Distribution generation really mean the Generation at Distribution Level--- your idea may be good for some condition but all the time it may not give good results challenges may be there to maintain at Distribution Substation level we need to verify the practical possibilities and rating DGs , generation transformer rating, protection scheme, monitoring etc.,
As it helps in reducing active power loss to a very large extent. but sometimes you face problems in setting the penetration level of DGs you are using.
If the connected load is less and the penetration level of the DG is high then your losses will increase this is the biggest problem with On-Grid DGs. some control mechanism is needed which can control penetration level of DGs to reduce losses.
In Electric Distribution centers the electricity is transmitted through higher voltages to load centers to avoid line losses. Generally the DG sets are for domestic use or at the most for captive power,but the voltage being that of end user level. (Not high voltage). If a DG is to be installed at sub stations it has to generate at Extra high voltages and rating has to be quite high, which makes the DG nonviable, both commercially and practically.
DG integration in distribution system is a common practice. It helps in reducing power loss, improving voltage profile and therefore, enhances the system loadability limits.
In present market, mostly all Electrical Power Systems are deregulated. This means anyone can enter in this market by just following the market rules. If I have a DG and I want to supply power to the grid, it will depend on the location of my DG because before installation I may not have any contract with the Grid authorities.
If the DG belongs to Grid authorities and before installation they decide to install it near distribution substation, it will work as substitute of supply being provided to distribution substation. This will also help in getting full control by the authorities and less labour, either skilled or unskilled is required. However, when it is near the load at any point of distribution network, it will be better technically. But, will result in more requirement of skilled and unskilled labour.
The adequate design and operation of distribution system, as the intermediate network between the end users and transmission system, will lead to a safe and reliable service to the customers in one hand, and appropriate design and operation of the transmission and generation systems in the other hand. Therefore, the distribution companies do their best to design their networks as optimal as more. In this regard, the distribution network expansion planning (DNEP) is performed by the utilities to optimally determine the upgrading and installation capacity of distribution equipment to adequately meet the load demand growth with the minimum
installation and operation costs, subjected to the technical and economic constraints.