Fact Sheet

Grid-Integrated Distributed Solar: Addressing Challenges for Operations and Planning.
English (PDF). 

Distributed Generation

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Distributed, grid-connected solar photovoltaic (PV) power poses a unique set of benefits and challenges. In distributed solar applications, small PV systems (5–25 kilowatts [kW]) generate electricity for on-site consumption and interconnect with low-voltage transformers on the electric utility system. Deploying distributed PV can reduce transmission line losses, increase grid resilience, avoid generation costs, and reduce requirements to invest in new utility generation capacity. With proper equipment and calibration, distributed PV systems can also mitigate reliability issues experienced by providing standby capacity during electric utility disturbances or outages.

Operational Considerations

In most electric utility systems, power flows in one direction: from centralized generators to substations, to end-use consumers. With distributed generation (DG), power can flow in both directions. Most electric distribution systems are not designed to accommodate widespread DG and a two-way flow of power. Common challenges include maintaining required voltage levels within regulated limits, coordinating protection system devices, and managing additional cycling—and associated wear and tear—of the voltage control equipment, especially critical for longer distribution feeder circuits in rural areas.

Planning Considerations

Traditional distribution and transmission planning does not adequately address the benefits and challenges of DG systems. Traditional distribution planning procedures use load growth to inform investments in new distribution infrastructure, with little regard for DG systems and for PV deployment. 

Example Interventions

Power systems can address the challenges associated with integrating distributed solar PV into the grid through a variety of actions. The following suggested actions may help enable the scaling up of distributed generation.

Addressing Operational Challenges

  • Review and update interconnection standards and grid codes to clearly define the interconnection requirements for distributed solar generators and ensure that their operating parameters support reliability in the distribution system. For example:
    • Require use of PV inverters with advanced functions such as fault ride-through, reactive power support, and voltage control to help maintain the grid’s frequency and voltage levels within utility standards
    • Require distributed PV equipment that can remotely and selectively curtail system output when generation significantly exceeds demand at the substation level
    • Require the use of commercially available battery inverters to enable off-grid operation of PV systems during grid outages.
  • In conjunction with interconnection standards, develop or update equipment standards to define the parameters that distributed PV components (e.g., inverters, converters, and controllers) must meet in order to contribute to reliability. Equipment standards can lay the foundation for testing, certification, and labeling programs for PV components that support interconnection standards.
  • Review and update interconnection procedures to create a standard and transparent process for interconnecting distributed PV in a way that balances the goals of increasing deployment with minimizing adverse impacts to the distribution system. For example:
    • Replace ‘first-come, first-served’ interconnection processes with a transparent process based on system impacts
    • Require PV inverters to comply with interconnection and equipment standards to enable interconnection screening procedures to be carried out quickly
    • Establish technical screens that take into account impacts such as unintentional islanding (caused by high energy production during light feeder load), high voltage at the location of generation, potential for transient overvoltage occurrences, and impacts on the protection system coordination.

Improving System and Distribution Planning

  • Incorporate distributed PV into integrated resource planning and modeling of system capacity expansion to optimize the amount of distributed PV on the system in the future.
  • Consider planning for higher PV penetration in designated areas—defined by regulatory criteria or created through targeted grid reinforcements and upgrades. These areas can be identified by utilities through a process administered by a regulatory body that considers stakeholder needs and is based on sound engineering principles.
  • Evaluate emerging approaches to distribution system planning (e.g., Integrated Distribution Planning), which proactively assesses the hosting capacity of distribution circuits, the ability of these distribution circuits to accommodate growth in distributed generation, and any necessary infrastructure upgrades in advance of receiving interconnection requests from generators.
  • Evaluate pricing mechanisms and rate designs and update them as needed to reflect the system-wide benefits and costs of distributed PV integration (e.g., by implementing Value of Solar tariffs).
  • Collect data on the load profile of distribution circuits (feeders) in order to assess hosting capacity and infrastructure needs.
  • At the transmission level, encourage system flexibility(e.g., through the use of generators that can change output quickly) to accommodate high levels of variable generation from distributed PV.

Reading List and Case Studies

Understanding the Impact of Distributed Photovoltaic Adoption on Utility Revenues and Retail Electricity Tariffs in Thailand

USAID Clean Power Asia, National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory, 2017

Utilities worldwide are concerned about the financial impact of increasing distributed PV adoption among their retail customers. This report analyzes the impact of distributed PV deployment on distribution utility revenues and retail electricity tariffs in Thailand. It provides policymakers, utilities, and other energy practitioners a real-world example of how distributed PV affects certain stakeholders.  

Grid-Connected Distributed Generation: Compensation Mechanism Basics

National Renewable Energy Laboratory, 2017

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 details the three possible arrangements for metering & billing of DG: net energy metering (NEM); buy all, sell all; and net billing. 

Distributed Generation Regulation Library

21st Century Power Partnership

The 21st Century Power Partnership supports global power sector transformation. The Partnership has developed a curated, annotated resource library that provides reports, academic literature, case studies, and good practices to support distributed generation regulation in a variety of power system contexts. The library is organized around several topical areas: Ratemaking, Understanding Impacts, Interconnection, Alternative Business and Regulatory Models, Planning, and Case Studies. 

Distributed Generation Interconnection Collaborative Website

National Renewable Energy Laboratory, Electric Power Research Institute, Solar Electric Power Association, Western Area Power Administration

To enable informed decision-making and planning related to increasing levels of distributed PV resources, the Distributed Generation Interconnection Collaborative facilitates knowledge sharing among its members about distributed PV interconnection practices, research, and replicable innovations. While the Collaborative itself primarily works with utilities and other stakeholders in the United States, its website hosts a collection of presentations, webinars, and reports that provide more broadly applicable information and case studies on interconnection practices. 

High-Penetration PV Integration Handbook for Distribution Engineers

National Renewable Energy Laboratory, 2016

High penetrations of PV on a distribution system can lead to reliability impacts related to overload, voltage, reverse power flow, protection, and circuit configuration. Drawing on the results and lessons-learned from a five-year study of the Southern California Edison (SCE) distribution system from 2010 – 2015, this handbook presents a detailed analysis of the potential impacts and mitigation techniques of PV integration. Written for distribution engineers, the handbook also provides a model-based study guide for assessing PV impacts, covering topics such as model development, data validation and measurement, study criteria, and the steps involved in power flow and fault analysis. While the impacts and mitigation techniques described in this handbook are derived from research that focused on the integration of utility-scale PV systems (1-5 MW), much of the information is also relevant for the integration of a large number of small, distributed PV systems. 

Processes and Timelines for Distributed Photovoltaic Interconnection in the United States

National Renewable Energy Laboratory, 2015

The amount of time required to complete the distributed PV interconnection process can be a significant driver of interconnection costs to PV project developers, utilities, and local permitting authorities. Using data from over 30,000 residential and small commercial systems, this report provides insights from the United States (both nationally and in five states with active solar markets) on the length of time needed to interconnect and deploy distributed PV. The report assesses the number of business days required to 1) apply for and receive utility interconnection review and approval; 2) construct the PV system; 3) pass final local jurisdictional building permit inspection and submit permission-to-operate paperwork to the utility; and 4) receive permission to operate from the utility. It also provides insights on some of the drivers of the interconnection process timeline, which can be used to inform the development of interconnection procedures. 

Value of Solar: Program Design and Implementation Considerations

National Renewable Energy Laboratory, 2015

Value of solar is an emerging concept that provides a mechanism (e.g., rates or tariffs) for utilities to compensate customers who generate their own electricity through distributed PV, based on the benefits and costs that distributed solar provides or incurs to the power system. This report discusses program design options for Value of Solar tariff offerings and the impact of this type of tariff on future deployment of distributed PV. It also includes case studies from two utilities in the United States (Austin Energy and the state of Minnesota) that have adopted Value of Solar mechanisms. 

Methods for Analyzing the Benefits and Costs of Distributed Photovoltaic Generation to the U.S. Electric Utility System

National Renewable Energy Laboratory, 2014

Estimating the benefits and costs of achieving significant deployment of distributed PV helps power system stakeholders evaluate regulatory measures and compensation programs for distributed PV. To inform these decisions, this report describes current and potential future methods, data, and tools that could be used with different levels of sophistication and effort to estimate the benefits and costs of distributed PV from the utility or electricity-generation system perspective. Although the report is explicitly written in the context of informing estimation of distributed PV costs and benefits to the United States electricity system, the discussions of the various methods, level of effort, and data and modeling requirements provide insights relevant to power systems outside of the U.S. The report provides methodologies for estimating distributed PV benefits and costs for the following categories: energy, environmental, transmission and distribution losses, generation capacity, transmission and distribution capacity, ancillary services, and other factors. 

Grid Integration of Distributed Solar Photovoltaics in India: A Review of Technical Aspects, Best Practices and the Way Forward

Prayas Energy Group, 2014

In anticipation of significant growth in distributed PV in India, this report reviews global and Indian policies and regulations for distributed generation; identifies technical challenges to significantly increasing grid-connected distributed PV; and makes recommendations for addressing power quality, safety, grid stability, and distribution system operation issues. The report provides an example of a country-specific review and synthesis of best practices to inform national and state-level technical and grid code specifications, advanced inverter functionalities, and meter technology considerations, certification, and testing processes. 

Advanced Inverter Functions to Support High Levels of Distributed Solar

National Renewable Energy Laboratory, 2014

Technological innovations are supporting increased distributed solar penetration levels. One important innovation involves the use of advanced inverter functionality to address PV grid integration challenges, and, in many cases, may only require software and operations protocol updates of inverters currently in use. The report describes the use of advanced inverters to support voltage and frequency level control as distributed generation comes on and off-line. Policy and regulatory consideration to support advanced inverter deployment are also presented in the paper. 

Distributed Solar PV for Electricity System Resiliency: Policy and Regulatory Considerations

National Renewable Energy Laboratory, 2014

To enable distributed PV that can supply electricity during grid outages, this paper presents approaches specifically to support resiliency through design of PV systems utilizing storage technologies, community energy storage, solar-diesel hybrid systems, and micro-grids. The paper also considers policies and regulations to support distributed PV that contributes to resiliency. 

Integrated Distribution Planning Concept Paper: A Proactive Approach for Accommodating High Penetrations of Distributed Generation Resources

Interstate Renewable Energy Council, 2013

Traditional interconnection processes evaluate the impacts of a given distributed generator to safety, reliability, and power quality after an interconnection request is received. This concept note introduces “Integrated Distribution Planning,” an alternative, emerging methodology designed to enable distributed PV. In the Integrated Distributed Planning concept, utilities or distribution system operators proactively study the hosting capacity of distribution circuits, the ability of these distribution circuits to accommodate growth in distributed generation, and any necessary infrastructure upgrades, all in advance of receiving interconnection requests from generators. 

Time in the Sun: The Challenge of High PV Penetration in the German Electric Grid

IEEE Power and Energy Magazine, 2013

Germany leads the world in deployment of distributed PV, with PV generation contributing approximately 40% of peak power demand during some hours of the year. This article outlines the impacts of high PV deployment in Germany on grid stability and power flows in the transmission and distribution system. It also highlights practical solutions that Germany has implemented to support frequency and voltage control and reduce congestion, and suggests new concepts for voltage-control strategies.

Regulatory and Policy Examples

Standard for Integrating Distributed Resources with Electric Power System – IEEE 1547 

IEEE, 2003 and 2014

Standard IEEE 1547 is an example of an interconnection standard (commonly used in North American power systems) providing technical rules for interconnecting distributed generation resources with the electric grid. The standard’s guide introduces the background and rationale for the technical requirements, facilitates use of the standard by characterizing distributed resource technologies and related interconnection issues, and provides approaches and information to support interconnection and implementation. The standard was updated in 2014 with an amendment providing existing information on voltage, voltage regulation, and frequency. 

Standard for Inverters, Converters, Controllers and Interconnection System Equipment for Use With Distributed Energy Resources

UL 1741

UL 1741 provides certification requirements for distributed generator equipment that operates according to the parameters established in IEEE 1547. The standard is used together with IEEE 1547 to provide comprehensive requirements for distributed generation projects. 

Minnesota Value of Solar: Methodology

Minnesota Department of Commerce, 2014

The U.S. state of Minnesota has enacted legislation that allows investor-owned utilities to use a Value of Solar tariff as an alternative to net metering for distributed PV. This document details the methodology participating utilities will use to calculate the Value of Solar tariff in order to account for several values of distributed PV (including energy and its delivery, generation and transmission capacity, transmission and distribution losses, and environmental value). The methodology includes detailed example calculations for each step.

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