Integrated Cost-Benefit Assessment of Customer-Driven Distributed Generation

Abstract

Distributed generation (DG) has the potential to bring respectable benefits to electricity customers, distribution utilities and community in general. Among the customer benefits, the most important are the electricity bill reduction, reliability improvement, use of recovered heat, and qualifying for financial incentives. In this paper, an integrated cost-benefit methodology for assessment of customer-driven DG is presented. Target customers are the industrial and commercial end-users that are critically dependent on electricity supply, due to high consumption, high power peak demand or high electricity supply reliability requirements. Stochastic inputs are represented by the appropriate probability models and then the Monte Carlo simulation is employed for each investment alternative. The obtained probability distributions for the prospective profit are used to assess the risk, compare the alternatives and make decisions.