A methodology for preliminary benefit evaluation of Distributed Generation to drive private investments

Abstract

Private investments in distributed generation (DG) are typically driven by the interests of private investor, often overlooking possible benefits for the distribution operator. This work presents a methodology that enables power distribution utilities to assess the potential for attracting investments in their networks, considering a regulatory framework where utilities could actively encourage private DG investors. The methodology involves calculating and integrating the benefits associated with investment deferral, losses reduction and reliability improvement into the energy price negotiated between the utility and the DG owner. The proposed approach was applied to an adapted test grid, considering real regulatory aspects related to technical losses and reliability. The results provide support for utilities to perform preliminary financial analyses to determine the appropriate incentives for private DG investors, identifying cases with competitive energy prices for generators. Key contributions of this methodology include a clear and reasonable metric for quantifying the capacity to attract investments based on standard utility data and the importance of incorporating regulatory aspects related to technical losses and reliability, that are often neglected in similar studies. Furthermore, the methodology not only promotes new opportunities for DG investors but also addresses challenges associated with network congestion.