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Standby Generation: A New Proposition

A cost/benefit analysis of full interconnection of customer-owned standby generators.
Fortnightly Magazine - June 1 2002

requirements and project implementation processes, a second project review should occur. Protracted utility procedures can increase total project costs.

The distributed generation marketplace will remain complex until national standards for interconnection are adopted. Utilities have not adopted national interconnection standards and often have complex and lengthy procedures for interconnection with their distribution networks 5

However, due to enhanced power reliability and potential for energy savings, managers should carefully review the economics of parallel interconnection on an individual project basis. As energy prices, regulatory requirements, and system interface standards vary greatly by region, attention to local market conditions is necessary for sound business decisions.

  1. Power factor control is accomplished by controlling the inductive component of the synchronous machine. When the utility and generator are paralleled together, they share the inductive component, Vars. By varying the amount of excitation the generator receives through the voltage regulator, the power factor of the load can be increased or decreased. Reactive power is nonproductive. Vars do not register on customers' kWh meters. Generation of Vars expends fuel and other generation resources. The generation burden is commonly passed from energy supplier to distributor in the form of power factor requirements and associated penalties. Excessive reactive load is unprofitable, unnecessary, and highly visible in today's marketplace.
  2. The occurrence of high spot market prices and utility constraints are often correlated.
  3. Avoided costs are often defined as the utility's cost of power generation and delivery infrastructure and not the spot market price.
  4. Source: Arthur D. Little: Distributed Generation Systems Interfaces and Encorp.
  5. The Institute of Electrical and Electronics Engineers is in the process of drafting distributed generation interface standards. However, once completed, individual utilities may elect to adopt the standards in whole or in part.

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