TOWARDS EFFICIENT TARIFFS FOR DISTRIBUTION NETWORKS WITH DISTRIBUTED GENERATION Introduction

The amount of generation located in distribution networks has been increasing worldwide in recent years. According to WADE [1] the actual share of decentralized power in the world market is about 7 % and it is expected to continue growing. Distributed generation (DG) has many potential benefits including the reduction of line losses, deferral of investments in transmission and distribution networks and new central station facilities, providing additional reliability through the supply of back-up power and ancillary services, and in electricity markets, helping mitigate potential market power abuses. Additionally, for the case of on-site co-generation, overall thermal efficiencies of above 85 % can be achieved, in contrast to a centralized electricity sector with system thermal efficiencies of no more than 35 % [1].