1、The Impact of Distributed Generationon Local Distribution CompaniesSubmitted to:American Gas Association400 N. Capitol St. NWWashington, DC 20001Submitted by:Harry ChernoffandRobert LorandScience Applications International Corporation8301 Greensboro Dr. ms E-5-8McLean, VA 22102703.676.5816 / 703.676
2、.4439 / July 2000TABLE OF CONTENTSES. EXECUTIVE SUMMARYiES.1 Background.iES.2 ObjectiveiES.3 ScopeiES.4 Findingsii1.0 INTRODUCTION .11.1 Background11.2 Objective.21.3 Approach21.4 Limitations32.0 TECHNOLOGY OVERVIEW .43.0 MAKING MONEY FROM DG - THE VALUE PROPOSITION83.1 Commercial / Industrial Basel
3、oad93.2 Commercial / Aggregated Residential Full Requirements .103.3 Commercial / Industrial Full-Requirements Cogeneration (Isolated Operation)103.4 Commercial / Industrial Partial-Requirements Cogeneration 123.5 Commercial / Industrial Peak Shaving133.6 Commercial / Industrial Peak Sharing.153.7 I
4、ndividual Residential Full Requirements 153.8 Electric LDCs 163.9 Summarizing the Value Elements.174.0 BARRIERS TO DG. 204.1 Interconnection Standards 204.2 Charges for Standby, Backup, Exit Fees, and Other Utility Services 224.3 Permitting Processes.234.4 Electric Distribution System Requirements .
5、235.0 VALUATION AND ALLOCATION OF DG BENEFITS. 245.1 Valuation of Benefits 245.2 Allocation of Benefits.255.3 Stakeholders.285.4 Net Metering296.0 FIFTEEN-YEAR OUTLOOK 326.1 Defining the DG Market .326.2 The Dynamics of the Market.336.3 Summary Outlook347.0 REVIEW AND ASSESSMENT OF RELATED WORK 387.
6、1 Related Studies, Including Review Comments .387.2 Related Studies, Without Review Comments .408.0 GLOSSARY 439.0 REFERENCE DOCUMENTS 45REFERENCE CONTACTS. 49LIST OF TABLESTable ES-1 Potential Benefits from Distributed Generation.iiTable ES-2 Key Value Elements for Grid-Connected Commercial / Indus
7、trial DG.vTable 2-1 Cost and Performance Characteristics of DG Technologies 4Table 3-1 Example C/I Baseload Application 9Table 3-2 Example Commercial / Aggregated Residential Full-Requirements Application .11Table 3-3 Example C/I Full-Requirements Cogeneration (Isolated Operation) Application12Table
8、 3-4 Example C/I Partial-Requirements Cogeneration Application12Table 3-5 Example C/I Peak-Shaving Application .14Table 3-6 Example Individual Residential Full-Requirements Application .16Table 3-7 Key Value Elements for Grid-Connected Commercial / Industrial DG.18Table 4-1 DPCA Survey - Ranking of
9、Barriers to Distributed Energy Resources.21Table 5-1 Potential Benefits from Distributed Generation.24Table 5-2 Estimated Range of Benefits from Distributed Generation (DPCA).25Table 5-3 What Non-DG Customers Want From DG .29Table 5-4 States with Net Metering Programs Available for Gas-Fired DG31iES
10、. EXECUTIVE SUMMARYES.1 BACKGROUNDRecent developments in the electric power and power supply industries have raised a great deal of interestin distributed power generation (DG). Advances in power generation (e.g., micro-turbines, fuel cells) andpower control technologies have made DG increasingly co
11、mpetitive with conventional grid-suppliedelectricity in certain regions and for numerous applications. Changes in the operations of the electric system(e.g., reduced reserve margins, more price and supply volatility) and changes in the way electricity is priced(e.g., real-time pricing, competitive t
12、ransition charges) have created new opportunities for supplying poweron a value basis rather than a cost basis. Also, legislative and regulatory changes have reduced the cost ofowning and operating DG. Overall, DG offers many customers, especially small to mid-sized commercial/ industrial (C/I) cust
13、omers, the potential to reduce costs and increase reliability and flexibility.These changes provide gas local distribution companies (GLDCs) with significant new opportunities,including the potential to increase gas throughput, load factors, and operating margins; enter new businesses,e.g., unregula
14、ted engineering or energy service company (ESCO) subsidiaries; and offer new services, e.g.,maintenance, insurance, and financing.ES.2 OBJECTIVEBecause of the significance of DG to electric power supply in general and to gas LDCs in particular, theAmerican Gas Association has requested SAIC to analy
15、ze the impact of distributed generation on the gasdistribution companies. The objective is to provide a management-level review and 15-year outlook onmarket risks and opportunities, technologies, applications, gas sales, etc. ES.3 SCOPEThis report addresses the potential impacts of DG on the gas LDC
16、s from the perspective of customer value- where does DG add value to the customer and under what conditions is it likely to succeed. The reportcovers technologies, applications, rules-of-thumb for commercial success, the response of the electricLDCs, and related factors.In this report DG means a sma
17、ll electric power plant constructed at the customers site to serve onsiteloads, or constructed at the end of a distribution line to support the distribution system. The size of theseplants is usually from a few tens of kW (excluding individual residential applications) to about 5-10 MW.Plants larger
18、 than 50 MW and merchant power plants selling at wholesale to the grid are excluded. Discussions with members of the industry indicate that DG (as an emerging concept) is usually limited toiiplants below 5-10 MW. Above 5-10 MW, DG is viewed as a continuation of the established trendtowards on-site g
19、eneration and cogeneration.ES.4 FINDINGSA review of the literature on DG would suggest that technology drives the DG market: reciprocatingengines, combustion turbines, micro-turbines, and fuel cells. This perspective is misleading. DG is notdriven by technology. It is driven by value - value to the
20、customer, to the electric power system, and tosociety. DG is about demonstrating this value in a complete package, e.g., design, analysis, procurement,installation, operation, maintenance, financing, leasing, etc. DG also affects the value of the gas LDCsthrough increased throughput, higher load fac
21、tors, and new opportunities for services. Table ES-1summarizes the potential benefits from DG.Table ES-1 Potential Benefits from Distributed GenerationSources: Adapted from Liss, 1999a; Skowronski, 1999.From the gas LDC perspective, peak shaving and standby are established markets for many types ofc
22、ustomers, especially the multi-megawatt customers. The emerging opportunities offered by DG expandthe market to smaller loads, especially loads below about 2 MW, and expand the market to more gas-intensive applications, including baseload, full requirements, and cogeneration. These trends imply sign
23、ificantincreases in incremental gas sales because of the large number of units sold for these applications andbecause of the much higher load factors for baseload, full requirements, and cogeneration applications. Reduced energy ($/kWh) and demand ($/kW) costs Increased reliability, including provis
24、ion of standby or emergency power Reduced transmission and distribution line losses Reduced spinning and non-spinning reserve margins More peak shaving and interruptible loads Deferral of transmission and distribution expansion Reactive power support and power quality Cogeneration capability Improve
25、ment in utility load factors Fuel diversity Emissions reductions Reduced energy congestion Less societal disruption Faster response time Emergency start capability System operations benefitsiiiAssuming that the DG technologies discussed in the present report meet their cost and performanceobjectives
26、, incremental installations of DG units for baseload applications (baseload, full requirements,cogeneration) could reach 2,000 MW per year by 2005 and 5,000 MW per year in the 2010-2015 periodand beyond.1 These numbers compare to an expansion of the grid in the range of 25-30,000 MW peryear, excludi
27、ng replacement capacity, and as much as 40-50,000 MW per year, including replacementcapacity, through the 2015 period. Retirements of nuclear units become significant in the latter part of the15-year forecast period. Overall, baseload DG units could capture a double-digit percentage of the totalmark
28、et for capacity additions. The rate of growth in DG installations would level off in the 2010-2015period due to saturation of the key markets. At 2,000 MW per year of incremental baseload DG capacity,incremental sales of gas for DG would reach 100 trillion Btu per year. At 5,000 MW per year ofincrem
29、ental baseload DG capacity, incremental gas sales would reach 250 trillion Btu per year. LDCs,not pipelines, are likely to supply most of this gas. Below about 20 MW, it is usually not economical forthe DG operator to bypass the LDC and go directly to the pipeline. Above about 20 MW, or if the DGis
30、almost literally right on top of the pipeline, bypass becomes a factor. Incremental installations of gas-fired DG units for peak-shaving and standby applications could also reach2,000 MW per year by 2005 and 5,000 MW per year in the 2010-2015 period. At these levels,incremental gas sales would reach
31、 20 trillion Btu per year by 2005 and 50 trillion Btu per year by 2010.Almost all of these DG units would be customer-owned and would use gas supplied at retail by the LDCs.Overall, total sales of gas by the gas LDCs to the incremental DG market could reach 120 trillion Btu peryear by 2005 and excee
32、d 300 trillion Btu per year by 2010. At retail prices averaging $4.00 per millionBtu (heavily weighted towards C/I rates rather than the residential rates), the total market opportunity is inthe range of $500 million per year by 2005 and more than $1.2 billion per year by 2010. Key observations rela
33、ting to these points include the following: Market Potential - DG has the greatest long-term potential in markets where electrictransmission and distribution costs are naturally high (e.g., the Northeast) and where the reliabilityof delivered power is less than adequate (various areas). The value pl
34、aced on reliability is aparticularly important factor. Because the value of reliability is often orders of magnitude greaterthan the price of electricity, especially for commercial / industrial users, small gains in reliability from1Incremental installations are installations above those that would
35、take place at the current level oftechnology cost and performance. Achieving the incremental installation levels requires reaching the gas industrygoals for cost and performance. Goals for turnkey costs (including the interconnection) are roughly $500/kWfor gas engines, $500-600/kW for micro-turbine
36、s (at 30 percent electrical efficiency), and $1,000-$1,200 for fuelcells (at 40 percent electrical efficiency or higher). For gas engines, these cost goals are perhaps 25-35 percentless than current levels. For micro-turbines and fuel cells, the cost goals are 25 to 50 percent less than currentlevel
37、s.ivDG will translate into large gains in market size. This relationship is especially important for DGsystems providing baseload or full requirements service. The contraction of spark spreads throughout the country (i.e., the difference in the prices per Btuof electricity and gas) will erode market
38、s based on currently high electric generation costs relativeto natural gas prices. Table ES-2 shows some of the key requirements for commercial success inthe mid-sized, grid-connected C/I market. This market is one of the largest potential markets forDG. The values on Table ES-2 should be viewed in
39、the context of a complete application,including opportunities for tradeoffs among the variables, not as individual values that must each bemet for each variable.DG has the least short-term potential in markets where exit fees and stranded cost recoverycharges are high and unavoidable, e.g., Pennsylv
40、ania. Over the longer term, the elimination of thesefees and charges will allow a market to develop. DG has little long-term potential in markets orapplications that are based on mispriced peak resources. Retail access and performance-basedratemaking will eliminate arbitrage opportunities in these m
41、arkets. Excluding high reliabilityapplications, DG has little long-term potential in markets that have naturally low central stationgeneration and T&D costs. Market Evolution - During the next 10 years, rates for baseload power will decline the fastestin the regions and to the customers where DG is
42、currently the most attractive, e.g., mid-size C/Icustomers in the Northeast. Success in this market will require marketing and packaging techniquesthat go beyond spark spreads.Technology alternatives to non-utility DG, such as highly efficient MW-scale turbines, and economicalternatives, such as pri
43、cing electricity on a value basis, will narrow the market opportunities for DGand for gas LDCs. Special circumstances in certain states or by certain companies offer opportunities for the DGindustry and the gas LDCs. Some companies are targeting customers for isolated operation toavoid competitive t
44、ransition charges. Others are targeting new customers to avoid both transitioncharges and exit fees. Many companies are targeting high-reliability customers and explicitlyincorporating the value of avoiding outages into the payback calculations. Other companies aretargeting residential customers wit
45、h the highest electric rates. A common approach is to define theDG equipment as a break-even proposition and plan to profit from the increased gas throughput.vTable ES-2 Key Value Elements for Grid-Connected Commercial / Industrial DGElement Favorable CommentLoad 200-2,000 kW With current DG technol
46、ogies, economies-of-scale become very important for loads exceedingabout 200 kW. Smaller loads may be economical in certain applications, e.g., high-valuecogeneration (for the user) or high-value gas throughput (for the LDC). Loads above a fewMW tend to have existing opportunities without any change
47、s in DG technology, interconnectstandards and costs, restructuring, etc.Load Factor 60% Sixty percent is often cited as the breakpoint needed to spread the fixed costs of the DG systemover the kWh. Deviations from the 60 percent level would depend on offsetting factors, e.g.,thermal value.Thermal Va
48、lue 1 cent/kWh- equivalent Capturing thermal value, e.g., water or space heating, requires additional equipment andsystems. Unless the thermal value exceeds about 1 cent/kWh-equivalent, it is rarely economicalto add these heat recovery systems. Thermal value rarely exceeds 2 cents/kWh-equivalent.Spa
49、rk Spread 4 The spark spread is the difference between the delivered price of electricity and the price of thefuel input to the electric plant in some common unit. The convention is to compare electricity incents/kWh to gas in $/MMBtu. In this convention, a spark spread exceeding “4” (e.g.,electricity at more than 8 cents/kWh and gas at less than $4/MMBtu) is a favorable relationship.Installed Cost 5 MW) and willbe served primarily by combustion turbines rather than reciprocating engines.11Table 3-2 Example Commercial / Aggregated R
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