Showing posts with label energy autarky. Show all posts
Showing posts with label energy autarky. Show all posts

Wednesday, September 19, 2018

Distributed Generation Options for Industry and Commerce





Distributed Generation Options for Industry and Commerce
Introduction
Several coincident, significant transformations are causing a revolution in the way electricity is produced, distributed, stored, and marketed. A top-down, centralized system is devolving into one that is much more distributed and interactive. The mix of generation is shifting from high carbon to lower carbon, and, often, to no carbon. In many regions, the electricity business is transforming from a monopoly to a highly competitive arena. A profound shift is under way in the energy market, as companies increasingly turn to their own, on-site generation of power in order to meet at least some of their energy needs. While centralized production at power plants continues to dominate, leaders of many energy-intensive businesses are exploring ways to put themselves in better control of their energy supply: recognizing that how energy is produced, how reliably it is delivered and at what price is a key factor in their profitability, sustainability and resilience.

Distributed Generation
Although there is not a single shared definition for distributed generation among the different jurisdictions worldwide, the term is generally used to refer to power generation located near the point of consumption, as opposed to centralized generation, which is typically located outside of the distribution network. Frequently, distributed generators are located on the consumption side of the customer’s meter, and the electricity generated by a DG system can be either consumed on-site or injected into the local grid.                                                                                                          
 Distributed energy, or decentralized energy means to generate  electricity  at  or  near  the  point  of  use,  rather  than energy produced at large centralized plants elsewhere and sent through the national grid. This production can encompass any size of operation, technology or fuel used, both off- grid and on-grid.
Thats not to say that traditional and familiar centralized energy production will be consigned to the past any time soon. The power system relies principally on centralized power: large, high-capacity plants, built at great cost over long timescales  With  large  infrastructure  projects  often  planned  decades  before  they  become  operational, the reliance on centralized energy continues  But against this backdrop of continued reliance on centralized power, another, more disruptive trend is emerging as companies begin to explore self-generation for at least some of their energy
 
Environmental Benefits
Distributed generation (DG) could contribute to the world drive to reduce carbon emissions and global warming.. This would be the result of : reduced heat losses , heat that is now lost could be used for cooling of heating buildings ; reduced electricity losses as generation is moved in proximity of the consumption point ; encouraging use of renewable sources of energy ; increasing awareness of the environmental concerns related to power sector contributions to emissions .
Reasons for Interest in Distributed Generation

The rising cost of wholesale energy prices and the falling cost of self-generation technologies and capabilities, are driving businesses towards distributed energy, environmental considerations (whether intrinsic or because of positive associations and brand lift) are also a strong motivator. The main reason behind the move to distributed energy and self-production is cost,  .Companies have experienced rising energy costs along with everyone else 15 years, nor are they exempt from the increase in costs associated with the management of grid infrastructure, which represent an increasing share of energy bills. In other words, wholesale energy bills are made up of commodity costs (the cost of the energy itself) and non-commodity costs (other charges). While commodity costs made up around three-quarters of commercial users’ energy bills as recently as 2012, non-commodity costs (charges associated with transmission, distribution, technical losses, theft, collection deficiency, subsidies and policy costs) have been steadily rising and now account for around half the energy bill of wholesale customers. The cost associated with buying and installing energy- generating equipment on their own sites keeps coming down. There has been a big reduction in the cost of solar panels, for example, and were now seeing big reductions in the cost of batteries, which are also an important part of the distributed energy picture. Businesses hope to drive down their overall electricity bills, while becoming greener in their energy use and less reliant on third-party providers for their supply. Some businesses have already travelled a fair distance down this path, while others are weighing up the pros and cons  These investments and strategic plans are leading to a trend of decentralization in energy production, with significant implications for utilities firms in terms of planning for changing patterns of demand from large-scale energy users and adapting to new ways to manage more decentralized distribution networks. Other reasons highlight the emphasis on renewable-energy sources that companies are principally relying on. For example, environmental considerations are cited by many as a reason to produce their own energy. some mention tax breaks or other incentives for the use of renewables and some cite the desire to be seen as a green, sustainable and/or innovative business. ome of the big technology companies running huge data centers—Google, for example, or Amazontheres a definite movement in the direction of wanting to run on 100% renewable power, often involving on-site generation of that power Sony announced that they aim to be 100 per cent renewable across all of their business sites by 2040 . Tetra Pak to boost renewable energy use with new solar array at its U.S. headquarters

Company is on track to reach 100 percent renewable electricity worldwide by 2030

Thats not to say that many companies plan to ditch their utility provider completely. Sixty-two percent of respondents strongly or somewhat agree that electricity utilities should remain the main energy producers, to enable economies of scale..There’s plenty of evidence that the   energy market is changing fast and that the utility of the future is likely to play a rather different role in its work with businesses, particularly those in energy-intensive industries


Options

Options include solar arrays on the rooftops of hotels, shops, distribution hubs and factories to combined heat and power (CHP) systems in their basements, Solar stands out as by far the most popular option for on-site energy generation, due in part to the convenience and space-benefits of installing solar arrays on rooftops that might otherwise go unused, and the maturity of the technology for the self-generation market..solar seems the most popular followed by wind , biomass, non renewable  sources and hydro The trend is gathering momentum, however, with several prominent  companies recently announcing new  projects in on-site power generation. In July 2018, for example, consumer packaged Goods Company Nestle opened a nine-turbine wind farm in Dumfries and Galloway in Scotland, which will produce around 125 GWh of power annually. This is enough, the company claims, to supply half the annual electricity demands of its factories, offices and warehouses in the UK and Ireland.  In June Screwfix, a DIY retailer owned by home improvement giant Kingfisher, announced its first net-zero energy store, featuring an on-site solar array, battery storage and an air source heat pump. According to Kingfisher, energy generated by the solar panels at the Peterborough store will run the building during the day and charge the batteries to provide power at night, while the heat pump will replace existing gas and electric heating units. And in Crewe, construction has begun on a 10,000 unit-strong solar farm at the factory of carmaker Bentley. Once completed, these panels will provide 2.7 MWh to the factory, or around a quarter of its total power consumption. Exxon, Shell, and BP have announced initiatives to report the risks climate change pose to their business, bowing to shareholder pressure. 6 U.S. Corporate Giants Leading the Move to Renewable Energy these are : Intel; Kohl;  Walmart ; Apple ;and IKEA .


DG systems may include the following devices/technologies:
·         Combined heat power(CHP), also known as cogeneration or trigeneration
·         Fuel cells
·         Hybrid power systems (solar hybrid and wind hybrid systems)
·         Micro combined heat and power (MicroCHP)
·         Micro turbines
·         Photovoltaic systems (typically rooftop solar PV)
·         Reciprocating engines
·         Small wind power systems
·         Stirling engines
·         or a combination of the above. For example, hybrid photovoltaic, CHP and battery systems can provide full electric power for single family residences without extreme storage expenses.

Cogeneration

Distributed cogeneration sources use steam turbines, natural gas-fired fuel cells, micro turbines or reciprocating engines to turn generators. The hot exhaust is then used for space or water heating, or to drive an absorptive chiller for cooling such as air-conditioning. In addition to natural gas-based schemes, distributed energy projects can also include other renewable or low carbon fuels including bio fuels, biogas, landfill gas, sewage gas, coal bed methane, syngas and associated petroleum gas.

Solar power

Photovoltaic, by far the most important solar technology for distributed generation of solar power, It is a fast-growing technology doubling its worldwide installed capacity every couple of years. PV systems range from distributed, residential, and commercial rooftop or building integrated installations, to large, centralized utility-scale stations. As most renewable energy sources and unlike coal and nuclear, solar PV is variable and non-dispatch able, but has no fuel costs, operating pollution, as well as greatly reduced mining-safety and operating-safety issues. It produces peak power around local noon each day and its capacity factor is around 20 percent.
 Wind power
Wind turbines can be distributed energy resources or they can be built at utility scale. These have low maintenance and low pollution, but distributed wind unlike utility-scale wind has much higher costs than other sources of energy. As with solar, wind energy is variable and non-dispatchable. Wind towers and generators have substantial insurable liabilities caused by high winds, but good operating safety. Distributed generation from wind hybrid power systems combines wind power with other DG systems. One such example is the integration of wind turbines into solar hybrid power systems, as wind tends to complement solar because the peak operating times for each system occur at different times of the day and year.

Hydro power


Hydroelectricity is the most widely used form of renewable energy and its potential has already been explored to a large extent.

Waste-to-energy

Municipal solid waste (MSW) and natural waste, such as sewage sludge, food waste and animal manure will decompose and discharge methane-containing gas that can be collected and used as fuel in gas turbines or micro turbines to produce electricity as a distributed energy resource.  ).

Energy storage

A distributed energy resource is not limited to the generation of electricity but may also include a device to store distributed energy (DE). Distributed energy storage systems (DESS) applications include several types of battery, pumped hydro, compressed air, and thermal energy storage.  

PV storage

 

Common rechargeable battery technologies used in today's PV systems include, the valve regulated lead-acid battery (lead–acid battery), nickel–cadmium and lithium-ion batteries. Compared to the other types, lead-acid batteries have a shorter lifetime and lower energy density. However, due to their high reliability, low self-discharge (4–6% per year) as well as low investment and maintenance costs, they are currently the predominant technology used in small-scale, residential PV systems, as lithium-ion batteries are still being developed and about 3.5 times as expensive as lead-acid batteries. Furthermore, as storage devices for PV systems are stationary, the lower energy and power density and therefore higher weight of lead-acid batteries are not as critical as for electric vehicles.
However, lithium-ion batteries  have the potential to replace lead-acid batteries in the near future, as they are being intensively developed and lower prices are expected due to economies of scale provided by large production facilities. In addition, the Li-ion batteries of plug-in electric cars may serve as future storage devices, since most vehicles are parked an average of 95 percent of the time, their batteries could be used to let electricity flow from the car to the power lines and back.  

Vehicle-to-grid

 

Future generations of electric vehicles may have the ability to deliver power from the battery in a vehicle-to-grid into the grid when needed. An electric vehicle network has the potential to serve as a DESS


Impacts of Distributed generation of companies

Companies who have already made the move, self-generation of electricity is widely regarded to have delivered impressive rewards. Most claim   a slightly or strongly positive impact on the cost of business operations,  

     Drawbacks

 Drawbacks include: the high up-front cost; while a lack of understanding/expertise in electricity generation; reduced focus on their core business. Energy generation is quite capital-intensive and for a relatively small business   that kind of capex   isnt as achievable as it might be for bigger companies, Self-generation is also quite time-consuming. Its a complicated area and one in which the company has no expertise.  

 .
  Implications for utilities providers and network operators
 The big question is who is going to pay for the grid in the futurethe fixed costs associated with building and maintaining transmission lines. If more and more companies go off-grid and become essentially energy self-sufficient, utilities are left with a diminishing number of customers to pay these costs, which obviously results in an inequitable distribution of those grid costs among remaining customers. There could be a move towards network charges based on gross demand rather than net. However, this could prove unpopular, as it would mean that self-generating businesses also face network charges. Business models and charging mechanisms are going to have to change the traditional utility model based on centralized supply is under severe pressure from technological change and regulatory interventions.

There is also the question of whether local grids will be able to cope with two-way flows of energy as more companies seek to sell the energy they generate back to the grid.  . Battery prices are falling rapidly, opening up opportunities for companies to create new revenue streams, by storing at least some of the energy they create and selling it on. This could create challenges for distribution network operators (DNOs), the companies that own the cables and towers that bridge the gap between the national transmission network on one side, and homes and businesses on the other.. “\A two-way flow on these networks, where power is being pushed back into the grid at times when theres excess power locally creates a need to manage local grids much more closely on a minute-by-minute, second-by-second basis, to keep frequencies within the ranges at which they need to be maintained and ensure the local grid doesnt trip.. Thats a big change from the unidirectional flows that DNOs are accustomed to managing. This will force todays DNOs to become distribution system operators, or DSOs— innovative companies that use smart grid technologies to move away from this traditional role of delivering electricity in one direction from centralized power plants to homes and businesses, in favor of acting as operators of smart platforms” that actively manage and balance supply and demand in local areas, from a range of decentralized sources.
 
The rise of electric vehicles (EVs), which will also bring new complexities, not just for utilities but also for many of their business customers..Increasing numbers of EV owners will be looking to plug in their cars when they visit a supermarket, check into a hotel or simply arrive at work. It will take some pretty smart management across the entire grid in order to cope with the inevitable peaks in demand that occur at charging stations at certain times of the day, because charging an electric vehicle relies on a higher capacity and faster charging connections compared with charging other kinds of appliances. For hotel car parks and motorway service stations, for example, capacity constraints in terms of the quantities of energy that can be delivered to a site during peak periods could quickly become an issue. This may even result in increase in peak demand.  
New patterns in electricity flows across the grid, meanwhile, will open up new opportunities for demand-side response aggregators, but these are likely to face increasing competition from utilities companies and DSOs,   Demand response is the mechanism by which companies and consumers reduce or shift electricity use during peak periods in response to time-based rates or other forms of financial incentives.  Many aggregators have flourished in recent years, thanks in large part to the shift to energy self- generation by companies. These tech-focused firms have built some very clever software to help businesses understand how best to use the mix of distributed energy and power that comes from utility providers and then manage those assets on their behalf, Many of these companies are still quite small, however, and traditional utilities are increasingly investing in similar technologies to offer those services themselves to customers.  

Sorting through these issues will take a concerted joint effort among utilities, policymakers and energy- intensive companies. A number of things need to happen in order to enable the smarter grid of the future to operate more efficiently, smart meters , time of use tariffs , and two way metering and buy back tariffs needs tom be in place 
The future relationship of utilities and energy-intensive business customers will instead look far more collaborative—but the latter group will become increasingly more savvy shoppers and be reluctant to pay higher bills. More than half (52%) strongly or somewhat agree that the cost of energy will probably fall if more power production is decentralized, due to increased competition between power producers.

 Pakistani Market
Solar roof tops have a decided financial attraction for the Pakistani industrial and commercial consumer.  For starters both these consumers are charged above cost of supply.  The tariff dissertations are explained as follows:
     Tariff distortion.
Electricity tariff subsidizes domestic consumption at the cost of industrial consumption. Comparison of the financial tariff to tariff based on marginal costs has been made. The marginal Cost estimates (at an oil price of $ 52/bbl) are presented as follows:






Table - : LRMC Estimates
(Based on oil price of US$52)
Voltage Level
Capacity
Peak Energy
Off Peak Energy
$/kW
c/kWh
c/kWh
Gen
417
10.24
6.39
500 kV
506
10.41
6.51
220 kV
540
10.59
6.58
132 kV
623
10.91
6.74
66 kV
718
11.23
7.00
11 kV
755
13.72
8.96
0.4 kV
970
16.35
10.25
Source: Consultant
Tariff from LESCO web site had been compared with a tariff calculated based on marginal costs. This comparison is presented as follow:
Tariff : Financial vs. Marginal
Tariff Rs./kWh
Customer
Financial
Category
Financial
Marginal
% Marginal
Industry
13.46
11.59
16.19
Domestic
10.25
15.29
-32.98
Commercial
16.30
15.14
7.65


The domestic financial tariff is about 33% lower than the tariff based on marginal costs.B1 industry financial tariff is 16% higher than the economic tariff. Financial and tariff based on marginal costs for medium sized commercial customers is about even. The share of domestic consumption in Pakistan is much greater than in most countries at its stage of development. The reason is that the state subsidizes domestic consumption, especially for more affluent households. This happens at the cost of power for industrial consumers. This is one reason why compared to the size of the economy, the country remains less industrialized. High energy cost impact profitability of investors. Basing electricity tariffs on the long run marginal cost ensures that both the level and structure of tariffs reflect the cost of expanding the power system.

Commercials entities  say a mall purchases power from the grid at Rs12-14 per unit for its consumption which is spread over 24 hours, a solar rooftop solution can instantly cut the net tariff in half — thereby helping them to hedge a long-term power tariff. There is another advantage for industrial and commercial consumers with solar power — the energy is available when they need it the most during daytime  which results in significant cost savings for their operations. Educational institutes such as colleges and universities could come in next as potential players in the market. Think of these institutions which have expansive, flat-topped buildings and large campuses ideal for installing solar panels.
Urban educational institutes obviously come with a net metering advantage and have become excellent candidates for rooftop solar plants. Many of these institutions have acres of roofs, but assuming conservatively that only 200 kW of solar gets installed on average on these premises, there is scope for additional installation of 5,000MW across the country.
  Net metering provides an ideal opportunity to sell power back to the grid in summer and over the weekends and supplying to the grid at a tariff of Rs10-12 per unit.What once did not make any commercial sense is now solely lucrative on economic grounds.With rooftop solar dominating, net metering has become even more critical today and is sprouting different business models such as the ‘opex model’ where the roof owner does not own the solar plant. The solar is owned by a third party who invests in the plant and sells power, typically, to the roof owner.
Since the rooftop solar plant owner is a power company and there is an incentive to sell electricity back to the grid through net metering, every unit of electricity generation matters. The roof owner is happy because he gets a fixed long-term tariff without undertaking any upfront investments — and hedges himself against rising power tariffs (think of all the surcharges).
The third-party owner of the solar panel is happy because his internal rate of return (IRR) of selling the power back to the grid and opex revenues from his customer is higher than his cost of capital. And last, the government is happy because the grid is now more stable owing to all the excess power being supplied to surrounding neighborhoods instead of burning additional electricity.
There are technological challenges, too, but they could be easily overcome. For instance, not many Discos have the technical capability to adjust to power fluctuations. During the day, there’ll be adjustments to accommodate sudden spikes of generation; in the evenings, there’ll be a reverse flow which makes the power variability and intermittency come in a much larger way. There is another concern of the government’s stranded costs of assets that it has procured on stringent ‘take or pay’ terms.



CONCLUSIONS

 

        Benefits and Costs associated with DG


Stakeholder perspective

Factors affecting value

DG customer

Benefits: Reduced utility bill, additional incentives, tax credits, consumer empowerment
Costs: DG system cost

Other customers (e. g. ratepayers)

Benefits: Reduction in transmission, distribution, and generation capacity costs, energy costs, and grid support services8
Costs: Administrative costs, rebates/incentives, decreased utility revenue that is offset by increased rates

Utility

Benefits: Reduction in transmission, distribution, and generation capacity costs, energy costs, and grid support services
Costs: administrative costs, rebates/ incentives, decreased revenue, integration and interconnection costs

Society

Sum of the benefits and costs to all stakeholder + additional societal and environmental benefits or costs that accrue to society at large rather than any individual stakeholder.

 

 

 

                                                                                    

A profound shift is under way in energy production. Distributed energy is here, and a trend likely to pick up pace as more business opts to meet a greater proportion of their energy needs through self-generation. The pressure is on for utilities companies to radically rethink their business models. For many, future success will depend on their ability to partner with energy-intensive companies on their distributed energy journeys, assisting them in the design, procurement and implementation of on-site energy generation equipment, and its ongoing operation and maintenance.

 Power grid is under increasing pressure, and that trend is set to continue. Electricity pricing, meanwhile, is volatile, but on a general upwards trajectory. For many companies, particularly those in energy-intensive industries, it will simply make good business sense to generate at least some of their own energy, store it when it is abundant and cheap, and tap into it when grid power is scarce and costly. It is not only the ability to self-generate that drives self-generation, but complementary technologies and capabilities such as those that allow greater insight over energy use and the ability to squeeze out further efficiencies, as well as battery storage.

For many, the only way to guarantee round-the-clock access to cost-efficient power will be to make it themselves and take advantage of investment economics that are improving at breakneck speed. In time, self-generation of power will become a valuable revenue stream and a source of new value for business leaders, as well as an attractive form of insurance and clear sign of their companys green credentials.