Overview of State and Federal Incentives for the Use of Distributed Generation

Abstract

This article1 presents a summary of some of the primary state and
federal incentives that are currently available for the use of distributed
generation (DG). 2 Although there are various de finitions for DG, in
general it refers to the use of small-scale power generation technologies
located at or near the point of use.
At present, there are many important incentives available, from
both federal and state sources, for the development and use of DG. Al-
though not all states provide incentives for the development of DG, and
many impediments to development remain, the rate of growth in this
sector is impressive. In fact, it is hard to overestimate the importance of
this energy sector. Not only does DG represent a signi ficant new source
of electric generating capacity, it is also changing the structure of the
electric generating industry. As more businesses and homes produce
much if not all of their own electricity, the demand for new large-scale
generating projects and new transmission and distribution facilities is
likely to be reduced as well.
Today, DG developers in many states still confront problems when
they attempt to connect with the utility transmission system or grid,
seek to net meter, or struggle through a mountain of bureaucratic red
tape in order to qualify for incentives. The good news, however, is that
many energy policymakers have awakened to the promise and value of
DG. This in turn is resulting in a growing body of new regulations and
legislation that seeks to foster this important new energy sector.