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Distributed generation: It’s all a matter of control

Issue 8 and Volume 107.

By: Steve Blankinship, Associate Editor

When it comes to DG assets, it’s not so much what you have, but how you use it.

The total is often greater than the sum of its parts, and perhaps no better example exists in today’s electric power business than distributed generation. Distributed power sources range from gen-sets with outputs of less than 100 kW, to turbines rated at a few MW – mere ants compared to the behemoths that make up the vast bulk of the generating fleet. Yet tiny ants working as a highly orchestrated unit constitute a powerful force of nature. So it is with DG.

Increasingly sophisticated technology and an evolving DG support industry, allow distributed energy assets dispersed across states, continents, or even globally, to be far more valuable to their owners than was possible a decade ago. The ability to aggregate, dispatch and monitor such assets with strategic precision can mean millions of dollars in cost savings for those able to perform those tasks well.

Because up to 40 percent of a commercial customer’s energy bills can consist of demand charges, DG owners are learning that energy is not a fixed cost over which they have little control. Rather, managing energy is a significant money-saving opportunity that can boost profits and possibly increase shareholder value. Most important of all, they’re learning it’s not how much energy they use but rather when they use it that counts.

“Customers can measure, analyze and manage their energy generation and consumption systems in real time so they can more efficiently operate and maintain their facilities by using cost curves to deploy assets and meet price curves,” says Cody Graves, CEO of Oklahoma City, Okla.-based Automated Energy. The company markets programs that help DG owners manage their assets to maximum advantage. “For example,” says Graves, “reducing a facility’s load by five percent during peak demand periods can reduce the price of peak energy purchased by 20 to 50 percent. And as more customers cut their loads, wholesale prices start falling.”

Such services require no investments in hardware, software, software upgrades or dedicated manpower. A monthly service fee is charged based on the number of monitored metered points. They can be integrated with energy enterprise management solutions that allow unprecedented control of the generation assets for maximum economic gain.

There are bigger players involved too. From DTE Energy Technologies’ headquarters in Farmington Hills, Mich., the energy|now System Operations Center (SOC) controls close to 30 MW of generation owned by almost 120 customers around the world. DTE Energy Technologies, an unregulated subsidiary of DTE Energy Company, introduced the SOC commercially in January 2002. The SOC monitors industrial, small to large commercial, and even residential customer sites 24/7 utilizing broadband, Internet and dial-up to dispatch units based on economic conditions. In real time customers can view load duration curves, time interval reports, average hourly profiles, archived data, single and multi-point trends, as well as aggregate demand and peak load summaries.

Alarm capabilities alert customers’ on-site personnel in situations where equipment must receive maximum attention at critical sites such as medical facilities, precision manufacturing or data centers. Preventative and predictive maintenance monitoring is also provided. DTE Energy Technologies’ customer service extends to maintenance, operation, parts and warranty support. All data is secured by way of a virtual private network.


From this control center in Farmington Hills, Michigan, customer installations around the world are monitored by DTE Energy Technologies. Photo courtesy of DTE Energy Technologies.
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In accordance with the generation owner’s wishes, the SOC will activate a unit to avoid having the customer establish a new peak demand and incur the costs associated with a new peak. The SOC will also bring a stand-by unit into service should an approaching storm threaten service reliability. “The energy|now System Operations Center enables our customers to enjoy reliable, quality power without becoming an on-site energy equipment expert,” says David Fontanive, director of sales, SOC/Service for DTE Energy Technologies. “Our SOC makes owning on-site energy equipment simple and cost-effective.”

Reasons To Be A Control Freak

Encorp, a leading DG communications and controls developer with more than 1,400 projects commissioned, has found its customers deploy DG in three general economic dispatch business scenarios.

The first — operating the generator in response to a utility demand-management program — provides tangible benefits to the utility and end-user. The utility receives a reduction in aggregate demand at a critical time and then compensates the end-user for reducing strain on the grid. In essence, the utility rewards end-users who respond to the utility’s request to self-generate for a limited number of hours per year. This request is determined by the utility’s internal needs and not by the end-user’s consumption patterns.

The second approach is peak-shaving. This occurs when end-users possess strong knowledge of their consumption patterns and tariff structure. End-users leverage this insight to determine when self-generation is economically attractive. Peak-shaving flattens the end-user’s load profile and reduces the peak demand charge, sometimes called the utility infrastructure charge, on the electric bill.

The third economic dispatch scenario combines wholesale price volatility with onsite generation. For end-users on real-time pricing tariffs, an onsite generator acts as a physical hedge against price volatility. When prices in the marketplace exceed the end-user’s cost of self-generation, it becomes economically attractive to operate the generator to offset the purchase of expensive grid-supplied energy.

Each practice requires powerful communication and control technologies. For a generator to intelligently interact with the marketplace, the utility network and end-user loads require robust and integrated communications, controls and grid interface technologies. For large facilities or companies that operate multiple generators, information technology and advanced communication technologies are far more efficient than relying on human operators.

“Our customers deploy software and hardware technologies to control and automate economic dispatching sequences,” says Dennis Orwig, Encorp’s CEO. Consumers, energy service companies and utilities manage, aggregate and dispatch fleets of generators for economic purposes using Virtual Power Plant, an Encorp software product.

Encorp manufactures a line of generator power controls and digital switchgear that provide communication interfaces to its software platforms. Encorp’s Virtual Maintenance Monitor and Energy Management Center provide software, reporting and analytical tools to keep generators running at peak effectiveness. “When our customers dispatch their generators for economic purposes, they leverage Encorp’s technologies to ensure maximum reliability, efficiency and savings,” notes Orwig.

Having Everything On The Radar Screen

Energy information services let asset owners see the big picture so they can make the best decisions possible. Automated Energy offers an energy information service that includes a rate engine – software that processes local tariffs and usage scenarios and determines an optimum solution for the customer. That helps managers know exactly when to dispatch on-site generation assets for all load conditions. Energy information provided by the service includes demand and variable energy costs in real time.

The information helps the customer determine if he wants to start an asset. If the answer is “Yes,” it tells the customer how much power should be produced and when. It also tells whether or not the assets did, in fact, produce power. The answer may not always be obvious since generating power entails signaling the controller to start the generator, starting the generator, getting the generator up to speed, paralleling the gen-set with the utility source, and finally, switching to the utility source. Anywhere along the process, a step may not operate as required, therefore no power is produced.

Such services make data relevant, useful and customized. The energy information service can monitor and control single or multiple gen-sets at a single site, or any configuration of gen-sets at multiple sites around the world.

“Rate engines are going to become increasingly important as more utility rate structures, such as time-of-day and real time pricing, materialize,” says Graves. “The reason is that costs such as that of building the utility reserve and maintaining a portion of it as standby capacity have been embedded in the overall rate structure and traditionally have been invisible. As restructuring multiplies, these costs will become more visible, especially for larger users, who will want to exert greater leverage during rate re-negotiations.”

An energy management service also shares energy information with other departments within a company, such as finance and accounting, allowing them to have needed information for enterprise budgeting and pro-rating energy costs across electrical systems and departments.

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Kawasaki’s 17 MW L20A gas turbine is available with TechnoNet — a proprietary remote monitoring technology that incorporates predictive maintenance capability. The package utilizes thermodynamic and vibration modeling to determine which parts of the machine either need maintenance immediately or might need to be maintained at the next service interval. The combination of the L20A’s numerous state-of-the-art design features and the remote monitoring capability is intended to advance both reliability and availability beyond current benchmarks. Photo courtesy of Kawasaki.

Real time, 24/7 communication alerts staff when set-points — ranging from power level to engine temperature and oil pressure — are not met. Critical information is displayed in real time so problems can be identified and corrected quickly, facilitating equipment maintenance and reducing unplanned downtime.

Other service features include direct, one-to-one comparisons of monitored points, a peak shaving calculator and the ability to monitor all utility metered data – natural gas, propane, water, etc. The peak shaving calculator, for example, compares kWh costs of an enterprise’s energy suppliers, allowing the enterprise to reduce the most expensive rates for electricity.

Any number of users can access the information at one time from any PC with an Internet connection. Access to information can be limited by secure passwords, depending on the enterprise’s requirements. Utilities that offer distributed generation services directly or through deregulated subsidiaries can include the service as part of their overall customer energy management programs.

Fuel Cell Monitoring

Fuel cell deployment continues to increase within the growing distributed generation fleet and with it, the increased importance of the ability to remotely monitor the conditions inside them. Among the variables in need of constant monitoring include temperatures, pressures, humidity, voltage and current.

DTE’s broad commitment to distributed generation (see sidebar) is providing remote control and monitoring to fuel cells too. Plug Power (originally formed as a joint venture between DTE Energy and Mechanical Technologies) and DTE Energy Technologies plan to use the energy|now SOC for remote monitoring on all future Plug Power fuel cell customers. “We are working with Plug Power to develop controls that will allow us to remotely monitor and control their fuel cells,” says Fontanive. Mark Sperry, Plug Power chief marketing officer, says, “Adding the functionality of the DTE SOC to our fuel cell systems is another step forward in enhancing the reliability and capabilities of our on-site energy solutions.”

Fuel cells are finding an increasingly attractive niche as backup power providers where diesel engines pose environmental problems. “Although our company has done a number of stationary power applications, one of our most publicized focused on backup power with Nextel Communications in California,” says Grant McArthur of Toronto-based fuel cell technology firm Hydrogenics. Although momentary outages are best handled by uninterruptible power systems composed of batteries, telecommunication companies fear longer outages requiring backup needs greater than two hours.

“That’s where the fuel cell starts to make sense,” says McArthur, “because it’s a very steady performer, especially when diesel generators can be a problem in places like California.” He points out that battery systems for such durations can be very large and pose maintenance problems. “Fuel cells are good for long duration backup needs, like four hours for example. The proton exchange membrane fuel cell can come up to its full power output very quickly with only the need for a brief buffer provided by batteries. That’s why it was very interesting for us and Nextel to work on it.”

Hydrogenics did a demonstration where it had a year’s worth of power outages simulated and had a fuel cell backup power device right on one of the sites. “With remote monitoring via the Internet, we were able to understand how the fuel cell was operating. A fuel cell is always taking data about how the fuel cell stack is performing and feeds it back to an engine control unit (ECU) that analyzes performance and makes adjustments to keep it performing well. Fuel cells lend themselves very easily to remote monitoring and operations.”


DG: Loving It, Not Shunning It

While most vertically integrated electric utilities continue to view distributed generation as an unprofitable market segment at best and at worst, a threat to their traditional business and a potential hindrance to their transmission and distribution systems, DTE Energy, parent of Detroit Edison, has fully embraced DG.

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“Back as far as the mid 1990s, DTE had a strong interest in distributed generation,” says Mark Fallek, vice president and chief marketing officer for DTE Energy Technologies. “That interest stemmed from what happened in the computer industry where things went from big mainframes to PCs and hand-helds.”

DTE reasoned that what happened in those industries could happen in theirs. Technology would eventually allow customers to reap benefits from being independent of the grid, lower their costs and have greater security.

Under the energy|now brand, DTE Energy Technologies offers customers natural gas and diesel generator products including internal and external combustion engines, miniturbines, fuel cells and reciprocating engines ranging from 5 kW to 2 MW. Shown is DTE Energy Technologies 150 kW ENI 150 internal combustion engine. Photo courtesy of DTE Energy Technologies.

DTE went so far as to think about benefit to its own distribution lines. Detroit Edison has deployed distributed resources on poor performing circuits where there’s not enough power for various reasons, perhaps an undersized substation. Substations are upgraded in 5, 10 or 20 MW increments and the Detroit utility sees no reason to upgrade in such large increments if only 1 or 2 MW is required. “So why not use a DG solution there because it’s probably during peak period and you can put in a 1 or 2 MW diesel or gas-fired unit to hit those peaks and defer the capital investment,” says Fallek “We save everyone some money.”

DTE’s non-regulated DG business also comes to Detroit Edison’s rescue by providing uninterrupted power during substation repair and allowing almost seamless deployment of customers’ standby generators for grid use on hot days. “There’s lots of standby capacity out there,” says Fallek, “and our SOC can dispatch a large number of them all at once rather than call customers individually and ask them to turn on their generator.”

Says Peter Pintar, director of DTE investor relations and manager of the corporation’s technology capital investments pool, “About six years ago we decided to become a player in the DG industry. We know, broadly, distributed resources will grow over time, and we’d rather be a player than be sitting on the sidelines.”