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Distributed Generation: Who Benefits?

Distributed Generation
Fortnightly Magazine - March 2005

in Chicago. This case study demonstrated a system where DER was able to meet high reliability requirements unavailable from the existing local distribution grid. This same case was also a compelling example of the efficiency and cost-saving opportunities associated with cogeneration. Following an extended power outage that nearly led the zoo to move its dolphins to Florida, the zoo installed two natural-gas-fired engines with waste heat recovery and an emergency backup diesel-fired engine. The two gas-fired engines operated daily in a cogeneration mode, and the system was projected to have a positive cash flow of more than $700,000 over 10 years. The three engines operating together were sufficient to meet 100 percent of the zoo's load, thereby providing the desired reliability in the event of another utility outage.

Commonwealth Edison (Com Ed) did not participate in the case study, but information garnered from industry sources indicated that the zoo's DER installation may indeed have provided benefits to the utility system. 8 The Com Ed system was under such strain during this period that it was asking local fire departments to cool overloaded transformers, offering a curtailment program to business customers, and paying cash rebates to interrupted customers. 9 An extensive maintenance program was instituted to improve reliability, but not until four years after the zoo's critical outage. During this same time frame, Com Ed leased a large number of mobile generators to help meet its peak demand. 10 Possible benefits to Com Ed therefore included deferral of distribution system upgrades and a reduction in very expensive power purchased at peak periods. The cost to Com Ed was the lost revenue from the daily power generation provided by the zoo's cogeneration engines.

The fourth case study was a review of a relatively large DER installation at Vanderbilt University. Vanderbilt's power plant produced all the steam required on campus and at the medical center in Nashville, Tenn., and a portion of the complex's electric power needs. This plant included units fired by coal, oil (for the emergency back-up units), and natural gas. The Vanderbilt plant, including four generating units with a total capacity of 17 MW, was sufficient to meet 100 percent of the steam needs (including steam used to power five absorption coolers) and 50 percent of the electricity load. This enabled the university to take advantage of a limited interruptible power contract for half of its demand, while using the more traditional firm-demand contract for the remaining 50 percent. With this contract, the university was able to operate its DER system to match its steam loads rather than its electrical demand, because any power needed beyond the firm-demand contract amount was purchased at a greatly reduced price. The fuel flexibility of the DER installation enabled Vanderbilt to negotiate lower fuel prices and so has reduced utility rates and fuel costs, saving the university approximately $2.1 million in the year preceding this study. As the study was under way, Vanderbilt increased the generation capacity from 17 MW to 27 MW and added two new heat-recovery boilers.

The DER system provided an element of