Distributed generation planning in the deregulated electricity supply industry

Distributed generation (DG) is increasingly becoming more important in the power system because of its high efficiency, small size, low investment cost, modularity and most significantly, its ability to exploit renewable energy resources. However commercial and regulatory requirements create challenges for the deployment of DG in distribution systems. Due care must be taken during the planning stage to ensure that system security and quality of supplies are not degraded by the introduction of the new DG. It is also important, particularly in deregulated environment, that the DG scheme must be economically viable. The task of distributed generation planning is further complicated by many uncertainties and risks in today's power markets that render the traditional deterministic planning tools inadequate. This work proposes a framework for embedded generation planning in line with these challenges and with special emphasis on the risks and uncertainties.

I. Introduction

It has been widely accepted that DG is a viable option in solving utility distribution systems capacity problems [1]– [3]. Given the many uncertainties and risks in the deregulated environment, DG is favourable because of its modularity, low investment costs and hence reduced capital risk [1], [2], [4]. Their small sizes (plant area) make it easier to find sites and shorten construction times. It is also acknowledged that DG can improve security of the power supplies and present opportunities for diversifying the fuel mix in electricity generation, thereby providing an additional variable in overall power system efficiency control.