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CEIC-02-07

"The Regulatory Environment for Small Independent Micro-grid Companies."

M. Granger Morgan and Hisham Zerriffi.

Abstract:
New technology, including low cost solid-state electronic sensors, control systems and power electronics, as well as cost-effective distributed co-generation technology, holds the potential to open new commercial opportunities for micro-grids that would operate on a small-scale underneath traditional regulated distribution utilities. What is the regulatory environment that would be faced by non-utility parties that might wish to develop and run small micro-grids that contain distributed generation? In the spring of 2002, this question was explored with a survey administered to eight current and former state utility regulators who serve on the EPRI Advisory Board. The survey outlined several different business models under which a small micro-grid might be operated, and asked similar questions in each case. The results show that small commercial micro-grids with distributed generation in an unregulated competitive environment underneath traditional distribution systems, face large regulatory barriers in much of the U.S. today. Micro-grids operated as co-ops appear to face similar, though somewhat smaller, barriers.

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