Reaping the benefits of distributed generation

June 13, 2019

Across the United States, business operators are reducing energy costs and improving environmental footprints with distributed generation. Also known as onsite power generation, distributed generation systems use renewable energy sources, such as solar power or combined heat and power, to generate energy at the end user’s site. Distributed generation systems are ideal for businesses with ample land, roof space, or parking lots. Reducing dependence on utility companies, distributed generation systems help organizations to lower both short-term and long-term energy costs.  While distributed generation output ranges, most systems produce 250 kilowatt hours to several megawatts. 

Financial value. “The number one benefit of implementing distributed generation is the financial value, including day-one savings and predictable, long-term energy cost hedging,” said Chris D. Fraga, Founder & CEO of Alternative Energy Development Group, a firm that develops, finances, owns, and operates clean energy projects for commercial and industrial clients. “Increasingly, we’re seeing energy costs from distributed generation systems beating energy costs from traditional utility companies. Customer cost savings are between 10 to 40 percent.”

Funding. Particularly in states with higher electricity costs, such as California and states in New England and the East Coast, more states are adopting stronger renewable portfolio standards, which drive more state-based financial incentives for distributed generation projects. Additionally, more financial institutions are offering competitive loan rates to fund distributed generation projects. Third party investors are also available to finance, own, and operate distributed generation equipment, and sell energy by the kilowatt hour to the end user. 

How it works. If we look at a temperature-controlled manufacturing facility that has distributed generation installed, the manufacturer will typically consume 100% of the energy generated from the system, and if necessary, seamlessly draw additional energy from its local utility company as a secondary source with separate metering. Storage of onsite generated energy is increasing in popularity as more businesses are using distributed generation and energy storage to manage peak demand charges and time-of-day energy production and consumption. 

Sustainability. In addition to early and long-term cost savings, benefits of distributed generation include sustainability and environmental perks.  For example, innovations in solar energy have resulted in development of higher density solar panels, which require less costs and less space to produce more energy. Currently, an estimated two million solar systems are operating in the United States. In addition, those businesses that install combined heat and power benefit from higher efficiency. Combined heat and power systems transform natural gas at a rate 25 to 50 percent more efficient than utility electric grids.  In addition, businesses that consume energy from distributed generation ease demand on aging grids and deteriorating power plants. 

Solar with battery A/I installation at manufacturing plan in Maryland.


DC plant.


Get started. The first step to implementing distributed generation is to contact a distributed generation energy expert for a consultation.  An expert will provide a full analysis of your facility’s energy consumption and needs, as well as an evaluation of costs, options, necessary permits, and available interconnection capacity to your local utility company. Today, 158 trade associations and chambers of commerce endorse consulting firm APPI Energy to reduce and manage costs for members. Contact APPI Energy at 800-520-6685 or for a complimentary consultation.


Photos: Courtesy of Alternative Energy Development Group