Increasing Power Reliability via Distributed Generation

Power Quality 2000 October 5, 2000

E.J. Honton ejh@or.rdcnet.com www.distributed-generation.com

business solutions for energy markets

Overview
1. Why Distributed Generation (DG) Now? 2. Compare Evolving DG Technologies 3. DG Regulatory Environment and Air Emissions 4. Reliability and Premium Power Applications 5. Future of DG Technologies and the Marketplace

Rising Demand for Electricity

E/GDP (index 1900=100)

140 130 120 110 100 90 80 70 60 50

40 30 20 10 0
Electricity Fraction (%)

80

90

00

10

20

30

40

50

60

70

80

90

18

18

19

19

19

19

19

19

19

19

19

19

E/GDP Ratio
Source: Electric Power Research Institute

Electricity Fraction

20

00

U.S. Peak Summer Electric Supply and Demand

800
Net Capacity

700

1000 MW

600 500 400 300

80 82 84 86

Surplus

Peak Load

90

88

94

96

92

19

19

19

19

19

19

19

19

98 19

Source: Energy Information Administration

19

20

00

California Manufacturing Output and Electric Use

400 44 43 42 41 40 350 300 250 200

19 92

19 90

19 91

Manufacturing Shipments
Source: Energy Information Administration

19 93

19 94

19 95

Electric Use

19 96

19 97

Electric Use (Billion KWh)

Shipments (Billion $)

Percent of Electricity Generated On-Site, 1996

SIC Industry 20 24 26 28 29 32 33 35 Food products Lumber products Paper products Chemicals Petroleum refining Rubber/plastic products Stone/concrete products Electronics/computers CA 7.1 29.4 27.1 28.7 66.8 4.3 7.1 0.1 U.S. 10.8 9.1 50.5 23.8 29.3 1.0 5.5 0.5

Source: RDC calculations based on Energy Information Administration and CEC data

Generation Capital Cost By Technology

5000
Installed Cost (98$/kW) Photovoltaic

4000 3000 2000 1000 0 1990 1995 2000 2005 2010

Fuel Cell Wind Coal Plant Gas Recip Engine Microturbine Small Gas Turbine Gas-Fired Combined Cycle

Source: Resource Dynamics Corporation

DG Technology Characteristics
Technology Size (MW) O&M ($/kWh) % Electric Efficiency Usable CHP Temp (Degrees F) % Overall Efficiency Availability Footprint (sq ft/kW) Diesel Engine 0.03 - 10 0.005 - 0.015 36-43 Diesel 180-190, Other IC 400-500 82 90-97% 0.25 Micro Turbine 0.03 -0.2 0.004-0.010 18-32 400-650 82 90-98% 0.25 Mini Turbine 0.5 - 10 0.003-0.008 21-40 500-1,100 85 90-98% 0.30 Fuel Cell 0.1 - 3 0.002-0.015 40-57 140-700 82 >95% 0.90

Source: Resource Dynamics Corporation

DG Commercial Status
Technology Commercial Availability Fuel Type Noise Diesel Engine Well established Diesel, propane, NG, oil Moderate to high (requires enclosure) Baseload Micro Turbine Evolving industry Propane, NG, distillate Moderate (enclosure supplied with unit) Peaking, intermediate, baseload Industrial, commercial, UDC Mini Turbine Well established Propane, NG, distillate Moderate (enclosure supplied with unit) Baseload, intermediate, peaking Industrial, UDC, commercial Fuel Cell Well established Hydrogen, propane Low (no enclosure required) Baseload

Typical Duty Cycles Likely Users Next 5 Years

Industrial, commercial, UDC, residential

Residential, commercial, industrial, UDC

Source: Resource Dynamics Corporation

DG Regulatory Environment
Interconnection standards

Grid use fees Net metering laws Stranded asset charges Power reliability and quality Emissions
Uncertainty slows introduction of DG

Air Emissions by Technology

(lb/kWh)
Generation Technology Distributed Generation Recip engines Miniturbines Microturbines Fuel cells Photovoltaic Wind turbines Central Station Gas steam New coal plant Geothermal Hydropower Nuclear CO .004-.006 .01-.05 .003-.050 .00001 0 0 .00009 0 0 0 PM10 .0002 .0001-.0002 .0001-.0002 0 0 0 .00001 .0001 0 0 0 NOX .0015-.037 .007 -.009 .0005-.0050 .000002 - .000060 0 0 .00003-.00010 .002 0 0 0 SOX .0003 .0003 0 0 0 0 .002-.004 0 0 0

Sources: CADER and Resource Dynamics Corporation based on manufacturers specifications

Benefits of DG
Improved reliability via disruption prevention

Wider user choice Potentially lower emissions May be developed more quickly than central station generators Potential to save energy producers and consumers money

Quality Risks With DG

Inconsistent interconnection standards make it harder to integrate DG with overall grid Increasing number of DG generators (and an aging stock) could lead to potential power quality degradation

Several Ways DG Can Improve Reliability

Industrial on-site generation - backup and baseload

Energy company purchase during peak periods Aggregating backup assets for sale to grid Utility provision of premium power UDC locate DG to circumvent T&D constraints Properly installed and operated, DG can increase both end-user and grid reliability

Traditional Premium Power Customers

! B u s in e s s e s w it h la r g e m is s io n - c r it ic a l c o m p u t e r s y s t e m s ( e . g . a ir lin e s , b a n k s , d e p o s it o r y in s t it u t io n s , b r o k e r s , in s u r a n c e c o m p a n ie s , c o m p u t e r p r o c e s s in g c e n te rs ) ! C o m m u n ic a t io n s s t a t io n s ! H o s p it a ls , n u r s in g h o m e s , o t h e r h e a lt h c a r e f a c ilit ie s ! L a r g e p h o t o f in is h in g la b o r a t o r ie s ! A ir p o r t s ! R a d io a n d t e le v is io n s t a t io n s ! D a ir y f a r m s ! F ir e a n d p o lic e s t a t io n s ! M ilit a r y b a s e s ! N a t u r a l g a s t r a n s m is s io n a n d d is t r ib u t io n ! P r is o n s ! W a t e r s u p p ly a n d s e w a g e t r e a t m e n t p la n t s ! A p a r t m e n t b u ild in g s ! H o t e ls ! O f f ic e b u ild in g s ! O t h e r c o m m e r c ia l/ r e t a il/ g o v e r n m e n t b u ild in g s ! S c h o o ls ! S k i re s o rts ! T h e a t e r s , s t a d iu m s , a n d o t h e r p u b lic g a t h e r in g p la c e s ! V a r io u s in d u s t r ia l f a c ilit ie s ( e . g . , S I C s 2 2 2 1 , 2262, 2281, 2621, 2631, 2 6 7 1 , 2 7 1 1 -2 7 6 1 , 2 8 1 0 3089)

Interruption Cost for Some Traditional Premium Power Users

Customer Segment Average Cost of 1 Hour Interruption $41,000 $72,000 $90,000 $2,000,000 $2,580,000 $6,480,000

Cellular Communication Telephone Ticket Sales Air Reservation System Semiconductor Manufacturer Credit Card Operation Brokerage Operation

Source: Resource Dynamics Corporation

Market for Traditional and NonTraditional Premium Power

Customer Segment Traditional Commercial Industrial Non-Traditional Commercial Industrial Total Potential Number of DG Units 220,000 25,000 380,000 5,000 630,000

Source: Resource Dynamics Corporation

Future of DG Technologies
Technology improves - efficiency, durability, and reliability Acceptable emission levels obtained through controlling technologies Lower costs through mass production Global market Overseas technology shakedown/improvement

Future of DG Marketplace
Diminishing DG regulatory uncertainty Increasing capacity and T&D shortages reduce grid reliability Major energy end-users apply DG for reliability and power quality Key investments by large players DG industry consolidation

For More Information

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