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DG Update: News & views on distributed generation

Issue 7 and Volume 104.

Study Identifies Barriers to Distributed Generation

According to a recent DOE study of 65 distributed generation case studies, distributed generation stakeholders are facing significant barriers when attempting to interconnect into the electrical grid.

According to the report, 58 of the case study applications experienced significant market entry barriers, while only seven cases reported no major utility-related barriers and were completed and interconnected on a satisfactory timeline. Of those experiencing entry barriers, the project proponents expressed dissatisfaction in dealing with the utility, believing that the utilities’ policies or practices constituted unnecessary interconnection barriers. At the time the report was written, 29 of the case study projects had been completed and interconnected; nine were meeting only the customer’s load and were not sending any power to the grid; two had disconnected from the grid; seven had been installed, but were still seeking interconnection (and may be operating independently in the interim); 13 were pending; and five projects had been abandoned.

The study identified three barriers-technical, business-practice and regulatory-that impact market entry. Technical barriers consist primarily of utility requirements to ensure engineering compatibility of interconnected generators with the grid and its operation. Distributed generation proponents stated that the required equipment and custom engineering analyses are unnecessarily costly and duplicative. According to the study, such requirements added 15 percent to the cost of a 0.9 kW photovoltaics project, plus an additional $125 per year for relay calibration. Newer generating equipment, however, increasingly incorporates technology designed specifically to address safety, reliability and power-quality concerns.

Business-practice barriers arise from contractual and procedural requirements for interconnection and, often, from the simple difficulty of finding someone within a utility who is familiar with the issues and authorized to act on the utility’s behalf. This lack of utility experience in dealing with such issues may be one of the most widespread and significant barriers to distributed generation, particularly for small projects.

Other significant business-practice barriers include procedures for approving interconnection, application and interconnection fees, insurance requirements and operational requirements. Many project proponents complained about the length of time required for getting projects approved. Seventeen projects-more than 25 percent of the case studies-experienced delays greater than four months.

Tariff structures are the primary regulatory barrier identified by customers who added distributed generation facilities, although other regulatory barriers exist as well, such as outright prohibition of parallel operation, which refers to any use other than emergency backup when disconnected from the grid. The tariff issues include charges and payments by the utility and how the benefits and costs of distributed generation should be measured and allocated. Also, several project proponents reported being offered discounts on electrical service from the utility as an inducement not to build planned distributed generation facilities.

The DOE study recommended a 10-point action plan for reducing barriers to distributed generation:

  • Adopt uniform technical standards for interconnecting distributed power to the grid.
  • Adopt testing and certification procedures for interconnection equipment.
  • Accelerate development of distributed power control technology and systems.
  • Adopt standard commercial practices for any required utility review or interconnection.
  • Establish standard business terms for interconnection agreements.
  • Develop tools for utilities to assess the value and impact of distributed power at any point on the grid.
  • Develop new regulatory principles compatible with distributed power choices in both competitive and utility markets.
  • Adopt regulatory tariffs and utility incentives to fit the new distributed power model.
  • Establish expedited dispute resolution processes for distributed generation project proposals.
  • Define the conditions necessary for a right to interconnect.

The full report, Making Connections: Case Studies of Interconnection Barriers and their Impacts on Distributed Power Projects, can be found at www.eren.doe.gov/distributedpower.


Europe Commits to Renewable Energy

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A draft law from the European Commission aims to double the proportion of green energy from six percent to 12 percent of primary energy supply by increasing the share of renewably generated electricity from 14 to 22 percent by 2010. The directive would apply to the 15 nations of the European Union.

Under the directive, member states will be able to keep national financial support schemes for at least five years, but should eventually adopt a harmonized EU system. Non-binding indicative national targets (see table) for renewables will be set to ensure the overall EU target is met. Member states will have to report annually on their progress, and the Commission will propose mandatory targets if national goals are “inconsistent” with the EU target.

The renewable energy industry and environmentalists acknowledge that the proposed targets are ambitious but argue that they should be made binding to have real effect. Several countries are under heavy pressure to launch more progressive renewable energy policies, including Finland, France, Greece, Luxembourg, the Netherlands and Portugal.

In an unrelated but significant development, ABB has outlined a strategy for alternative energy solutions that it believes will result in the company capturing $1 billion worth of the green energy market within five years. “We have developed technologies that make wind power and other renewable and alternative energies economically attractive for the first time,” said ABB president and CEO Goran Lindahl in an on-line news conference. “Especially important is the information technology and communication features that we’ve built into the systems, making them easier to operate and maintain and much more cost-effective than conventional approaches.”

ABB unveiled its new Windformer technology during the news conference, which it claims will enable the economic development of windfarms as large as 300 MW. The Windformer reduces power losses from wind turbines and can be used to directly connect windfarms to larger power grids, even from offshore. ABB is currently testing a 500 kW prototype of the Windformer, and the Nordic energy group Vattenfall has agreed to install a 3-3.5 MW demonstration plant by the summer of 2001.

While acknowledging that alternative energy solutions are not a replacement for large-scale power generation, ABB sees green energy as a critical complementing technology, offering a more economically viable and environmentally preferable solution in many parts of the world.


Hospital Help

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A Cummins QSV81 genset has been installed at St. Charles Mercy Hospital in northwest Ohio to be used for peak load shaving as an alternative to the local utility service. The unit will operate when usage exceeds a pre-set demand for electricity, allowing the hospital to realize cost benefits and efficiencies by supplementing its power requirements during daytime peak periods.

The QSV81 unit was installed within the hospital’s existing powerhouse and is accompanied by a heat recovery steam generator to supplement the hospital’s steam needs. The system is expected to run about 3,300 hours per year. The cogen system operates at a total efficiency of 66 percent, with thermal efficiency at just under 28 percent and electrical efficiency at 38.1 percent.