| The micro-grid architecture has emerged as a concept that holds potential for improving the value of distributed energy resources (DERs). This architecture builds on conventional DER applications by aggregating and interconnecting small groups of customers onto a local grid. The advantages of this kind of aggregation include: better resource utilization; increased redundancy and system robustness; economies of scale; and increased customer choice and flexibility.;The author presents results from an engineering-economic model of micro-grids systems. Micro-grids are shown to be good investments in some cases with current utility rate structures, and this value increases for customers that value highly-reliable power. The value of a micro-grid is shown to depend strongly on utility electric and natural gas rates, as well as the mix of customers on the system; the value is only modestly dependent on climate and system scale. Micro-grids are clearly advantageous compared to traditional distributed generation applications.;The regulatory environment for micro-grids is examined using results from a survey of state regulatory officials. This survey shows that although micro-grids are generally considered legal, a lack of coherent policy on the matter makes conditions very uncertain, subject in many cases to interpretations or legal action by utilities. Recommendations for regulatory change are provided.;The problem of effective utility tariff design for customer-generators is examined, and a framework for assessing the benefits and costs associated with DERs is provided. Model results are presented that demonstrate how well different tariff components achieve the goals of a utility tariff, and the implications of these results are discussed. Standby rates are shown to increase customer peak period consumption by customer-generators, and represent a poor choice for cost-recovery in most cases. Increased demand charges are shown to be the best option for cost-recovery by utilities in most cases.;Finally, this thesis examines the claim that a market based on DERs will have higher rates of innovation and new technology adoption than conventional, centralized supply. The characteristics that distinguish DERs---small size, dispersed resources, and modular design---are described, and relevant literature is discussed, providing theoretical support for the claim. |
