving and developing a DG system facilitates a quick-off-the-ground electrical system to supplement and extend the use of aging infrastructure, especially in remote areas. Advances in hybrid generation, which couples DG systems with energy storage, can enable remote communities to use variable renewable generation to contribute to serving local loads.
- DG models offers small-scale and less-intimidating ways for communities to usher in renewable energy sources. For example, the construction of a large windfarm or solar farm can challenge a community and face heavy opposition. Although they still can face resistance from communities, whose legitimate concerns need to be addressed, the spread-out set-up and more subtle presence of DG lessens the impact, encouraging communities to support renewable as well as locally-fueled sources.
Opportunities in Canada
Industrial and commercial facilities may host good opportunities to explore distributed energy technologies to supply portions of on-site loads, potentially reducing costs and providing improved reliability of supply. In Canada, some provincial governments, regulators, and electric utilities have helped to open up the opportunities for distributed generation; however, local distribution companies’ approval processes, rate structures, and policies are still being established and fine-tuned.
DG is part of an unprecedented shake-up in the power sector that is connecting new technologies and restructuring the traditional grid. Market trends project a reinvention of the traditional power sector and they anticipate first-mover rewards for the companies keeping pace. As the barriers to implementation get whittled down, technologies advance (e.g., the Internet of Things, big data, smart meters), infrastructure ages, and governing bodies prioritize a shift to renewable resources, we only expect the opportunities for DG and multi-directional power networks to grow.
