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Hastening Genco Obsolescence?

DER: This final installment of Oak Ridge National Laboratory's series on distributed energy resources investigates efficiency, the environment, and generation displacement.

Fortnightly Magazine - May 2005
Table 2 - Parameters for Distributed Generation (With CHP) and Alternative Technologies

a result of the addition of the DER; and (2) determining the consequent change in fuel use and emissions.

While the conventional wisdom is that adding DER automatically will displace new CC production, we found that assumption was not correct. In the scenarios with baseload DER, multiple types of production were displaced, even if gas CC capacity was canceled in response to the DER ( see Figure 3 ). Coal capacity was displaced in all cases, representing those times when coal plants were on the margin. If no plants were canceled or if older plants were retired, then a fair amount of gas-fired combustion turbine production was displaced, even though oil-fired steam units were the main technology retired. Even if the DER experienced random forced outages, the other technologies would drop in the same proportions as shown in Figure 3 because the outages could occur randomly anywhere along the LDC.

The fuel prices in the reference cases were based on the fuel prices paid by the individual plants in the region between 1999 and 2001. The price averages are shown in Table 1. With the recent run-up in natural gas and oil prices, it was worthwhile to evaluate what would happen if higher prices were used [ Short-Term Energy Outlook 1]. With higher gas prices, the dispatch order changes so that gas-fired plants run less often. This in turn places oil-fired plants on the margin more often, so that they are displaced by DER more often ( see Figure 3 ). Even in the cases where new CC capacity was canceled, the displaced production from CC represented less than 80 percent of the total displaced; without cancellation of CC capacity, the amount of CC capacity displaced was closer to 60 percent.

Table 3 - Net Changes in Energy and Emissions for All Scenarios Studied

In the scenarios with DER operating during weekdays only, the impact of new gas CC capacity was more evident ( see Figure 4 ). When 2,000 MW from new CC plants were canceled, their lost production was greater than the amount added from the peaking distributed generation. As a consequence, other central plants increased their production to make up the deficit. This somewhat overstates the amount of CC that would be canceled to compensate for the DER, however. Because the DER operated only during weekdays, weekend demands were unaffected and the overall peak demand declined by only 510 MW. If we canceled just 600 MW of new CC in order to maintain the same system-reserve margin, then no central generation increased its production to replace lost CC capacity; all declined. If old plants were retired (1,845 MW oil, 155 MW coal), then coal-fired electricity production declined significantly. And with higher gas and oil prices, oil generation was on the margin much more than in the reference cases, as in the baseload cases. Thus in the cancel scenario, oil-fired steam units increased their production more to compensate for the loss of gas CC production.

Net Emissions Changes

As production from each generating technology changes, the energy use and emissions picture changes. The characteristics of the DER used for the analysis are