A "use case" for distributed and local energy is defined as a combination of five elements:
U.S. Residential Third-Party Solar. Household-scale for residential use, rooftop solar PV system of typically 1-kW to 5-kW, no energy storage, providing power for self-consumption and export to grid. System owned by a third-party (i.e., SolarCity), which leases the system to the household for a monthly fee and provides net income to the household from sales to grid. Third-party finances large numbers of systems through single or multiple sources such as bank loans, equity investments, or other investment vehicles. Policy context is net metering (retail price parity) coupled with Investment Tax Credit (ITC).
U.S. Residential Household-Owned Solar. Household-scale for residential use, rooftop solar PV system of typically 1-kW to 5-kW, no energy storage, providing power for self-consumption and export to grid. System owned by household, financed by home mortgage or household assets. Policy context is net metering (retail price parity) coupled with Investment Tax Credit (ITC). Individual states may offer further incentive policies, such as California's "Small Generator Incentive Program" (SGIP).
U.S. Distribution Utility Solar. A distribution utility installs a solar PV array on the distribution system, typically 100-kW to 10-MW, as a means to defer transformer or line/equipment upgrades caused by demand growth in that part of the distribution feeder. The solar PV array gets included in the utility rate base.
Germany FIT Aggregated Renewables (Households). A household buys a solar panel using cash or bank loan, typically 3-10 kW, installs on the roof, and sells the power to an aggregator ("direct marketer"), which then sells the power into the power grid, aggregated with others. Larger versions of this occur when multiple households form a special-purpose enterprise or cooperative to invest in larger capacity. Policy is Feed-in-Tariff plus management fees paid to an aggregator, along with requirements for aggregator to bear forecasting risk.
Germany FIT Renewables by Households (Defunct). A household buys a solar panel using cash or bank loan, typically 3-10 kW, installs on the roof, and sells the power to the grid and collects the Feed-in-Tariff rate. This simple model prevailed for more than 15 years, before it became defunct in 2015.
Germany Multi-Family Residential Building Solar PV Micro-Utility by Third-Party. A third-party micro-utility installs solar on the roof of a multi-family residential building, typically 50-500 kW, and sells power to all residents of the building at a price lower than the retail price. Business model includes most revenue at near the retail rate, much higher than the FIT, with some power sold to the grid at the FIT rate. Policy is FIT and taxes/surcharges on purchased power.
China Industrial Rooftops by Plant Owner. An industrial plant purchases rooftop solar PV, typical sizes 1-50 MW, and consumes close to 100% of the power in its facility. Policy is China national and provincial subisidies for self-consumed solar power, plus much lower prices paid by State Grid for power exported to the grid.
China Industrial Rooftops by Third-Party. Similar to previous case but a third-party ESCO installs and owns the solar panels, collects the subsidies, and sells the power to the industrial plant owner at a price lower than retail price (i.e., 90% of retail price).
China Offsite Captive Generation by Third-Party. A third-party developer builds a generating plant nearby to a customer, and sells power to that customer directly, without going onto the grid. Typically the generating plant is a hybrid of wind, solar, and battery storage, of sizes ranging from 1-100 MW. The customer pays a price less than the ordinary retail price prevailing on the grid. Contract terms are typically short-term, 1-5 years.
Island or Village Third-Party Micro-Grid or Mini-Grid. A micro-grid or mini-grid provides power to multiple consumers, sometimes with service limitations (total kWh over time period, peak KW, time-of-use levels, etc.) or service-level sharing rules. The micro-grid or mini-grid can contain solar, wind, and/or biomass power, along with battery storage and/or diesel generators. A third-party finances, owns, and operates the micro-grid or mini-grid, and sells the power according to established (or regulated) tariffs. Finance may come from debt and equity raised by third-party, from balance-sheet finance, and from project finance, among many others. Policy context may or may not regulate the grid, and may or may not provide monopoly concessions to the third-party.
Rural Solar Home System, Owned on Credit. A rural household purchases a solar home system on credit, typically 50-200 watts integrated with a 0.5-5 kWh battery, and the system provides enough power for lights, TV and other small appliances, and mobile phone charging. The credit is extended by the seller of the system, or by a micro-credit program from a micro-lender or bank. The credit may be tied to social conditions within a community.
Rural Solar Home System, Leased. Same as above, except the system is leased from the equipment provider, which finances many systems through business loans, or from its balance sheet in the case of a large utility company. Policy context may be government granting monopoly concessions to utility company to serve households in a given rural area, in which case costs are regulated or other incentives may apply.