Utility Horizons - Second Quarter 2013 - (Page 49)

REGULATION de Rigueur By: Mark B. Lively | Principal | Utility Economic Engineers In Support of Distributed Generation SPECIAL TARIFF NEEDED Distributed generation is large in the US – and itʼs getting bigger. Fifteen years ago, California alone had 30 GW of distributed generation, which was only slightly less than the capacity of Californiaʼs central station power plants. In the last year, we have seen movements that will continue to increase the amount of installed distributed generation. The amount of energy produced by distributed generation units is minor. Just as most of the distributed generation capacity in California is backup or standby, many people have been touting distributed generation for its ability to backup the grid. Backing up the grid means that the distributed generators would pump power into the grid – not just supply power to the owners of the distributed generation – which was the situation in California. But for significant amounts of distributed generation output to make it to the grid to backup the grid, there needs to be a special tariff that is operational when the distribution grid is stressed, as I discuss in this article. This special tariff would be applicable to all energy on the distribution grid during this period of stress, both as payment to the distributed generators and as payment by the connected loads. Growth in Distributed Generation After the derecho that hit the Washington, DC area in June 2012, I conducted a survey, asking friends www.UtilityHorizons.com how long they were without power. One friend told me he was without power for six days and finally got utility power back a half hour after he and his son installed their own generator. He said humorously – or at least I thought he was trying to be humorous – that the utility couldn’t stand the competition. However, now that he has utility power I doubt that he often runs his generator. Most of the time the fuel cost of the generator is greater than the delivered cost of utility power, especially when one includes the inconvenience of trips to a filling station to get gasoline or diesel fuel. But high cost distributed generation need not be the case. Another friend is developing the concept of home cogeneration systems using natural gas. The unit cost of his fuel per Btu is less than the cost of the liquid fuel to my other friend. Furthermore, the second friend’s generator should be much more efficient at turning the heat of the fuel into electricity. Some gross calculations (almost back of the envelope in that he sent me an e-mail with his thoughts and some numbers) showed that his fuel cost would be significantly cheaper than the delivered cost of utility power, so much so that he could earn a return on the investment in his home cogeneration system. Washington’s Mayor Vincent Gray has a vision of reducing energy consumption in the District of Columbia by 50%. I learned of this while preparing a presentation for the All Hands Day meeting of the District Department of the Environment (DDOE). I pointed out during the meeting that a 50% decline in the use of electricity in the District would result in a 100% increase in the unit price for wire services. My reasoning was that PEPCo, the local utility, would still have the same cost of owning and operating the wires in DC but would have to recover that cost from half of the KWH. Standard rate-making ends up doubling the unit price. And, since Mayor Gray wanted 50% of the remaining energy to be point-of-source renewable – such as solar – the final result would be a 300% increase in the unit price for wire services. At such a price level for wire services, my friend’s home cogeneration system makes a lot more economic sense, as would many other distributed generators. Q2 - 2013 • UTILITY HORIZONS • 49  http://www.UtilityHorizons.com

Table of Contents for the Digital Edition of Utility Horizons - Second Quarter 2013

Utility Horizons - Second Quarter 2013
Publisher’s Message
Contents
The Queue
Automation Rising!
Inside Tracks
Focal Point
Automation and Innovation at Epcor Water Services
BLeading Edge: Advanced Technology Perspectives
Consumer Engagement: The Future Goes Mobile
Demand Response: Why the Future Is in the Cloud
Building Paths to Smarter Water Management
Bullet-Proofing Your Scada System Against the Evil-Doers
Education Matters
Standard Bearings
Regulation De Rigueur
On the Horizon
Purviews
Intersections
Eventualities
Thinking It Through With Sparky Flamedrop
Loose Ends

Utility Horizons - Second Quarter 2013

https://www.nxtbookmedia.com