Dyson College of Arts and Sciences

41 V. The Public Interest in DER as a Resiliency Tool DER, including electricity and thermal energy, generated at or near a building, and interconnected with the electric and gas utility grid, can offer a significantly higher level of energy reliability then reliance on the grid alone. This reliability benefit always requires some additional investment, and in some instances, depending upon the existing energy assets onsite, may result in markedly higher project costs. However, where sites can capture "free heat" via a high efficiency CHP system, resiliency may be acquired at a total cost of energy less than the site's current energy bills. The societal benefits of resiliency can justify public investment at high value locations. Furthermore, as described in our final section on the "new utility paradigm", properly valuing resiliency, as well as other grid benefits of DER, can result in new revenue streams that make these investments economic. During grid outages, the capability to continue to serve the energy needs at nursing homes, public housing, large multi-family buildings is an important social benefit keeping people "safe-in-place". Increasing the reliability of power supply to hospitals, and extending that enhanced reliability to a far broader set of hospital functions and activities, has a significant public benefit. Reducing the risk of failure by adding high reliability, high capacity factor onsite power generation sources to supply local and state emergency operation centers and refuge centers is essential to effective coordination and deployment of resources during the response and recovery phases of emergency events. When a business evaluates the benefits and the costs of investing in a DER system that can operate through outages of extended duration, they may not put a value on the "resiliency benefit" that's nearly commensurate with the benefits to the public. There may be a significant divergence between the private benefits and societal benefits. This has implications for creating significant missed opportunities to capitalize on DER's potential to make communities more resilient. When DER at a public building, hospital, or campus makes that site, and perhaps makes neighboring sites more resilient, there are "spillover benefits" to society at large. There are costs to making buildings, campuses, and in the case of microgrids, whole neighborhoods, more resilient. However, there is no commensurate payment for these spillover or societal benefits. Where the welfare of others is improved by a private investment, a good case can be made for public incentives that insure that the right level of investment will be made. This concept is best described by the following series of charts presented by Pace to the Council of State Governments, Eastern Regional Conference. 19 Table 1 depicts that DER/Microgrids create certain benefits for three beneficiaries: microgrid owner/ users, the utility transmission and distribution grid, and societal at large. In this instance non-monetized benefits.

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