New Resource - Grid-Connected Distributed Generation: Compensation Mechanism Basics

This short report defines compensation mechanisms for grid-connected, behind-the-meter distributed generation (DG) systems as instruments that comprise three core elements: (1) metering & billing arrangements, (2) sell rate design, and (3) retail rate design.

This report describes metering & billing arrangements, with some limited discussion of sell rate design. The report detail the three possible arrangements for metering & billing of DG: net energy metering (NEM); buy all, sell all; and net billing.

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