AnAnalyticalApproachtoEvaluatingDistributedGenerationFeasibilityJim Goebel, PEBSEE, MBA
Professional EE Services
AboutMe• Design Manager at Powersecure (NASDAQ: POWR) – turnkey DG projects, managed 4‐7 engineers/designers on proposals and construction document preparation
• Project Manager/Engineer at ABB – substation automation projects• Other startup and consulting experience within electricity value chain• Here in Iowa:
• Prepared an interconnection agreement for a municipal utility and helped them through evaluating system impact of Photovoltaic projects
• Evaluated a municipal utility’s coordination/sectionalizing on part of their system and performed recloser selection.
Content1. What is DG?
2. Relevant Technology i. UL1541
3. Business Building Blocksi. Cost Structure Impactsii. Common Roadmap
4. Framework for DG Projecti. Common Customer Profilesii. Tools to Evaluate Utility Value Drivers of DG
A. Reduction of Line LossesB. Peak Power Reduction
WhatisDistributedGeneration?(contd.)
Electricity Value ChainOld, Central Model
Minimize ‘n’ number of LargeGeneration plants
Transmission
Sub‐Transmission
Distribution
Meters/Customers
Market Mechanisms Allow Market Participation here
WhatisDistributedGeneration?(contd.)
Electricity Value ChainNew, Distributed Model
Maximize ‘n’ number of SmallGeneration plants throughout system
Transmission
Sub‐Transmission
Distribution
Meters/Customers
Market Mechanisms Allow Market Participation hereTechnology is enabler
WhatisDistributedGeneration?(contd.)
• DG Costs• Different Resource Mix and Cost Structure
• Sometimes PR challenges (utility can engage/inform community or inflame concerns)
• Real Implementation Challenges to ‘get there’
• DG Benefits
– Attract high wage jobs/Facilitate Economic Growth
– Increase Grid Resiliency & Reliability
– Decrease System Losses– Reduction of peak power
requirements – Provision of ancillary services,
including reactive power – Improvements in power quality– Reductions in land‐use effects
and rights‐of‐way acquisition costs
– (Maybe) Reduce Costs at Scale?
StakeholderDrivers
One‐Off Approach ‐Driver is Program Level @ Utility:
Aggregate Approach ‐ Driver is Program Level @ Utility
Profit
UtilityDrivers
ProjectDeveloperDrivers
CustomerDrivers
‘Value@Risk’, Profit
UtilityProgramExamples• San Antonio Power Authority – largest Municipality in country• Austin Energy – value of solar initiative• KIUC (Hawaii) – embraced lots of DG, PV in particular• Traer, among others
AustinEnergy– ValueofSolar• Took an attempt to value solar. Some even more comprehensive attempts have been done integrating more societal benefits of DG:
TechnologyBuildingBlocks
• Do you have a ‘Technology/Program Roadmap’ ?
• A utility can and must provide leadership and is a key enabler for economic growth, project growth, etc.
TechnologyBuildingBlocks• IEEE 1547• Typical Inverter Applications:
• PV projects• Monitoring
• Some Wind Projects • Value @Risk projects: UPS applications
• Grid‐Tie ‘Anti‐Islanding’
• ‘Smart’ Inverters
BusinessBuildingBlocks• What does a utility need to get ‘ahead’ of DG?
• Interconnection Agreement
• System Model
• Rate Structure
• Project Developers
BusinessBuildingBlocks(contd.)
• Interconnection Agreement:
• tailored to your specific needs
• Covers Physical Requirements (for instance ANSI protective device settings) as well as legal requirements
• Rate Structure is often referenced here
BusinessBuildingBlocks(contd.)
• System Model:• Arc Flash Compliance• Ability to integrate with GIS Systems – Real Outage
Management is holy grail• Vendors: SKM Powertools, Milsoft, ETAP, among others
• Reduced Cost/Time to Evaluate design issues
• Risks:• Top‐Down and Bottom‐Up ‘buy‐in’ required to keep current
• Your vendors and engineers must ‘play nice’ with each other and share info
BusinessBuildingBlocks(contd.)
• Rate Making Timeline:
• Step 1: Embrace public utilities role in facilitating economic growth and role of constraints
• Step 2: Establish Retail Rates with demand charges
• Step 3: Enable some market participation component
BusinessBuildingBlocks(contd.)
• Capable Project Developers that Share Risk
• Often not a traditional design firm (For instance, Power Systems or MEP, etc.)
• Must be familiar with own operate model
• Public bidding restrictions to project delivery model
• Track record
CostStructureImpacts• What does a utility look like that embraces DG or at the very least is prepared for it?
• Resource Mix –• for instance, 2 engineers and 6 linemen instead of 9 linemen
• Front loaded cost structure
CommonRoadmap
time
1. Interconnection Agreement2. Rate Structure3. Model Prep
1. Commitment Levels and Resource Mix
Help evaluate Customer DG Feasibility
ModelDefinition
LOAD
GEN (Baseload)
M
GEN (Peaking)
LOAD
M
LOAD
M
LOAD
M
Utility owned
ModelDefinition(contd.)
LOAD
GEN (Baseload)
M
GEN (Peaking)
LOAD
M
LOAD
MM
Utility owned
M
IEEE 1547 Interconnections
FrameworkforaDGProject
• 1. Define Customer Profile and Value Driver
• 2. Project Developer will work to define intended Design and First Cost based on these constraints
• 3. Utility can put ‘hat’ on the table on a one‐off basis, or utilize existing rate structure in which project developer is a ‘price taker’
• 4. Project is executed and project cash flows/ownership are appropriately split using multi‐party negotiations
CommonCustomerProfiles
• Common Customer Profiles for the following Generation Technologies (Diesel Fired Generators, UPS/batteries, PV/Storage combinations):• Data Centers, Value@Risk Commercial and Industrial sites (metal foundries, grocery stores, manufacturing sites), Hospitals, among others
• In some areas of the country utility scale and residential solar/wind should be evaluated, • High Energy Costs• Lots of Solar or Wind
ValueandCostDrivers
• Global:• First (Materials/Labor) Cost of Installation• Net value / revenues / cash flows due to installation
• Customer:• Cost for interruption (initial due to Reliability) can be curtailed• Cost for Sustained Outage ($/hour) can be curtailed
• Utility:• Reduction of Peak Power Requirements (defer investment in transmission) – (Hard Quantity)
• Reduction of Line Losses (Hard Quantity)
ReductionofPeakPower(ordefermentofinvestmentininfrastructure)
• More free capital for other projects
• Reduction in costs (debt or equity depending on financing vehicle) that can be passed on to ratepayers/customers
ReductioninLineLosses• Line Losses are lost revenues (equivalent to costs born by the utility and therefore the ratepayer)
• How can we quantify line losses?• Voltage drop calculations apply here – see excel sheet
• Reduction in line losses make the pie bigger and should be counted at full ‘value’ to the utility/revenue requirements• For simplicity, we would take the total kW*hr in reduced losses times the retail rate to approximate
Q&A
Extra‐
Are utility policies and overall economic activity related?
WhatisDistributedGeneration?(contd.)
WhatisDistributedGeneration?(contd.)