; or (B) incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized. (3) Distributed energy The term distributed energy means energy sources and systems that— (A) produce electric or thermal energy close to the point of use using renewable energy resources or waste thermal energy; (B) generate electricity using a combined heat and power system; (C) distribute electricity in microgrids; (D) store electric or thermal energy; or (E) distribute thermal energy or transfer thermal energy to building heating and cooling systems through a district energy system. (4) District energy system The term district energy system means a system that provides thermal energy to buildings and other energy consumers from one or more plants to individual buildings to provide space heating, air conditioning, domestic hot water, industrial process energy, and other end uses. (5) Islanding The term islanding means a distributed generator or energy storage device continuing to power a location in the absence of electric power from the primary source. (6) Loan The term loan has the meaning given the term direct loan in section 502 of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661a ). (7) Microgrid The term microgrid means an integrated energy system consisting of interconnected loads and distributed energy resources, including generators and energy storage devices, within clearly defined electrical boundaries that— (A) acts as a single controllable entity with respect to the grid; and (B) can connect and disconnect from the grid to operate in both grid-connected mode and island mode. (8) Renewable energy resource The term renewable energy resource includes— (A) biomass; (B) geothermal energy; (C) hydropower; (D) landfill gas; (E) municipal solid waste; (F) ocean (including tidal, wave, current, and thermal) energy; (G) organic waste; (H) photosynthetic processes; (I) photovoltaic energy; (J) solar energy