21.01.2025
Today, during the war, work on the development of new distributed generation is being carried out by both state-owned companies and municipalities, as well as private businesses.
In Ukraine, this trend is actively developing, simultaneously with the restoration of destroyed generation facilities in large-scale energy, and it should be noted that the construction of dispatchable distributed generation is one of the main tasks of Ukrainian energy professionals as a response to Russian terrorism against energy infrastructure facilities.
The government has simplified the conditions for connecting to electricity, gas and heat networks, and financial and credit programs have been developed to stimulate the development of distributed generation for both individuals and condominiums, private businesses and municipalities.
In addition, the government and regions are currently actively working on providing critical infrastructure with backup power systems, which in the event of a difficult situation will provide certain consumers with the necessary electricity and heat.
Against the background of the above, it is necessary to tell in more detail what distributed generation is and what role it plays in the power systems of different countries of the world.
Analysts have mixed opinions on the distributed generation market. Global reports for 2023 give estimates of the global market from 150 to 250 billion USD, which corresponds to a share in the total generation structure of 10-20%. The prospects are also assessed differently, but in general, experts estimate the pace of development of distributed generation in the structure of the energy balance within 6.5-13.6% per year, which is significantly higher than the overall growth in electricity production.
The reason for this divergence of boundaries is the different meanings of the term “distributed generation” in European countries, for example:
In the vast majority of cases, distributed generation has a relatively small capacity and a stable local consumer, with which it is connected by one or two distribution network lines and long-term contracts for the purchase of electricity and heat (in the case of a cogeneration plant).
In this format, distributed generation enters the general electricity market on a residual principle, it is based on local energy resources and cannot be scaled in this area into a business larger than local consumption.
Distributed generation, in general, due to small volumes, has both a disadvantage (these are higher specific costs for construction and production of electricity) and a competitive advantage in a short electricity transportation chain, while they realize their technological advantages where simultaneously:
Thus, modern distributed generation is a niche opportunity based on a large consumer (large for local conditions, and small relative to the national market as a whole) and cannot be scaled beyond the conditional local consumption of electricity or heat.
At the same time, small distributed generation projects have relatively low construction costs, guaranteed stable payment and payback from a solvent guaranteed consumer tied to a certain territorial area.
Therefore, in Ukraine, in conditions of financing restrictions for large new generation projects and transmission system and distribution network facilities, the flow of new MW of generation will be created mainly through the development of own generation by household and industrial consumers to primarily meet their own needs. Large projects, mainly wind farms, will be developed later, through a longer preparation cycle (for reference – large wind farms are not distributed generation, but for their integration into the regime and power systems require large hydroelectric/gas-fired power plants and thermal power plants, which are also not distributed generation).
Taking into account the above, it is possible to predict what the generation structure in the new energy system of Ukraine will be, namely:
It should be noted that with such a configuration there is no possibility to exclude any of the components in the generation structure when forming the energy balance.
At the same time, mutual competition between “large” and distributed generation will occupy approximately 10% of the electricity market. That is, competition and mutual linkage between segments of large energy will have a greater impact on market stability than the development of distributed generation.
At the same time, to provide the opportunity to be competitive in all segments of the energy market of already built distributed generation, new players began to appear, such as: Aggregator – an energy market participant who provides services for aggregating energy production from various sources, including local management of demand and supply, and Prosumer – an active consumer who not only consumes energy, but also actively participates in its production and sale of excess generated electricity.
It is important to note that in order to implement dispatchable distributed generation and ensure its reliable operation both in all segments of the electricity market and in isolated mode for a designated area (in island mode) during power system operation restrictions, it is imperative to modernize electrical networks by implementing the principles of Smart Grid and Micro Grid. Such measures will allow integrating a certain set of modern technologies that will transform the old energy infrastructure into a modern digital system using the latest IT solutions.
Thus, networks, through the use of communication technologies, technologies for collecting information on the production, transmission, distribution and consumption of electricity, will be able to be effectively monitored and managed by the dispatcher. At the same time, the power system will achieve the ability to self-recover after failures in the supply of electricity to consumers, will maintain the necessary quality of electricity for consumers, will ensure the synchronous operation of distributed generation and electricity storage/regulation systems, will increase the network’s resistance to physical and cybernetic interference by attackers or the consequences of weather and climate effects on the network, etc.
Only if the above technologies and measures are integrated, distributed generation will be able to perform the function of ensuring guaranteed capacity in the power system and reliably operate in all its operating modes, including isolated (island) mode. Thus, reliably provide consumers with electricity and heat under any circumstances, taking into account the risks of war.
Otherwise, there are significant risks that communities and businesses, after investing enormous efforts, funds, and assistance from foreign partners, will be left with expensive generators that will only serve as expensive backup power for their own needs.
As a reminder, in February, Energy Club is launching an online training course for representatives of territorial communities “Distributed Generation: A Step Towards Energy Independence of Ukraine”. Details follow the link.
