Combined Heat and Power (CHP) can be much more efficient than central power generation because the waste heat is put to good use. (Thank you to the California Energy Commission for this animation)
Navigate this Report
Back to Supply Shifting Index
3. Business Case
6. Success Factors
7. Next Steps
|Source: National Energy Technology Laboratory -Modern Grid|
- When the United States was being electrified, regulations promoted construction of centralized plants managed by regional utilities. These regulations discouraged decentralized power generation, such as cogeneration. They even went so far as to make it illegal for non-utilities to sell power.
- By 1978, Congress recognized that efficiency at central power plants had stagnated and sought to encourage improved efficiency with the Public Utility Regulatory Policies Act (PURPA), which encouraged utilities to buy power from other energy producers.
- Technological improvements in gas turbines have changed the economics of power production. It is no longer necessary to build a 1,000- megawatt generating plant to exploit economies of scale. Combined-cycle gas turbines reach maximum efficiency at 400 megawatts, while aero-derivative gas turbines can be efficient at scales as small as 10 megawatts.
- Distributed generation can augment or even replace the large central power generators of today’s electricity grid. The portfolio of distributed generation technologies includes microtubines, solar photovoltaics and various types of fuel cells in addition to today’s mainstay diesel engines. These devices put generation closer to the end user, and they are capable of improving power reliability and security for entire communities or individual residences and businesses.
- Distributed or Community Storage provides capability to quickly ramp up MW capacity of storage and has the ability to provide peak shaving capabilities, deferral, and improving reliability
- Grid-connected distributed generation and storage increased from 5,423 MW in 2004 to 12,702 MW in 2007. While grid-connected distributed generation increased 134 percent over two years, it still only represented 1.4 percent of grid capacity, 1.6 percent of summer peak and 2.0 percent of winter capacity. DOE growth projections indicate a doubling of distributed generation capacity in five years.
|Distributed Smart Grid Control will enable greater penetration of efficient DER|
- AB-1613 - California Waste Heat and Carbon Emissions Reduction Act - Designed to encourage the development of new combined heat and power (CHP) systems in California with a generating capacity of not more than 20 megawatts.
The Act directs the California Public Utilities Commission (CPUC), publicly owned electric utilities, and the California Energy Commission (CEC) to establish policies and procedures for the purchase of electricity from eligible CHP systems. It also directs the Air Resources Board (ARB) to report on the reduction in emissions of greenhouse gases resulting from the increase of new electricity generation from CHP.
The Act specifically directs the CEC to adopt by January 1, 2010, guidelines establishing technical criteria for eligibility of CHP systems for programs to be developed by the CPUC and publicly owned utilities. The CPUC is also directed to establish (1) a standard tariff for the sale of electricity to electricity corporations for delivery to the electrical grid and (2) a "pay as you save" pilot program requiring electricity corporations to finance the installation of qualifying CHP systems by nonprofit and government entities.
Under the guidelines, A CHP System shall meet an oxides of nitrogen (NOx) emission standard of 0.07 pounds of NOx per megawatt hour (0.07 lb NOx/MWh) of electrical energy produced, crediting
mechanical energy produced at the rate of 1 MWh per 1,341 horsepower-hour (hp-hr).
- Absorption Chiller - A refrigerator that uses a heat source to provide the energy needed to drive the cooling system. Absorption chillers are a popular alternative to regular compressor refrigerators where surplus heat is available (e.g. combined heat and power (CHP) or industrial processes)
- Aggregated Distributed Applications can be “loads as resources” to help with renewable integration. Smart Grid is key to the aggregation of devices.
- CHP – Combined Heat and Power Cogeneration - (Also known as Cogeneration) The use of a heat engine or a power station to simultaneously generate both electricity and useful heat. CHP is often co-located at nearby industrial sites. The raw materials and industrial sectors together account for a little more than two-thirds of US capacity, while the commercial and institutional sectors account for a little under one-third. Conventional power plants emit the heat created as a by-product of electricity generation into the environment through cooling towers, flue gas, or by other means. CHP captures the by-product heat for domestic or industrial heating purposes, either very close to the plant, or—especially in Scandinavia and eastern Europe—as hot water for district heating with temperatures ranging from approximately 80 to 130 °C.
- Combined Cycle - An assembly of heat engines that work in tandem off the same source of heat, converting it into mechanical energy, which in turn usually drives electrical generators. The principle is that the exhaust of one heat engine is used as the heat source for another, thus extracting more useful energy from the heat, increasing the system's overall efficiency. This works because heat engines are only able to use a portion of the energy their fuel generates (usually less than 50%).
The remaining heat (e.g., hot exhaust fumes) from combustion is generally wasted. Combining two or more thermodynamic cycles results in improved overall efficiency, reducing fuel costs. In stationary power plants, a successful, common combination is the Brayton cycle (in the form of a turbine burning natural gas or synthesis gas from coal) and the Rankine cycle (in the form of a steam power plant).
- DG - Distributed Generation - Connects generation directly to the distribution system. The power provided by this generation ranges from 5 to 500 MVA, and includes wind turbines, solar arrays, solar thermal, small hydroelectric plants, fuel cells, and microturbines.
- DER - Distributed Energy Resources - Small-scale energy generation/storage sources capable of providing temporary changes in electricity supply. Expands on DG to include technologies such as battery energy storage, and superconducting magnetic energy storage
- Export - Aggregate generation at a Producer’s facility exceeds the aggregate load, and the net power flows to the distribution system. Export can be intended or unintentional.
- Fuel Cell (See my blog article Fuel Cells) - Similar to a battery in that an electro-chemical reaction is used to create electric current. The major difference between fuel cells and batteries is that batteries carry a limited supply of fuel internally as an electrolytic solution and solid materials. Fuel cells have similar reactions; however, the reactants are gases (hydrogen and oxygen) that are combined in a catalytic process. Since the gas reactants can be fed into the fuel cell and constantly replenished, the unit will never run down like a battery. Phosphoric-acid fuel cells (PAFC) comprise the largest segment of existing CHP products worldwide and can provide combined efficiencies close to 90% (35-50% electric + remainder as thermal)
- HHV - Higher Heating Value - Determined by bringing all the products of combustion back to the original pre-combustion temperature, and in particular condensing any vapor produced. Such measurements often use a temperature of 25°C. The higher heating value takes into account the latent heat of vaporization of water in the combustion products, and is useful in calculating heating values for fuels where condensation of the reaction products is practical (e.g., in a gas-fired boiler used for space heat). In other words, HHV assumes all the water component is in liquid state at the end of combustion (in product of combustion.
- IEEE 1547 - Institute of Electrical and Electronics Engineers Standard for Interconnecting Distributed Resources with Electric Power Systems) is a standard of the Institute of Electrical and Electronics Engineers meant to provide a set of criteria and requirements for the interconnection of distributed generation resources into the power grid
|Distributed Generation Alternatives|
- Developed with low penetration in mind
- Does not allow some functions needed for high penetration
- Without communication connectedness (i.e. manageability),utilities don’t want DER to try to do anything “smart” or grid supportive, due to concerns that the behavior will not work as intended, even potentially working against the utility. Existing IEEE1547 rules reflect this do nothing approach
- Volt/VAR control
- Low Voltage Ride Through
– Size and capabilities of the DER system itself
– Distribution system configuration and characteristics
– Location of the DER PCC with respect to the circuit’s configuration
– Sizes and capabilities of neighboring DER systems
– Requirements of the transmission system for support from the distribution systems
– The regulatory and financial environment of the utility, including utility economics, energy infrastructure and legacy systems.
The oxygen atom formed in the second reaction then goes on to form ozone; this series of reactions is the main source of tropospheric ozone (smog). CH3O2 is just one example of many partly oxidized organic molecules that can react with NO to form NO2. These reactions are rather fast so NO and NO2 cycle, but the sum of their concentration ([NO] + [NO2]) tends to remain fairly constant. Because of this cycling, it is convenient to think of the two chemicals as a group; hence the term NOx.
In addition to acting as a main precursor for tropospheric ozone , NOx is also harmful to human health in its own right.
- Biogas-fueled combined heat and power (CHP) generation
- Natural gas-fueled CHP generation in certain GHG reducing applications
- Certain gas-displacing solar thermal technologies such as solar heating and cooling which are not included in the California Solar Initiative (CSI) because they displace gas not electricity
- Complementary peak load reduction technologies such as energy storage
VPPs rely upon software systems to remotely and automatically dispatch and optimize generation or demand-side or storage resources in a single, secure web-connected system. In the U.S., VPPs not only deal with the supply side, but also help manage demand and ensure reliability of grid functions through demand response (DR) and other load shifting approaches, in real time.
VPPs can be viewed as a manifestation of transactive energy, whereby new technologies such as demand response (DR), solar PV systems, advanced batteries, and EVs are transforming formerly passive consumers into active prosumers. The primary goal of a VPP is to achieve the greatest possible profit for asset owners while maintaining the proper balance of the electricity grid—at the lowest possible economic and environmental cost. Without any large-scale fundamental infrastructure upgrades, VPPs can stretch supplies from existing generators and utility demand reduction programs (and other forms of DER). According to Navigant Research, global VPP implementation spending (excluding energy storage) is expected to reach $2.1 billion annually by 2025.
3. Business Case
- Generating power on-site, rather than centrally, eliminates the cost, complexity, interdependencies, and inefficiencies associated with energy transmission and distribution. Distributed energy is evolving in a manner like distributed PC and laptop computing, cars for transportation, and smart phones. As distributed Internet data and telephony have found a place in the market, so also will distributed energy generation become widespread. Distributed power shifts energy generation control to the consumer much to the consternation of the existing utility companies.
- Integrating Distributed Energy Resources into the grid requires instantaneous communications among all critical devices to allow continuous monitoring, control, and correction. A Smart Grid is a key enabler in integrating distributed generation Managing DER’s may be the Internet history’s killer lesson for energy.
|Source: National Energy Laboratory - Modern Grid Systems View: Appendix 5|
- Cost Impact - According to a June 2009 study by the California PUC, a high DG scenario would entail a 14.6% cost premium compared to the 20% RPS Reference Case. This cost is substantially higher than the 33% RPS Reference Case and alternative 33% RPS cases since this case relies on distributed generation, primarily solar PV, to fill the 33% RPS resource needs. However, under the Solar PV Cost Reduction sensitivity, the total costs of the High DG Case are very similar to the costs of the 33% RPS Reference Case. The solar PV industry is predicting dramatic cost reductions in the coming years even though solar PV is currently the most expensive renewable technology studied in this report.
- Lack of Interconnection Standards - In the United States, common standards for interconnecting DER devices into the utility system do not presently exist. Grid interface and interconnection rules are complex. The lack of common standards is a barrier to the wide acceptance and installation of DER technologies.
In February 2008, the EPA did a study of the 50 states and the District of Columbia, assessing their standards for interconnection. The EPA’s study based its criteria for favorability on whether or not standard forms were in place, time frames for application approval, insurance requirements, distributed resource sizes allowable, and interconnection study fees. With these factors considered, only 15 states were classified as having “favorable” interconnection standards, with 27 states either being “favorable” or “neutral.” The fact that there are five states with unfavorable policies towards distributed generation is also cause for concern, although it is worth noting that that these states are all in the southeast region of the United States perhaps indicating a regional issue.
- Interconnection Bureaucracy - Interconnection with California IOU's can take two years or more.
In May 2012, The California Independent System Operator Corporation (ISO) Board of Governors voted to streamline the process for interconnecting distributed generation. The ISO will annually publish information showing quantities of potential distributed generation at various grid locations. The assessment will be used by load-serving entities, resource developers and local regulatory authorities in negotiating renewable energy contracts and developing projects.
The new approach will align ISO policy with the state's goal to accelerate distributed generation -- smaller scale resources connected to utility distribution systems and located close to customers. The benefit of the new interconnection process is that distributed generation will obtain deliverability status in about half the time as the current process. Achieving "deliverability" qualifies projects as eligible for being counted toward the resource adequacy requirements of utilities and other load serving entities. Currently, it can take about two years to obtain deliverability status at the wholesale level because of the in-depth engineering analysis and customer consultation performed as part of the interconnection process.
The Board approval will enable CalISO to file tariff changes with the Federal Energy Regulatory Commission (FERC) so that the streamlined process can be integrated into the its 2012/2013 transmission planning cycle. With a timely FERC approval, CalISO will perform the first distributed generation deliverability assessment in November, publish the first results in February 2013, and conduct the first allocation of available deliverability shortly afterward.
- DG Developers Pay All Upgrade Costs - Developers are responsible for 100 percent of the cost of distribution grid upgrades when they interconnect projects to the distribution grid. This is different from how it works on the transmission grid. On the transmission grid the ratepayer is going to pay 100 percent of the upgrade cost of the transmission grid. And they’re going to pay zero percent of the upgrade cost for the distribution grid. It’s just the way FERC has ruled on these things. So the ratepayer is getting a free upgrade to the distribution grid when developers are interconnecting to the distribution grid and paying for network upgrades.
- Transparency of Interconnection Costs - Bbefore you start that process of getting site controls, which could cost hundreds o thousands of dollars, you need to know whether that location has any kind of potential to become a viable project. In order to have transparency you need to know things like what’s the capacity. What’s the capacity of the substation that this location is connected to? What about the actual circuit and the line segments? What are the back feed potentials and the cross feed possibilities at that point? Keeping minimum loads of all of the items above and the size of the location in the queue.
Not only do you have to have a snapshot of what it is today but you have to have a snapshot of everybody that’s ahead of you that’s going to be interconnecting wholesale DG projects anywhere near you on that circuit or that substation. You have to be aware of that because that’s going to impact the experience you’re going to actually have at the end of the day when you finally get it built. You need to be able to predict what those upgrade requirements are going to be and determine what the costs are going to be.
- Locational Benefits Not Included in DG Rates - In California, Market price reference (MPR) is the standard for what you’re allowed to sell renewable energy to the utilities. The market price reference is determined at the point of interconnection based on a 500 megawatts gas combined cycled power plant. This means that that interconnection reference point is a out in the middle of nowhere interconnected to the transmission grid. When the locational benefits of interconnecting your energy to the distribution grid instead of the transmission grid are normalized, you get a 25 percent value add for the energy interconnected to the distribution grid. First of all you’re not paying transmission access charges which are at least 1.5 cent per kilowatt hour,the standard rate that has to get paid. For every kilowatt hour that drops down from transmission to distribution it’s 1.5 cents, that’s about 15 percent of the baseline market price. Then there’s a line loss and a congestion loss for every kilowatt hour that comes off the transmission. And on average that’s about a 10 percent line loss, line slash congestion loss. So there’s a 25 percent value boost to wholesale distributed generation in California that is not valued, that’s not compensated in the market price reference.
- Markets - Limited export opportunities for excess power|
- Limited PURPA Enforcement
- PURPA undermined by EPAct 2005
- No state CHP policy to complement PURPA
- No real “market” alternatives to utility purchases for CHP products
- No “carrot” or “stick” to encourage utility purchases
- Smart Distribution - All new and upgraded distribution substations should be smart grid compatible, and utilities should be required to conduct cost/benefit analysis if
proposing not to incorporate smart grid features, like 100% bidirectional capability, in all upgrades/new builds. This is required utility practice to avoid distribution substations creating an artificial bottleneck to DG renewable energy development
- Simplified Interconnection – Streamlined complicated regulations and the processes involving interconnection, standardization, certification, environmental review, and permits.
- Improved Communication Technology - Technologies need to be developed to facilitate the expanded use and reduce the cost of DER, including interconnection, control, communication, and other system DER hardware.
- Smart Sensors and Controls - Integrating DER into the system requires advances in the research and commercialization of smart sensors, protective relays and control devices. Lower cost sensors and controls will reduce DER installation costs, ensure stable operation of interconnected DER units and safeguard line crews and the public during maintenance and restoration.
- Reformed Distribution Grid Interconnection Procedures - Both FERC and State PUC's need to hold the utilities responsible for making sure that they are doing their interconnections on a timely and effective and transparent process. We need to have audits because right now the utilities are in charge of the interconnection processes. You have to go to the utility to get your contract and you have to go to the utility to do your interconnection. And there’s nobody auditing them on the interconnection.
- Evaluation of Grid Impacts - The limits of penetration for wide-scale grid-connected DER interact with one another when connected to common distribution feeders of different designs, both radial and networked, and their effect on the dispatchability of resources and the integrity of the distribution and transmission system need to be determined.
- Applied New Technology- Including micro-grids, DER aggregation, and advanced control systems that enable safe, reliable and cost-effective integration of DER into the distribution system
- New Operating Models and Algorithms to address the transient and steady-state behavior of the modern grid, and the integration of large amounts of DER.
- Improved Operator Visualization Techniques and New Training Methodologies to enable system operators (both distribution and transmission) to work together to manage systems in both routine and emergency operations.
- Advanced Simulation Tools that can provide a more complete understanding of grid behavior, especially where a large number of diverse DER units are deployed. These tools are also needed to assist system planners in designing reliable power systems in this new environment.
- Market Integration- To maximize the benefits and minimize the costs of DER for end users, access to existing markets needs to be improved or new market structures need to be developed.
- Real Time Pricing - Will tell suppliers, marketers, DER vendors and consumers when it makes sense to buy more DER. That investment will in turn spur the development of next-generation DER devices, making them even more cost effective.
- Performance Standards - We must ensure that DER owners continuously meet their obligations to grid operators. Regulatory groups should perform periodic audits and enforce compliance when needed. Each owner should perform self assessments. (For instance, does the unit follow dispatch instructions within tolerances?)
- In California, the Rule 21 Working Group under the leadership of the CPUC is intended to build consensus among the CPUC, IOUs, generators, and advocates for Rule 21 reforms to meet the technical needs and policy goals of interconnecting distributed generation. Presentation materials and video archives of their April and August 2011 meetings are available on their website.
- At the federal level, getting the tax code amended would attract investors to CHP much the same way other renewable have used it.
Last year, a U.S. House bill with bipartisan support was introduced to recognize the resources as renewable. Heat is Power is seeking a 30 percent investment tax credit and/or a 2.1 cents-per-kilowatt hour production tax credit, just like wind, solar and geothermal power generators receive. “We’ve been working to get a significant group of Republicans on board before we introduce it again,” said Kelsey Walker, director of government relations for TAS Energy. ‘What we’re saying is that you might have the best renewable energy in the country because it’s base load,” Walker said, pointing out that the areas in the South and Midwest, thought to be renewable resource-poor, might be prime candidates.
The majority of the projects would be 10 megawatts or less.
- Evaluate Integration Issues with Bulk Power System
- Evaluation of variability impacts on regulation requirements
- Evaluation of forecasting error impacts on ancillary services requirements and associated costs
- Redesign of distribution system as a supply source to bulk power system
- Smart Inverters - Inverters, which convert DC to AC, are required for all PV systems. Inverters are now “software-driven” and have some amazing capabilities to shift their output:
- They can manipulate Watts (energy) output (as long as they remain within the capabilities of the PV system)
- More importantly, they can manipulate VArs
- Can provide capabilities like volt-var control, frequency-watt control, and dynamic grid support as part of low voltage ride through
- Inverters can sense local conditions, such as voltage and frequency, and respond with autonomous actions These pre-set reactions will improve power system efficiency and delay the need for distribution upgrades and can help avoid outages and system black-outs
- Inverter manufacturers are already adding these functions for the European market
- Expensive communications between utilities and these inverters are not immediately necessary
- Smaller inverters may never need communications
- Medium inverters may need to respond to broadcast commands
- Larger inverters or those on more “sensitive” circuits may need more interactive communications
- Functions for Inverter-based DER Generation and Storage Systems
- Immediate commands for inverter-based DER functions:
- Turn on/off
- Limit maximum output
- Status and event log information
- ”Modes” for pre-established autonomous behaviour:
- Volt-Var control
- Frequency-Watt control
- Volt-Watt control
- Dynamic grid support during low voltage ride-through
- Temperature-var control
- Pricing signal requests
- Schedules for hourly, daily, weekly, and/or seasonal actions: – Modes – Commands
- IEC 61850-90-7 standard (almost) exists for these functions
- Is already being implemented in Europe
- Already mapped to DNP3, web services, and (soon) Smart Energy Profile
- BPL Global, Pittsburgh PA - Provides software solutions and services to electric utilities enabling an intelligent grid to more efficiently manage demand, integrate distributed energy resources, improve service reliability, and optimize cost and capital productivity. Partners with local utilities, internet service providers, equipment suppliers and financiers to create end-to-end solutions integrating software, communications, hardware and managed services.
Their software solution allows dynamic, real-time management based on the changing conditions of the distribution network. Utilities can efficiently add and manage a variety of renewable and storage resources on the grid and actively coordinate customer load, generation and storage resources.
- Fat Spaniel, San Jose, CA - Provides High Definition Monitoring options for string- and sub-array monitoring, revenue-grade metering, demand monitoring, and environmental monitoring. Fat Spaniel Technologies received $18 million of VC funding in 2008 toward the development of an energy intelligence platform.
- GridPoint , Arlington, VA - Their software platform applies information technology to the electric grid to enable utilities to incrementally adopt and customize smart grid solutions including energy efficiency, load management, renewable integration, storage management and electric vehicle management. GridPoint, Inc. received $15 million of VC fudning in 2008 for their management of distributed storage, renewable generation, and load, bringing the firm’s total funding to over $100 million.
- Siemens - One of the first firms to explore the concept of VPPs, playing a key role in providing the management system for one of Germany’s pioneering efforts. A VPP project that has been operating since October 2008 aggregates the capacity of nine different hydroelectric plants ranging in size from 150 kilowatts (kW) up to 1.1 megawatts (MW), with a total VPP capacity of 8.6 MW. The VPP framework opened up new power marketing channels for these facilities that would not have been viable if these distributed energy resources (DER) were still operating as stand-alone systems.
The key technology Siemens is offering to the VPP market is its Decentralized Energy Management System (DEMS), which is designed to enhance both wholesale and distributed generation operations according to pre-defined economic, environmental or energy-related priorities. The company is now engaged in a variety of smart grid projects in the U.S. that could be considered VPPs in Kansas, Texas and Hawaii.
- TAS , Houston, TX - Designs and manufactures modular cooling and energy systems for the power generation industry; the district, commercial and industrial process cooling industries; and the industrial sector. Has developed a technology, its organic rankine cycle process that uses lower temperature resources that is being applied in the geothermal power industry. It can operate at 195 degrees, instead of the 900 degrees that are optimal for traditional steam turbines.
- PIER - Distributed Energy Resources (DER)Systems Integration
- CEC - Workshop on Renewable, Localized Generation The California Energy Commission’s Integrated Energy Policy Report Committee (IEPR Committee) conducted a workshop May 9, 2011 on topics related to Governor Brown’s goal of deploying 20,000 megawatts (MW) of renewable energy by 2020, including 12,000 MW of localized energy. See WebEx Recording of the meeting and PDF copies of the presentations
- CPUC Distributed Generation Programs
- Heat is Power - Collaboration by American innovators and entrepreneurs who are working to develop a roboust market in the United States for zero carbon emission electricity generated from heat wasted by industrial and oil/gas processes. At the federal level, getting the tax code amended would attract investors in much the same way other renewable have used it.