Distributed Generation Applications

Continuous Power.  In this application, the DG technology is operated at least 6,000 hours a year to allow a facility to generate some or all of its power on a relatively continuous basis.  Important DG characteristics for continuous power include:

  • High electric efficiency,
  • Low variable maintenance costs, and
  • Low emissions.


Currently, DG is being utilized most often in a continuous power capacity for industrial applications in facilities with low thermal demands.  Commercial sector usage, while a fraction of total industrial usage, includes sectors such as grocery stores, hotels, and hospitals, usually in facilities where the building has a heating, ventilating, and air conditioning system that makes cogeneration installation costly.


Combined Heat and Power (CHP).  Also referred to as Cooling, Heating, and Power or cogeneration, this DG technology allows a facility to generate some or all of its power.  A portion of the DG waste heat is used for water heating, space heating, steam generation or other thermal needs.  In some instances this thermal energy can also be used to operate special cooling equipment.  Important DG characteristics for combined heat and power include:

  • High useable thermal output (leading to high overall efficiency),
  • Low variable maintenance costs, and
  • Low emissions.


CHP characteristics are similar to those of continuous power, and thus the two applications have almost identical customer profiles, though the high thermal demand necessary here is not a requisite for continuous power applications.  As with Continuous Power, CHP is most commonly used by industry clients, with a small portion of overall installations in the commercial sector.  Because of their superior life-cycle economics, CHP applications are much more common than continuous power applications.


Peaking Power.   In a peaking power application, DG is operated between 200-3000 hours per year to reduce overall electricity costs.  Units can be operated to reduce the utility’s demand charges, to defer buying electricity during high-price periods, or to allow for lower rates from power providers by smoothing site demand.  Important DG characteristics for peaking power include:

  • Low installed cost,
  • Quick startup, and
  • Low fixed maintenance costs.


Peaking power applications can be offered by energy companies to clients who want to reduce the cost of buying electricity during high-price periods.  Currently DG peaking units are being used mostly in the commercial sector as load factors in the industrial sector are relatively flat.  The most common applications are in educational facilities, lodging, miscellaneous retail sites and some industrial facilities with peaky load profiles.

Green Power.  DG units can be operated by a facility to reduce environmental emissions from generating its power supply.  Important DG characteristics for green power applications include:

  • Low emissions,
  • High efficiency, and
  • Low variable maintenance costs.


Green power could also be used by energy companies to supply customers who want to purchase power generated with low emissions, although this does not truly fit the strict definition of DG unless the green power is located close to the customer site.

Premium Power.  DG is used to provide electricity service at a higher level of reliability and/or power quality than typically available from the grid.  The growing premium power market presents utilities with an opportunity to provide a value-added service to their clients.  Customers typically demand uninterrupted power for a variety of applications, and for this reason, premium power is broken down into three further categories:

Emergency Power System - This is an independent system that automatically provides electricity within a specified time frame to replace the normal source if it fails.  The system is used to power critical devices whose failure would result in property damage and/or threatened health and safety.  Customers include apartment, office and commercial buildings, hotels, schools, and a wide range of public gathering places.

Standby Power System - This independent system provides electricity to replace the normal source if it fails and thus allows the customer’s entire facility to continue to operate satisfactorily. Such a system is critical for clients like airports, fire and police stations, military bases, prisons, water supply and sewage treatment plants, natural gas transmission and distribution systems and dairy farms.

True Premium Power System - Clients who demand uninterrupted power, free of all power quality problems such as frequency variations, voltage transients, dips, and surges, use this system.  Power of this quality is not available directly from the grid – it requires both auxiliary power conditioning equipment and either emergency or standby power.  Alternatively, a DG technology can be used as the primary power source and the grid can be used as a backup.  Premium power systems are used by mission critical systems like airlines, banks, insurance companies, communications stations, hospitals and nursing homes.


Important DG characteristics for premium power (emergency and standby) applications include:

  • Quick startup,
  • Low installed cost, and
  • Low fixed maintenance costs.


Transmission and Distribution Deferral.  In some cases, placing DG units in strategic locations can help delay the purchase of new transmission or distribution systems and equipment such as distribution lines and substations.  A thorough analysis of the life-cycle costs of the various alternatives is critical and contractual issues relating to equipment deferrals must also be examined closely.  Important DG characteristics for transmission and distribution deferral (when used as a “peak deferral”) include:

  • Low installed cost, and
  • Low fixed maintenance costs.


Ancillary Service Power.  DG is used by an electric utility to provide ancillary services (interconnected operations necessary to affect the transfer of electricity between purchaser and seller) at the transmission or distribution level.  The market for ancillary services is still unfolding in the U.S., but in markets where the electric industry has been deregulated and ancillary services unbundled (in the United Kingdom, for example), DG applications offer advantages over currently employed technologies.  Ancillary services include spinning reserves (unloaded generation, which is synchronized and ready to serve additional demand) and non-spinning, or supplemental, reserves (operating reserve is not connected to the system but is capable of serving demand within a specific time or interruptible demand that can be removed from the system within a specified time).  Other potential services range from transmission market reactive supply and voltage control, which uses generating facilities to maintain a proper transmission line voltage, to distribution level local area security, which provides back-up power to end users in the case of a system fault.  The characteristics that may influence the adoption of DG technologies for ancillary service applications will vary according to the service performed and the ultimate shape of the ancillary service market.  


Resource Dynamics Corporation Consulting Services

To help clients better understand distributed generation applications, we offer several services, including:

Evaluation of distributed generation opportunities in end-use markets - identifying key sectors, geographic areas, and applications in the industrial and commercial sectors where distributed generation has the most potential to be installed.

Assessments of distributed generation technologies – developing key insights about the feasibility and commercial potential of distributed generation technologies.

Identification of potential sites for distributed generation applications - performing in-depth studies to identify and evaluate sites with the technical, economic, and institutional potential for distributed generation.

Feasibility studies for distributed generation projects - determining the technical and economic feasibility of distributed generation at specific sites and for specific applications.