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Distributed Generation: Implications for Restructuring the Electric Power Industry

Fortnightly Magazine - June 15 1995

modest capital investments for highly reliable service.

Peak-shaving generators can be either IC gensets or small gas turbines (GTs), ranging in size from less than 100 Kw to several megawatts. Peakers are primarily used as capacity resources rather than energy providers. A common application is peak shaving (reduction) to lower customers' billing demand. A number of utilities have initiated customer-partnership programs for collaborative investments in inside-the-fence generators (to reduce the need for bulk-power capacity).

Baseload generation faces two economic barriers: low conversion efficiency (less than

two-thirds that of a modern combined-cycle plant) and high fuel prices. Fuel procurement for small generators normally requires using fuel distribution delivery systems. Although such systems represent a cost disadvantage for distributed baseload generators, gas service unbundling will at least partially redress the situation.

Cogeneration packages (electricity and heat) typically aim to partially or totally bypass the utility to reduce the customer's electricity and fuel bills. The commonly used technologies are IC and GT generators equipped with highly efficient waste heat recovery systems, in unit sizes that range from less than 50 Kw to more than 10 Mw. Fuel savings from successful projects provide a margin sufficient to overcome the required high capital investment and efficiency disadvantage of distributed baseload operation.

Energy storage devices are currently limited to batteries, and often used in uninterrupted power supply systems by C/I customers who require especially high service reliability and quality. The currently favored product for utility applications is the valve-regulated lead acid (VRLA) battery. Ranging in size from a few kilowatts to more than 20 Mw, these batteries can store energy for a few minutes or up to several hours. Round-trip (charging and discharging) efficiency could reach 75 percent. High initial capital costs call for niche applications where the projected benefits outweigh the costs.

Mobile resources can be relocated from one site to another in a matter of a few hours or a few weeks. The most mobile options are housed in a trailer, complete with switchgear and fuel hookup equipment. The earliest examples of such products were IC gensets and GT units designed to serve offgrid loads and temporary and seasonal customers. Now, mobile batteries and cogeneration facilities are also available. Mobile generators can be rented (normally on a monthly or annual basis) or leased.

Developing Technologies

Although the distributed generation industry is clearly well established, new and developing products lie on the horizon. Expected significant technological innovations include advanced fuel cells, small-scale GTs, and energy storage systems.

Advanced fuel cells represent the modular answer to baseload bulk power, promising competitive operating costs and very low air pollution emissions. The current generation of commercial fuel cells (em the 200-Kw phosphoric acid fuel cell (PAFC) (em has an impressive record of performance and reliability. However, PACFs entail considerable capital investment.

Development efforts are proceeding along several tracks. First, the PAFC technology is being repackaged into larger units, lowering the balance of plant costs and installation expenses on a per-kilowatt basis. Second, the United States, Europe, and Japan have active programs to develop carbonate fuel cells (em the second-generation technology