Can Distributed Intermittent Renewable Generation Reduce Future Grid Investments? Evidence from France.

This article examines the impact of investments in five distributed electricity generation technologies—solar photovoltaic (PV), wind, small hydro, renewable thermal, and non-renewable thermal—on hourly net electricity withdrawals from over 2,000 distribution substations in France between 2005 and 2018. Using comprehensive datasets and a fixed-effects regression framework, the study finds that distributed wind and solar PV have little to no effect on reducing peak net withdrawals that drive future transmission and distribution (T&D) grid investments, while distributed hydroelectric and thermal units significantly reduce these peaks. Additionally, distributed wind and solar increase the variability of net withdrawals, potentially raising operational challenges and costs. The analysis suggests that substantial battery storage—far exceeding current deployment levels—would be necessary alongside distributed wind and solar to achieve meaningful reductions in peak grid demand. Consequently, the findings imply that policies favoring distributed wind and solar over utility-scale installations in France cannot be justified by anticipated savings in future grid infrastructure investments.