Drivers for DER

For the past 60 years, electricity production and supply has been performed by centralized, regulated electric utilities who owned and operated power generation facilities as well as the transmission and distribution lines. Investor-owned utilities are regulated by state public utility commissions (PUCs), while cooperative and municipal utilities are governed by local jurisdictions.

Since the 1970s, federal and state public policy has encouraged the opening of the electric power system to entities other than the electric utilities. This has created a competitive landscape for power generation and has opened the transmission system to access by paying users. A significant shift in the U.S. regulatory system began with the Energy Policy Act (EPAct) of 1992, which required interstate transmission line owners to allow all electric generators access to their lines. Many states today are at various stages of electric utility deregulation.

Utility deregulation is one reason for the high level of interest in distributed energy resources.

Other drivers for DER include:

• Desire for alternative renewable resources such as solar and wind
• Need for higher quality power in some commercial and industrial facilities as a result of increased use of microelectronic devices
• Remote power applications and the desire to reduce the cost of transmission line upgrades
• Meets requirements for reduced emissions
• Ability to utilize DER's thermal energy at end-user facilities.