Quick answer
Distributed Generation (DG) is electricity made by small power sources close to where it is used, such as rooftop solar on a home, instead of by a large power plant far away on the transmission grid.
In tariffs and laws, “DG” is a label with rules attached. Calling your system a DG facility decides which rider you are billed under, what size you may build and how your surplus is paid.
Quick facts
The key facts about distributed generation, with sources:
Key takeaways
- DG is power made near where it is used. A rooftop solar system on your home is DG.
- Utilities use “DG” as a billing and paperwork label. The label picks your rider, size limit and export credit.
- Georgia Power, Santee Cooper and Virginia law each define the home DG customer in their own words and with their own limits.
- Under the federal PURPA rules, a home solar system can be a “qualifying facility”, but systems of 1 MW or less do not file with FERC 4.
- DG is the generating part of the wider group called distributed energy resources (DERs).
- Before you sign, ask which DG tariff you will be on and what it pays for surplus power.
What “distributed generation” means on paper
The plain meaning is simple. The power is made where it is used, not shipped in over long lines.
The US Energy Information Administration (EIA) describes a distributed generator as one “located close to the particular load that it is intended to serve” 1.
EIA adds that it is usually tied to a distribution or sub-transmission line of 138 kV or less.
For a homeowner, the paperwork meaning matters more. A utility does not treat “DG” as a loose phrase. It is the name of a program, a rider or an application. Georgia Power, for example, points installers to its “Distributed Generation Website” for test and construction rules 2.
Our page on the broader idea, the distributed energy resource (DER), covers batteries, EVs and demand response. This page stays on the narrower DG label: what it triggers in tariffs and laws, and how to read it.
How the DG label travels through your project
- Installer designs the system → names it a DG facility on the utility application
- Utility checks the size against its DG limit → picks the matching agreement
- Signed agreement → places you on a DG rider or export tariff
- Rider → sets how each exported kWh is netted and credited on your bill
How a utility decides your system is DG
Three tests come up again and again. First, the system sits on the customer’s side of the meter. Santee Cooper’s rider says the source must be “installed on the Customer’s side of the delivery point” 3. Georgia Power calls the same thing “behind-the-meter” 2.
Second, it runs in parallel with the grid. That means it stays connected and shares the load with utility power. Santee Cooper’s rider covers systems “interconnected with and operated in parallel with” its distribution system 3.
Third, it is sized to serve your own use. Santee Cooper caps a home system at the lesser of 20 kW or your estimated maximum monthly demand 3.
Georgia Power’s export program limits home systems to 10 kW or less 2. A system that fails the size test may need a different, larger-generator process.
Kinds of DG labels you may meet
| Label | Who uses it | What it decides |
|---|---|---|
| DG rider or DG tariff | Your utility, e.g. Santee Cooper Rider DG-25 3 | How exports are netted and credited; extra monthly charges |
| DG interconnection | Your utility’s technical rules | Application, testing, disconnect and meter setup |
| Customer-generator | State law, e.g. South Carolina Act 62 8 and Va. Code §56-594 10 | Who may net meter and up to what size |
| Qualifying facility (QF) | Federal PURPA rules 4 | The right to sell to the utility at avoided cost |
| Energy offset only | Georgia Power 2 | A DG system that is not paid for any surplus |
Example: one month on an hourly DG rider
An illustration using Santee Cooper’s Rider DG-25 rules 3. The kWh figures are round numbers we chose, not a real customer’s data. The credit rate is the rider’s own.
| Step | What happens | Result |
|---|---|---|
| Each hour | Solar sent out is subtracted from power taken in that same hour | Net use for the hour |
| Hours with net use above zero | Billed at the energy charge in your normal rate schedule | A charge |
| Hours with net use below zero (example: 300 kWh in a month) | 300 kWh × $0.0415 | $12.45 credit |
| Month-end credit test | Is the net credit $50 or more? | No, so it carries to next month |
| Fixed rider charge | Residential DG customer charge | $10.00 a month |
The point of the example is the DG label at work. The same panels on a monthly-netting tariff would produce a different bill. Our net billing page explains how separate import and export rates work in general.
Where you will see “DG” as a homeowner
- The interconnection application. Georgia Power residential customers apply through its PowerClerk tool with a one-line diagram, a site plan and spec sheets 2.
- The service agreement. Georgia Power offers separate agreements for its RNR export program and for “Energy Offset Only” systems 2.
- Your bill. On Santee Cooper, a line for the DG rider’s $10 residential customer charge appears each month 3.
- Inverter spec sheets. Georgia Power asks for proof of UL 1741 SB and IEEE 1547-2018 listing 2.
- Your installer’s quote. Look for the tariff name the savings figures assume. Our proposal analyzer helps you find it.
What DG status gives you, and what it costs you
What it gives you
- A legal right to connect and run in parallel with the grid, under written terms.
- A defined price for surplus power, set in a public tariff you can read.
- Federal backing for the right to sell surplus at avoided cost under PURPA 6.
- Clear technical rules your installer can design to.
What it limits
- Size caps. 10 kW for Georgia Power’s RNR program 2; 20 kW or your demand for Santee Cooper 3.
- Extra monthly charges on some riders, such as DG-25’s $10 residential charge 3.
- Export credits are usually well below the retail price.
- Utilities can revise riders. Santee Cooper adjusts its DG-25 credit at least once a year 3.
Limits of the DG label
The label tells you which rules apply. It does not tell you whether solar pays off. Two homes with the same DG rider can see very different savings. The gap comes from how much of their own solar each one uses at the moment it is made.
DG rules also lag behind equipment. Batteries, EV chargers and smart panels raise questions some older DG riders never answer.
Georgia Power, for instance, bars a home from its RNR program if a derated battery system has a maximum inverter capability above 10 kW 2. Ask how your utility treats a battery before you buy one.
Costs that come with being a DG customer
We do not quote a system price here. See our solar cost guide for that. The costs below are the ones the DG label itself brings.
Application fees. Georgia Power charges a one-time interconnection fee set in Section G of its Rules and Regulations 2. Santee Cooper charges an application fee under its Interconnection Standard 3.
Monthly rider charges. DG-25 adds $10.00 a month for residential customers on top of the normal customer charge 3. Check your own utility with our fixed charge lookup.
Upgrade costs. Both utilities can pass on the cost of grid upgrades your system needs. Santee Cooper’s rider says the customer pays “any costs associated with upgrades required” 3. Ask for this in writing before you sign.
How you become a DG customer
Georgia Power publishes a six-step order for home systems 2. Other utilities use a similar path.
- Read the utility’s interconnection summary and DG tariff. Your installer should read the technical policies too.
- Submit the application with a one-line diagram, site plan and equipment spec sheets.
- Wait for the utility’s review before buying equipment. Georgia Power advises customers not to buy equipment until the review is done 2.
- Sign the service and interconnection agreement for your chosen program.
- A licensed installer builds the system. The local building inspector checks it against the electrical code.
- The utility may witness-test the system, then programs the meter for two-way service and grants permission to operate.
Our interconnection timeline shows where each step tends to slow down.
Keeping your DG status in good order
- Keep a copy of your signed agreement and permission-to-operate letter. A buyer will ask for both.
- Tell the utility before you add panels or a battery. A change in size or equipment can mean a new review.
- Read your utility’s yearly rate notices. DG credits and charges can change.
- Check each bill for the right rider. A missing DG line can mean you are being billed on the wrong rate.
Warning signs and when to call a pro
- Someone switches on a system before the utility approves it. Georgia Power says it learns of unreported systems from reverse energy flow alerts and may disconnect service until terms are signed 2.
- A quote assumes a DG tariff your utility no longer offers to new customers.
- The system size on the quote is above your utility’s DG limit, with no plan for the larger-system process.
- Your bill shows no export credit months after permission to operate. Call the utility and your installer.
- Any heat, buzzing or burning smell at the inverter or panel. Call a licensed electrician.
Safety rule
Only a licensed installer or electrician connects a DG system, and only after utility approval. Power fed into a dead line can injure line workers.
The rules: PURPA qualifying facilities and state law
Federal (United States). The Public Utility Regulatory Policies Act (PURPA) of 1978 created the “qualifying facility”, or QF. FERC’s rules at 18 CFR Part 292 set the terms.
A solar small power producer can be a QF up to 80 MW 5. A facility of 1 MW or less is exempt from the FERC filing rules 4. That covers every home system.
A utility must buy power from a QF. The rate must be just and reasonable, and it need not exceed the utility’s avoided cost 6. State regulators must set standard rates for QFs of 100 kW or less 6. Our avoided cost page explains that number.
Georgia. The Georgia Public Service Commission set avoided-cost terms for Georgia Power in Docket Nos. 4822 and 16573, by vote on 2 March 2021 7. That order notes home solar customers are paid under RNR-Monthly Netting or RNR-Instantaneous Netting 7.
South Carolina. Act 62 of 2019 (SC Code Title 58 Ch. 40) sets the rules for customer-generators 8. Santee Cooper’s rates are set by its own board, not the Public Service Commission.
Virginia. Va. Code §56-594 lets eligible customer-generators on investor-owned utilities net meter up to 25 kW for a home 10.
DG vs DER, QF and net metering
| Term | What it names | How it differs from DG |
|---|---|---|
| Distributed generation (DG) | Small generation near the load | — |
| Distributed energy resource | DG plus storage, demand response, EVs | Wider: a battery is a DER but not DG |
| Qualifying facility (QF) | A PURPA status for small producers 4 | A federal legal status, up to 80 MW; DG is a size and location idea |
| Net metering | A billing method | Tells you how DG output is credited, not what DG is |
| Grid-tied solar | A system design | Most home DG is grid-tied; an off-grid system is not a DG customer of any utility |
Common misconceptions
- Myth “DG” and “net metering” mean the same thing.
- Reality DG is the system. Net metering is one way to credit it. Santee Cooper’s DG rider nets by the hour 3.
- Myth A DG system always earns money for surplus.
- Reality Georgia Power’s Energy Offset Only systems get no pay for surplus 2.
- Myth A home system must register with FERC as a QF.
- Reality Facilities of 1 MW or less are exempt from the filing rules 4.
- Myth DG limits are the same everywhere.
- Reality They differ: 10 kW in Georgia Power’s RNR program, 20 kW on Santee Cooper, 25 kW for Virginia IOU net metering.
DG in South Carolina, Georgia and Virginia
South Carolina: Santee Cooper bills home solar under Distributed Generation Rider DG-25, with hourly netting, a $0.0415/kWh credit and a $10 monthly residential charge 3.
Georgia: Georgia Power splits home DG into RNR (paid for surplus, 10 kW or less) and Energy Offset Only (not paid) 2.
Virginia: investor-owned utility customers may net meter up to 25 kW, and co-op members up to 20 kW 9.
When the DG label matters to you
- You are comparing quotes. Ask each installer which DG tariff their savings figure assumes, and get the tariff name in writing.
- You want a big system. Check the DG size cap first; it may set your size more than your roof does.
- You plan a battery. Ask how your utility’s DG rules treat it, since some programs cap inverter output.
- Your utility offers a “no export” option. Compare it with the paid export tariff using our net billing calculator.
- Next step: talk to installers who handle DG paperwork through Get Solar Options.
Questions about distributed generation
Is rooftop solar distributed generation?
Yes. Rooftop solar makes power right where your home uses it, which is the core idea of distributed generation. Utilities will usually label it a DG facility on your application and place you on a DG rider or export tariff. That label then sets your size limit and how surplus power is credited.
What does DG mean on my electric bill?
DG on a bill usually points to a distributed generation rider. It is the add-on rate that bills or credits your solar. On Santee Cooper, for example, the DG-25 rider adds a $10 monthly residential charge and credits net surplus at $0.0415 per kWh. The exact line names vary by utility.
What is the difference between DG and DER?
DG covers equipment that makes electricity near where it is used. DER is wider and also covers batteries, demand response, energy efficiency and electric vehicles. All DG counts as DER, but a home battery is DER without being DG. Our DER page covers the wider group.
Is my home solar system a PURPA qualifying facility?
It can be. A small solar power producer up to 80 MW can qualify under FERC rules. Systems of 1 MW or less are exempt from FERC’s filing rules, so homeowners never file anything. In practice your state tariff, not a PURPA contract, decides how you are paid.
What size can a home DG system be?
It depends on the utility and state. Georgia Power’s RNR export program takes home systems of 10 kW or less. Santee Cooper caps homes at the lesser of 20 kW or estimated maximum monthly demand. Virginia allows home net metering up to 25 kW on investor-owned utilities and 20 kW on co-ops.
Can I have a DG system that does not export?
Yes. Georgia Power calls this Energy Offset Only. The system serves your home, but it is not paid for any surplus, and the utility may require equipment to stop exports. It still needs an application and a signed agreement before it runs.
Do I need permission to connect a DG system?
Yes. Every utility requires an application and a signed agreement before a system runs in parallel with the grid. Georgia Power says it detects unreported systems through reverse energy flow alerts and may disconnect service until the terms are met.
Who sets DG rules in my state?
Usually the state utility commission for investor-owned utilities, and the board for public power or co-ops. In Georgia that is the Public Service Commission for Georgia Power. In South Carolina, Santee Cooper’s board sets its own rates. In Virginia, the State Corporation Commission applies Va. Code §56-594.
Can a DG tariff change after I sign up?
Yes. Utilities and regulators revise DG terms over time. Santee Cooper’s DG-25 says its energy credit is adjusted at least once a year. Some programs protect existing customers for a set period, so ask what happens to you if the tariff changes.
Sources
- US EIA, Glossary: “Distributed generator”, retrieved .
- Georgia Power, Behind-the-Meter Interconnection Summary for Residential Customers (rev. 15 Aug 2025), retrieved .
- Santee Cooper, Distributed Generation Rider DG-25, retrieved .
- 18 CFR §292.203, General requirements for qualification (LII), retrieved .
- 18 CFR §292.204, Criteria for qualifying small power production facilities (LII), retrieved .
- 18 CFR §292.304, Rates for purchases (LII), retrieved .
- Georgia Public Service Commission, Order in Docket Nos. 4822, 16573 and 19279 (Administrative Session 2 Mar 2021), retrieved .
- South Carolina Code Title 58 Ch. 40 (Act 62 of 2019, customer-generators), retrieved .
- Code of Virginia §56-594.01 (cooperative net energy metering), retrieved .
- Code of Virginia §56-594 (net energy metering), retrieved .
Expert review
Written by the HyreSolar Research team. Not yet reviewed by an outside expert. We say so rather than imply a review that has not happened; see our editorial policy.
How the numbers were checked: The EIA definition, Georgia Power program rules and process, Santee Cooper DG-25 terms, the PURPA QF rules (18 CFR 292.203, .204, .304) and the Georgia PSC order were read at the primary source on 8 Oct 2026.
South Carolina and Virginia facts come from the verified sc-local facts file and the verified Virginia input file. The hourly example uses round, labelled kWh inputs with the rider’s own credit rate.
Suggest a correction. We fix errors and say what changed.