A Study of incentives to increase the use of DG in Colombia based on a System Dynamics modeling

This paper presents a study regarding the introduction of distributed generation (DG) within the Colombian power system by considering commercial, environmental and technical incentives. Environmental and commercial incentives were quantified by studying international precedents for implementing DG. Technical incentives were quantified by taking into consideration the remuneration received by generator agents providing automatic generation control (AGC), since this is the only ancillary service recognized in Colombia. A system dynamics model was built to evaluate the complete proposal. The study found that the current incentives proposed in Colombian regulation, such as tax breaks, are insufficient to cover total costs. Moreover, environmental incentives can be an efficient way of promoting renewable energy use in Colombia to achieve more generating capacity with lower pollution indices. Similarly, technical incentives, in conjunction with environmental incentives, can further improve DG growth in Colombia. The diffusion of DG thus becomes an additional tool for the operator of the interconnected system for controlling voltage and improving the quality and security of electrical power systems.