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What's in the Cards for Distributed Resources?

The electric utility industry is in the midst of enormous changes in its market structure. Mile the generation sector moves towards a truly competitive market, the utilities' transmission and distribution functions are undergoing a transition to unbundled services and prices. These changes will affect the competitionbetween distributed and central-station generation technology. Although the ultimate market potential for distributed generation may be significant, the market will be fragmented and heterogeneous. Distributed generation will likely succeed in some small and only a few medium-sized market segments, each narrowly defined by the segment's unique operating requirements. The largestpotential market segment is for distributed generation technology with operational and economical characteristics suitable for peak shaving. Unbundling of utility costs and prices will make base-load and intermediate load equipment, such as fuel cells, significantly less attractive in the largest market segments unless capital costs fall substantially below $1,000 per kilowatt.

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Energy Specializations: Electricity – Distributed Generation; Electricity – Policy and Regulation

JEL Codes:
L94 - Electric Utilities
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Electric utilities, distributed generation, fuel cells, CCGT, restructuring

DOI: 10.5547/ISSN0195-6574-EJ-Vol18-NoSI-1

Published in Volume 18, Distributed Resources: Toward a New Paradigm of the Electricity Business of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.