The economics of distributed energy generation: A literature review

Abstract

The UK electricity system is likely to face dramatic technical and institutional changes in the near future. Current UK energy policy focuses on the need for a clean, affordable and secure energy supply. Decentralisation of the electricity system is recognised as one means of achieving efficient and renewable energy provision, as well as addressing concerns over ageing electricity infrastructure and capacity constraints. In this paper we provide a critical literature review of the economics of increased penetration of distributed energy generation. We find that there exists a large volume of research considering the financial viability of individual distributed generation technologies (and we are necessarily selective in our review of these studies, given the wide variety of technologies that the definition of distributed generation encompasses). However, there are few studies that focus on the pure economics of individual or groups of distributed energy generators, and even fewer still based on the economy-wide aspects of distributed generation. In view of this gap in the literature, we provide suggestions for future research which are likely to be necessary in order adequately to inform public policy on distributed generation and its role in the future of UK energy supply.

The economic impact of electricity losses

“…An interesting comparison is conducted between DG technologies (wind, solar and CHP) installed during the last decade in Spain and all other traditional base sources (nuclear, coal, combined cycle), in which we evaluate their differences in terms of losses along with their economic costs and benefits. This allows us to make a contribution to the scarce literature examining economy-wide aspects of DG (Allan et al, 2015). Our results should be useful for regulators and policymakers in countries with a low penetration of RES-E, or that are in an earlier stage in the implementation of DG, in order that they might take better advantage of their potential.…”

Review of distributed generation (DG) system planning and optimisation techniques: Comparison of numerical and mathematical modelling methods

“…For the former comprising of load serving entities (LSE) and utility companies, it is achieved via elimination of the need for costly investments on T&D expansion and upgrading, especially in constrained inland regions and remote islands [52].…”

Simulation of economic effect on electricity democracy based on clean energy at UMKM’S IPP in Indonesia

“…They also depict decentralized renewable energy as non-polluting plants is essential. In the other opinion, Allan, Grant Eromenko, Igor Gilmartin, Michelle Kockar, Ivana McGregor, Peter [5] said that decentralized electricity system is recognized as one means of achieving efficient and renewable energy provision, as well as addressing concerns over ageing electricity infrastructure and capacity constraints.…”