Note: Cover -- Title Page -- Copyright Page -- Dedication Page -- Contents -- Executive Summary -- Preface -- Part 1 Needs and Resources -- 1.1 The Inflection Point -- 1.2 Context: The Pattern that Connects -- 1.2.1 A dozen drivers of distributed utilities -- 1.2.2 The menu: three kinds of distributed resources -- 1.2.3 Outrunning the headlights: the pursuit of illusory scale economies -- 1.2.4 Discontinuity: a century of size trends reverses -- 1.2.5 Scale: what's the right size? -- 1.2.6 The origins of this study -- 1.2.7 Proximity: how close to home? -- 1.2.8 Control: the center and the periphery -- 1.2.9 Vulnerability: brittle power -- 1.2.10 Diversity: monocultures vs. ecosystems -- 1.2.11 Governance: concentrated vs. dispersed -- 1.2.12 Transition: the forces of renewal -- 1.2.12.1 New technologies -- 1.2.12.2 Competitive restructuring -- 1.2.12.3 Distributed benefits start to emerge in the market -- 1.2.12.4 What next? -- 1.3 Where We Start: The Existing Power System -- 1.3.1 Basic characteristics -- 1.3.2 Scale of existing utility generating units -- 1.3.3 Operating cost and dispatch of existing power stations -- 1.3.4 The invisible grid -- 1.4 Fine-Grained Thinking -- 1.4.1 Tapping the area- and time-specific bonanza -- 1.4.2 Basking in the "hot spots" -- 1.5 Uncertainty Reigns -- 1.6 Cautions and Heresies -- 1.6.1 Cost and its allocation -- 1.6.2 Value -- 1.6.3 Risk -- 1.6.4 Synergies between different kinds of resources -- 1.6.5 Smaller can be faster -- 1.6.6 Many littles can make a big -- Part 2 Benefits of Distributed Resources -- 2.1 Introduction -- 2.2 System Planning -- 2.2.1 Many timescales, many uncertainties -- Tutorial 1: Operational Fluctuations -- 2.2.1.1 Long-term supply/demand balances -- 2.2.2 Valuing modularity and short lead times -- 2.2.2.1 Forecasting risk -- 2.2.2.2 Financial risk -- 2.2.2.3 Technological obsolescence. , 2.2.2.4 Regulatory obsolescence -- 2.2.2.5 Flexibility/modularity value assessed by option theory -- Tutorial 2: Option Theory -- 2.2.2.6 Flexibility/modularity value assessed by decision analysis -- Tutorial 3: Decision Analysis -- 2.2.2.7 Project off-ramps -- 2.2.2.8 The extra value of modules' portability and reversibility -- 2.2.3 Avoiding fuel-price volatility risks -- Tutorial 4: Utility Accounting vs. Financial Cost Valuation -- Tutorial 5: Financial Risk -- Tutorial 6: Valuing Risk -- 2.2.3.1 Valuing electricity price volatility -- 2.2.4 Reduced overheads -- 2.2.5 Planning resource portfolios -- 2.2.6 Fuel diversification -- 2.2.6.1 Engineering perspective: diversify fuels and sources -- 2.2.6.2 Financial-economic perspective: guard against systematic price risk -- 2.2.7 Load-growth insurance -- 2.2.8 Matching loadshape -- 2.2.8.1 Evaluating field data for renewables -- 2.2.8.2 Improving loadshape match by technical design -- 2.2.8.3 Prospecting to maximize loadshape-matching's economic value -- 2.2.8.4 Fine-grained prospecting in time and space -- 2.2.9 Reliability of distributed generators -- 2.2.9.1 Renewable energy intermittency -- 2.2.9.2 Distributed resources' technical availability reduces reserve-margin requirements -- 2.2.9.3 Modular resources' reduced variance of availability further reduces reserve margin -- 2.2.9.4 Outage durations and ease of repair -- 2.2.9.5 Renewable capacity credit is real and valuable -- 2.2.9.6 Geographic dispersion and technological diversity -- 2.2.9.7 Generating reliability and grid reliability -- 2.2.9.8 Diversity, complexity, and resilience -- 2.2.10 Permissible saturation of renewable generators -- 2.2.10.1 Simulated penetration limits and available responses -- 2.2.10.2 A temporary issue? -- 2.2.11 Buying time -- 2.3 Construction and Operation -- 2.3.1 Generation -- 2.3.1.1 Reserve margin. , 2.3.1.2 Spinning reserve -- 2.3.1.3 Life extension -- 2.3.2 Grid -- 2.3.2.1 The mysterious grid -- 2.3.2.1.1 Losses -- 2.3.2.1.2 Costs -- 2.3.2.2 Grid losses: potential reductions -- Tutorial 7: Grid Losses -- 2.3.2.3 Power factor and reactive power support -- Tutorial 8: Power Factor -- 2.3.2.3.1 Distributed resources' reactive contribution -- 2.3.2.3.2 Benefits -- 2.3.2.4 Avoided voltage drop -- 2.3.2.5 Ampacity savings from daytime-correlated resources -- 2.3.2.6 Capacity expansion -- 2.3.2.7 Life extension -- 2.3.2.8 Repair, rerouting, and outage duration -- 2.3.2.9 Summary: Prospecting for grid-support distributed resource opportunities -- 2.3.2.10 "Negaloads" vs. engineering realities -- 2.3.2.10.1 Grid topologies: radial vs. web -- 2.3.2.10.2 Bi/omnidirectional flow -- 2.3.2.10.3 Synchronization and dynamic stability -- 2.3.2.10.4 Self-excitation -- 2.3.2.10.5 Fault protection -- 2.3.2.10.6 Normally interconnected, optionally isolated operation -- 2.3.2.10.7 Safety -- 2.3.2.10.8 Reclosing -- 2.3.2.11 Avoided grid connection (stand alone operation) -- 2.3.2.12 The intermediate case: micro-grids -- 2.3.3 Non-grid operational benefits -- 2.3.3.1 Energy generation -- 2.3.3.2 Reduced keep-warm (minimum-load) operation -- 2.3.3.3 Reduced spinning-reserve operational cost -- 2.3.3.4 Reduced startup cycles -- 2.3.3.5 Fast ramping -- 2.3.3.6 Net-metering advantages -- 2.3.3.7 Lower payments to QFs/IPPs -- 2.3.3.8 Unbundled service quality: harmonics, power quality, and reliablility -- 2.3.3.8.1 Power quality, harmonics, and active harmonic compensation -- 2.3.3.8.2 Premium reliability -- 2.4 Other Sources of Value -- 2.4.1 Customer value and marketing considerations -- 2.4.1.1 Green sourcing -- 2.4.1.2 Community sourcing and local control -- 2.4.1.3 Amenity, comfort, productivity, and customer value -- 2.4.2 DSM integration -- 2.4.3 Local fuels. , 2.4.4 Thermal integration -- 2.4.5 Byproduct integration -- 2.4.6 Structural integration -- 2.4.7 Infrastructural displacement -- 2.4.8 Land-use integration, land value, and shading -- 2.4.9 Avoided subsidies -- 2.4.10 NEEDs -- 2.4.10.1 Security of supply -- 2.4.10.2 The megaproject syndrome -- 2.4.10.3 Keeping the money on Main Street -- 2.4.10.4 Support of local economies, employment, and trade balance -- 2.4.10.5 Noise and aesthetics -- 2.4.10.6 Irretrievable commitments of resources -- 2.4.10.7 Conflict avoidance: stakeholders and trust -- 2.4.10.8 Health and safety issues: risk and perception -- 2.4.10.9 Equity -- 2.4.10.10 Accessibility -- 2.4.10.11 Accountability and local control -- 2.4.10.12 Community and autonomy -- 2.4.10.13 Learning institutions, smaller mistakes -- 2.4.10.14 Public image -- 2.4.10.15 Avoided air emissions -- 2.4.10.16 Land conservation -- 2.4.10.17 Fish and wildlife conservation -- 2.4.10.18 Less indirect pollution -- 2.4.10.19 Less depletion -- 2.4.10.20 Less water withdrawal and consumption -- 2.4.10.21 Psychosocial benefits -- Part 3 A Call to Action: Policy Recommendations and Market Implications for Distributed Generation -- 3.1 A Framework for Action -- 3.2 Policy Goals and Objectives -- 3.2.1 Overview -- 3.2.2 U.S. energy policy goals and objectives -- 3.2.2.1 Policy portfolio framework -- 3.2.3 Key barriers and issues facing distributed generation -- 3.2.3.1 Key barriers -- 3.2.3.2 Regulatory Response -- 3.3 Policy Recommendations -- 3.3.1 Overview -- 3.3.2 Getting there-crafting an effective policy agenda -- 3.3.2.1 Analysis of proposed policy reforms -- 3.3.2.2 Emerging consensus on a policy agenda -- 3.3.3 Recommendations to federal regulators -- 3.3.3.1 Recommendations to the FERC -- 3.3.3.1.1 Create uniform national interconnection standards for distributed generation. , 3.3.3.1.2 Integrate distributed resources into wholesale power markets -- 3.3.3.1.3 Integrate distributed generation into ancillary services market -- 3.3.3.1.4 Support locational marginal pricing for transmission resources -- 3.3.3.1.5 Provide greater access to information on the transmission system and wholesale markets -- 3.3.3.2 Recommendations to DOE -- 3.3.3.2.1 Accelerate funding of RD& -- D for distributed generation -- 3.3.3.3 Recommendations to EPA -- 3.3.3.3.1 Create emission standards for distributed generation -- 3.3.3.3.2 Clarify ownership rights to pollution credits created by distributed resources -- 3.3.3.4 Summary: Actions needed to adopt the suite of federal recommendation -- 3.3.4 Recommendations to state regulators -- 3.3.4.1 Universal state recommendations -- 3.3.4.1.1 Adopt "plug and play" interconnection standards for distributed generation -- 3.3.4.1.2 Create net-metering rules with buyback rates based on system value -- 3.3.4.1.3 Adopt emissions standards for DG -- 3.3.4.1.4 Provide public support to distributed generation RD& -- D through wires charges -- 3.3.4.1.5 Update building codes and real estate development covenants to accommodate DG -- 3.3.4.2 Recommendations for states with traditional utility regulation -- 3.3.4.2.1 Decouple utility revenue requirements from kWh sold, and create incentives to lower customers' bills, not price per kWh -- 3.3.4.2.2 Require mandatory ERIS planning as the basis for prudent cost recovery -- 3.3.4.2.3 Restructure distribution tariffs to reduce excessive fixed charges -- 3.3.4.2.4 Adopt renewable portfolio standards (RPS) and tradable credits -- 3.3.4.3 Recommendations for states adopting restructuring -- 3.3.4.3.1 Decouple distribution companies' revenue requirements from kWh throughput -- 3.3.4.3.2 Restructure and unbundle distribution tariffs. , 3.3.4.3.3 Impose stranded costs only after production threshold is exceeded.