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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
Figure 2 - Example of Change in Production From Plant Cancellation Plus DER

capacity; (2) an equivalent amount of new gas-fired CC capacity not being built; and (3) the oldest and least-economical existing capacity retiring. A variant of option (2) was added to more appropriately match the reduction in CC capacity to the actual reduction in peak load for weekday DER operation. Because of the recent volatility in gas prices, we also conducted an analysis of sensitivity to fuel price. The DER emissions were based on a low-NOX gas-fired combustion turbine.

Dispatching to Meet the Load

Displacement depends on the generation resources that are "on the margin"-those that are turned off when an alternate source of production is supplied or demand is reduced. The fact that capacity is new does not mean it is on the margin. Utilities, or independent system operators in some locations, will use either variable operating costs or prices bid into a market from the plants in a region to establish an order of loading, or dispatch. That is, at any point in time, the last plant added to meet the load is the plant that costs the most to run, and is therefore the first plant to be turned off when the load is reduced. (Factors such as contractual terms, start-up costs, and transmission constraints complicate this simple description.) As demand increases, the more expensive plants are brought on line and prices rise accordingly.

In a process similar to stacking production in order of increasing cost, power demands over a given period can be sorted in order of increasing load. The resulting load duration curve (LDC) shows that portion of the period in which demand exceeds any given power level. Combining the LDC and the dispatch order, we can see the fraction of time that each plant is on the margin. Figure 1 shows the modeled dispatch of plants for MAAC in the summer of 2006. The plants along the top of the LDC curve are those on the margin, mainly coal, gas, and oil plants. Nuclear, some coal and the must-run capacity below nuclear are never on the margin.

DER as a Load Reduction

Table 1 - Average Fuel Prices Used

Operating DER will lower demand on the rest of the system. DER operating at baseload would take a slice off the top of the LDC equal to the amount of power produced by DER, and the plants along the top would reduce production in response. Weekday-only DER would lower demand mainly during the higher part of the LDC; plants operating on weekends and at night would not be affected. In the scenario where a power plant is canceled, first its capacity would be removed from the stack and all plants above it would increase their operation to compensate. Then the DER (baseload or peaking) would reduce the operation of the new set of plants along the curve. So operation of DER and cancellation of new plants can in certain situations increase the production from other plants ( see Figure 2 ).

Results: Which Plants Were Displaced?

Our results were evaluated in two key steps: (1) calculating which central power plants reduced (or increased) production as