A Review on Distributed Energy Resources and Cost Analysis 1

A Review on Distributed Energy Resources and

Waleed Bin Qasim

Cost Analysis
(December 2019)


Abstract—According to International Energy Outlook 2018

report energy consumption will increase from 600 quadrillion
Btu to 739 quadrillion Btu. Major consumption of energy is by
Asian region. Another concern is that majority of the energy is
produced by petroleum, coal and natural gas which is quite
harmful for our earth. This paper shows that renewable and
distributed energy resources must be played into role to
overcome the alarming statistics of IEC 2018.

I. INTRODUCTION

T he energy concern in the world in an emerging issue.

Countries are looking for alternates and sources for their
energy production. A single large power plant supplying
energy to all regions is not now a good idea because as
population increases the demand for energy increases and re
shuffling and modifying such large power projects becomes a
costly task. Transmission also needs to be upgraded as the
load increases. World now is not only looking for an
economical energy solution but considering safety and health
of living organisms is looking for green and clean solution.
This paper is going to discuss the distributed energy resources
which include the renewable energy. A comprehensive cost
analysis is being done to see each technology. Figure 1: DER

A. Distributed Generation
Distributed Energy resources refer to portable power
equipment that are connected directly to the utility side
instead of the main grid. Distributed energy resources can
be broadly categorized as energy storage (battery storage)
as well as units which supply power instantly such as PV
cells. Figure 1 shows the complete spectrum of DERs.

A1. Fuel Cells

The primary purpose of fuel cell is to convert the stored
chemical energy into electrical energy. Working of fuel
cell can be defined by a chemical equation as stated below

H2 + 0.5 O2 --> H2O

Fuel cell consists of fuel purifier; that improves the

concentration of hydrogen and purifies the fuel, fuel cell
and DC to AC convertor are present to ensure that the DC
current can be used in a suitable AC form. Fuel Cell
components can be seen in Figure 2

Figure 2: Fuel
Figure 1: DER Cell
 A Review on Distributed Energy Resources and Cost Analysis
A2. Photo Voltaic Cells
The word Photo is derived from photo meaning light and the
term voltaic referring to the electrical energy. The conversion
of light energy to electrical energy is called photovoltaic effect
and its cell is called photo voltaic cell. It consists of PV cell
modules which are connected in series and parallel according
to the requirement. Figure 3 shows the schematic of Photo
Voltaic Cell.
A3. Wind Energy Conversion
Wind turbines utilize the wind velocity to make the wind
blades to move. As the blades moves the turbine moves and
electricity is being generated .Although this type of
generation is intermittent but suitable power control
2
conversions can improve the efficiency of wind
turbine.Figure.4 shows the schematic of Wind turbine
Figure 4: Wind Turbine
B. Energy Storage Technology
Technology which involves the storage of energy and
overcomes theFigure 3: intermittent
issue of PV Cell energy as observed in
solar or wind energy. So this technology ensures smooth,
stable and reliable output. One of the main storage
technologies is battery energy storage.
B1. Battery Energy Storage
Battery energy storage is utilized mainly as a backup option.
The battery energy is also coupled with chargers and inverters
to supply AC supply in case the main AC supply discontinues.
Batteries used are either flooded or gel and need regular
maintenance for long term usage.
II.SMART GRID TECHNOLOGY
Technology that makes the grid “smart” is called a Smart
Grid technology. Now let’s define the word smart. “Smart” In
this perspective is the joint venture of information technology,
sensors, smart meters and the usual grid. This makes the
grid bi directional and cost of energy decreases through this
smart incorporation [1].Figure 5 shows the model of a smart
grid.
Now the question arises why do we need smart grid now?
Power demand is increasing as time passes by. We all need
energy and not just energy clean and green energy. The
conventional grid is now incapable to bear such increasing
demands. As a consequence countries are facing blackouts or
load shedding [2]. Smart grid automates and improves the
energy increasing demand issues the best option
 A Review on Distributed Energy Resources and Cost Analysis
Figure 5: Smart Grid Technology
III. ECONOMICS OF DISTRIBUTED ENERGY
RESOURCES
A. Traditional Cost of Calculation
Cost involved in setting up and operating an electric
resource requires costs of two types’ variable and fixed cost.
Fixed cost refers to cost which does not change as a result
of quantity of electricity consumed [7]. Variable cost on the
other hand refers to those cost that changes with output. For
example the initial cost for an energy project can be
regarded as fixed cost and fuel cost which varies can be
regarded as variable cost
A1. Leveled Cost of Electricity
Leveled cost of electricity is an indicator to measure
performance of any electricity unit. It refers to the initial
cost to build and operate unit and the cost of generation
over the whole lifetime. [3].
3
A2. Marginal Cost
Marginal Cost can be defined as the change when electricity
sold is increased by one unit. Marginal cost contains both
variable and fixed cost. For increased efficiency variable cost
is tried to keep to a minimum value.
B.Cost of Distributed versus Centralized Generation
Figure 6 and 7 shows distributed and centralized generations
layout respectively. Considering a case study of UK we have
both potential of distributed generation and centralized
generation. Though the transmission network is laid and
offers benefit to conventional generation it seems an issue to
implement DG into such a system. Considering a DG close to
the utility which can feed a single home can largely reduce
the transmission cost. According to an estimate 6.5% of the
electricity is wasted in transmission and distribution.
Although the cost of electricity from conventional grid is less
than DG but while making such calculations we also need to
consider the extra cost of transmission, distribution, high
initial cost to build up a plant and its maintenance cost. Now
moving onto the low emission and low carbon side we can see
that DG which includes PV, Solar and Biomass reduces the
emission of carbon and are environment friendly
.Governments in Europe give benefit to operators producing
low carbon and penalizes operators producing high carbon
energy. So this makes DG a more favorable and economical
energy source for customers and the society [5].
Figure 6: Distributed Generation
Figure 7: Centralized Generation
 A Review on Distributed Energy Resources and Cost Analysis 4

C. Assumption for cost calculation of DER

Many aspects of DER can be analyzed and cost

calculations can be performed .We will only consider a
review of Upward and Downward flexibility,
Comparison between technologies and Cost of Charging
and discharging.

C1. Comparison between Technologies

A 10KW power was chosen for all technologies. Power

of 10KW provides energy to about 10 households.
For example battery technology required both power
(Kw) and energy (KWH) to determine an accurate value.
For Compressed Air Energy Storage needs a larger
cylinder for increasing the power demand.

C2. Cost of Charging and Discharging

Technology which can charge as well as discharge
(battery technology). So flexibility taken is given back to
the device. So basically cost doubles charging a unit and
discharging it. Calculations for such devices are not
included as for conventional units.

C3. Upward and Downward Flexibility

Upward flexibility refers to providing power to the system.
Downward flexibility refers to extracting power from the Figure 8: Results
system (storage mode).Example of Upward flexibility is
storage units and for Downward flexibility is PV.

C4.Results
Results are compiled in the form of a pie chart in Figure 8for
distributed energy resources used. Each technology was used
for duration of 12 hours and the cost percentage is evaluated.
As seen the most costly among them was the micro turbine
technology. And the least costly was EV and Flywheel.
IV. CONCLUSION
In this paper we discussed different Distributed Energy
Resources and then finally made a cost analysis of them. Our
findings show that world must now shift towards renewable,
clean and green energy. Nonrenewable energies need to be
minimized as they are going to diminish at one point and are
not good for our mother land earth. We also found that after
 A Review on Distributed Energy Resources and Cost Analysis 5

economic survey micro turbine was the most expensive while

Electric Vehicles and Flywheels were the least expensive
among the DER.

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[6] https://www.eia.gov/pressroom

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Energy Resources: Overview and Research Opportunities - Muzhikyan,
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