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DG (distributed generation) is defined as installation and operation of small modular power generating technologies that can be combined with energy management and storage systems. It is used to improve the operations of the electricity delivery systems at or near the end user. These systems may or may not be connected to the electric grid.

A distributed generation system can employ a range of technological options from renewable to non-renewable and can operate either in a connected grid or off-grid mode. The size of a distributed generation system typically ranges from less than a kilowatt to a few megawatts.


Technological options

DG options can be classified either on the basis of the prime movers used?engines, turbines, fuel cells?or on the basis of fuel resources used?renewable and non-renewable. In India, many renewable energy technologies are being employed in a number of distributed generation projects. The technologies include biomass gasifiers, solar thermal and photovoltaic systems, small wind turbines (aero-generators), and small hydro-power plants. The figure illustrates the technology options for distributed power generation.

Relevance of distributed generation in India

In India, distributed generation has found three distinct markets.

  • Back-up small power generation systems including diesel generators that are being used in the domestic and small-commercial sectors.
  • Stand-alone off-grid systems or mini-grids for electrification of rural and remote areas.
  • Large-captive power plants such as those installed by power intensive industries.

Distributed power generation systems are needed to address the following issues.

  • High peak load shortages? With a deficit of 12.3% in peak demand, distributed generation systems that can reduce the peak demand is seen as the most effective solution to the problem.
  • High transmission and distribution losses? Current losses amount to about 35.03% of the total available energy. Distributed power generation systems can greatly reduce these losses and improve the reliability of the grid network.
  • Remote and inaccessible areas? In many parts of the country extension of the grid may not be economically feasible. In such cases distributed generation can play a major role.
  • Rural electrification? Rural electrification has been identified as a priority for rural development by the Government of India. Wherever grid extension is not feasible, the government has directed that decentralized distribution generation facilities with local distribution network be provided.
  • Faster response to new power demands? The modular nature of distributed generation system coupled with low gestation period enables the easy capacity additions when required.
  • Improved supply reliability and power quality ??Disruptions such as grid failure, etc., can be prevented as electricity is produced close to the consumer. The quality of power? voltage and frequency?can also be maintained easily.
  • Possibility of better energy and load management? Distributed generation systems offer the possibility of combining energy storage and management systems.
  • Optimal use of the existing grid assets? Inadequacies in distribution network has been one of the major reasons for poor supply of power. Distributed generation facilitates an optimal use of the grid that improves the reliability of the grid network and reduces the congestion.


Policy context for distributed generation

The Integrated Energy Policy of the Planning Commission of the Government of India envisions energy security for the country and its citizens by stating that energy services should be safe, reliable, techno-economically viable, and sustainable considering different forms and fuels of energy?conventional as well as new, alternate sources.

The Electricity Act, 2003 has also given a thrust to distributed generation particularly in the context of rural electrification. The Act, in addition to grid extension as a mode for rural electrification, specifies distributed generation and supply through stand-alone conventional and renewable energy systems. It also includes the distribution of electricity through NGOs, local government units, community groups, and franchisees of distribution utility as alternate modes for rural electrification.

Further, the Act indicates that persons setting up new projects and/or extending existing infrastructure for composite schemes of generation and distribution are exempt from licensing and licensee related obligations.

The National Electricity Policy notified on 12 February 2005 mentions under the Rural Electrification component, section 5.1.2 (a) that to provide a reliable rural electrification system, a Rural Electrification Distribution Backbone be established by extending the transmission lines. However, when the extension is not feasible, as in section 5.1.2 (d), it directs that decentralized distributed generation facilities (using conventional or non-conventional sources of energy) together with local distribution network be provided.

Also, in compliance with sections 4 and 5 of the Electricity Act 2003, the central government prepared the Rural Electrification policy. The policy in section 3 (3.3) identifies decentralized distributed generation of electricity by setting up of facilities together with local distribution network based on either conventional or non-conventional resources methods of generation.

Two specific schemes of the Government of India, the RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojna) and the RVE (Remote Village Electrification) scheme, provide upto 90% capital subsidy for rural electrification projects using DDG (decentralized distributed generation) options based on conventional and non-conventional fuels respectively.?