Does the transmission and distribution system facilitate or deter --
Current transmission and distribution system structures deter the development of renewable energy technologies in three significant ways. First, on the local level, the small size and often remote locations of renewable generators mean that they are not directly connected to the regional bulk power system and often have to pay a distribution utility tariff in addition to the regional transmission tariff. Second, interconnection procedures in many regions do not provide streamlined procedures for interconnecting small generation units that have virtually no impact on the bulk power system. Third, the wholesale markets administered through tight power pools do not accommodate the small size and often intermittent production output associated with most renewable generation, such as wind, hydro, and solar. Until these barriers are addressed and a level playing field is created, renewable generation technologies will be at a competitive disadvantage.
The same issues discussed above regarding renewable generation also apply to distributed generation. In addition, local distribution utilities have difficulty integrating and accommodating the power flows of distributed generation that may operate only during peak load periods. One solution to this difficulty is to require the distribution utility to purchase, through bids, distributed generation resources that it then operates.
Although integrated resource planning in the 1990s quantified the significant benefits that energy efficiency, conservation, and load management can provide to distribution and transmission systems, there are very few mechanisms developed that capture these benefits. As mentioned earlier, Vermont has implemented a statewide efficiency utility that is supported through a systems benefit, or wires, charge. Alternatively, the RTO entity could provide incentives for demand-side programs based on the benefits to the bulk power system; however, the RTO may not be in a position to offer incentives for the distribution system benefits associated with DSM measures.