Don’t you just love acronyms?  I do, which is a good thing since I write the Smart Grid Dictionary, which is loaded with them.  Acronyms are shorthand for common phrases, and there are certainly plenty of them in the Smart Grid business.    Imagine my delight when I encountered a new acronym last week – BUGS.  Everyone with a software background immediately thinks of coding errors, but in this case BUGS refers to Backup Generation Sources, and it is used in reference to Distributed Generation or DG for grid support.  

The Smart Grid Dictionary defines distributed generation as “Electric generation that feeds into the distribution grid, rather than the bulk transmission grid, whether on the utility side or customer side of the meter.   It includes customer-owned microturbines, wind-powered generators, hydro units, and PV arrays.  Customers who own generation resources usually want to reduce the amount of power purchased from the local utility or supply their own backup power needs, and this form of DG is sometimes known as on-site DG.   Excess power may be sold back to the utility through net metering.   Utilities may invest in DG to mitigate substation level peak loads and/or avoid building or upgrading local distribution lines.  The technologies used in distributed generation are sometimes referred to as Distributed Energy Resources.  DG is also known as decentralized energy.”    

Backup generation has been around for decades.  Telecommunications systems and other mission-critical operations like hospitals and data centers routinely install generators (often diesel or natural gas) along with battery backup to keep running even when an emergency event prevents electricity delivery from the utility grid.  However, the BUGS business model uses distributed generation assets to provide grid support and add generation capacity in situations where the utility’s usual generating capacity is not sufficient to meet customer demands for electricity.  The old business model would require that utilities either fire up an expensive “peaker” plant and/or ask customers to reduce their electricity use through demand response programs.     

The BUGS model presumes that utilities would own, install, and manage the backup generation assets at substations.   It is an innovative option for utilities to avoid capital expenditures on new generation plants and transmission and distribution facilities.   It’s a great idea, and when it combines renewable energy sources and energy storage for grid support, it gets even better.  Rather than continue investments in remote generation and long distance transmission facilities, placing more generation closer to users reduces electricity losses incurred during transmission and therefore improves overall grid efficiency.   There’s a diagram of it at the California Energy Commission site.

Utility-owned distributed generation is not sufficient to address long-term generation capacity requirements, making it critically important for utilities and state regulatory agencies to encourage more distributed generation business models that convert residential, commercial, and industrial sites into energy producers rather than just energy consumers.   We need innovators who can take the mantra, “Think globally, act locally”, and transform it to “Think globally, generate locally”.