Facilitating Microscale Distributed Generation in New Zealand

Prepared for: NERI Energy Conference, Massey Date:July 07

Alister Gardiner

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Overview

Drivers for change The role of Government Definitions - DG and microgrids Network design issues – technical, market Current status – a level playing field? Facilitation framework – technical, market design What I would like to see happen here

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Drivers For Change

Delivery of energy services faces new challenges: Consequences of environmental damage Energy security

Contributing factors Continued growth in demand Dwindling traditional energy resources Political instability Competition for resource use Wellbeing and economic competitiveness Environmental awareness and sustainability The digital age requires higher quality and security

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Drivers For Change

The requirements translate to a need for: Higher StU efficiency (not just demand side) Lower overall carbon emissions

Existing infrastructures have served well but will need to be adapted for the future:

Market liberalisation and customer choice Changing commercial frameworks and removal of barriers Technological advances and disruptive technologies End of life replacement and upgrade costs New resources and localities

Distributed generation can contribute to these goals

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Government Role

Electrical energy objective: to ensure that electricity is produced and delivered to all classes of

consumer in an efficient, fair, reliable, and environmentally sustainable manner and to promote and facilitate the efficient use of energy

Distributed generation objective (GPS) To facilitate the use of distributed generation by ensuring that it does not

face undue barriers in connecting to lines

The government is responsible for a sector framework that delivers these objectives

“Electricity” or “electricity services”?

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Distributed Generation

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MicroGenerationGeneral customers can generate from “behind the meter”

Intermittent renewable energy Firm Combined Heat and Power (CHP) ><10kW?

Potentially a substantial increase in system complexity

Conversion device

Reduced losses

Distributed Resources including

wind, solar, battery storage, fuels

Surplus electricity for other network

customers

M

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MicroGeneration Through weight of numbers MicroDG could deliver a network

transformation

SUPPLY-SIDE DRIVEN BY BUSINESS

DEMAND-SIDE DRIVEN BY CUSTOMERS

NEW TECHNOLOGY INITIATED

OPPORTUNITY INITIATED

Number of Sites

Capacity of Site

LARGE

100MW

MEDIUM

10MW

SMALL

1MW

MINI

100kW

MICRO

ENERGY RETAIL

GENERATION

TRANSMISSION

DISTRIBUTION

INDUSTRIAL

COMMERCIAL

COMMUNITIES

DOMESTIC

• Large scale DG is supply side / business driven

• Small scale DG will be demand side driven, but will be influenced by supply side strategies

• A market framework that recognises the value of the full value of agregated microDG is desirable

BAU

Network Transformational

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MicroGrids

“Smart Grids” is a new concept for electricity networks, needed to meet the challenges of the 21st century and fulfil the expectations of society

(European Commission Directorate General for Research http://www.eurosfaire.prd.fr/7pc/doc/1144859476_smartgrids_en_etp_2006.pdf

)

MicroEnergy technologies and the MicroGrid are key

components of the Smart Grid concept

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MicroGrids

What is a microgrid?

A power network that operates at the community level, including the integration of small electricity sources,

energy storage, and controllable loads.

Includes a wide range of sources including PV, wind, fuel cells, etc. and loads operating as a single aggregated generator or load

Can operate as a net source of power, or as ancillary services supporting the network.

Unique feature – generally connected to the greater distribution network, but can automatically transfer to islanded mode, and also resynchronise as required

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MicroGrids

“Behind the meter” customer-generators Each can import shortfall and export surplus (to next door?)

A disruptive technology? New regulatory framework? – central supply no longer dominates Autonomous, self healing systems?

~~

Centralised Generation

Transmission

Distribution

M M M

M M M

~

Micro-generationExample of a Microgrid connected to the existing Distribution System Community Microgrid

Other network feeders

2-way power flow

fuel based CHP

1-way power flow

Conventional Distribution

~PV, wind, hydro

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MicroGrids

The value of the network - ADMD capacity reduction

If individual house peaks are 16kW The 100 house+ community per house peak is ~ 4kW The network provides substantial value by reducing the supply

capacity requirement

Who should pay for the cost of the network? The consumer - not the generator A customer-generator who makes a reduced demand on

network capacity should be rewarded with lower network costs

# of Houses 1 5 20 100

Ratio of MD 1 0.62 0.34 0.24

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MicroGrid OptionsIntermittent local generation - Network dependent

Aggregated passive

generation

Network provides power balancing and

ancillary services (voltage, frequency,

etc.)

Firm local generation - Network independent: capable of islanded operation

Microgrid environment

Aggregated smart

generation

Microgrid can provide power balancing and

ancillary services (voltage, frequency,

etc.)

Microgrid environment

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Public Good Outcomes

Big improvement in supply efficiency Line losses reduced From <40% central generation to >80% CHP

Reduction in GHG emissions Many local energy resources are renewable Much less

fuel is used

Thermal resources conserved the rate of usage could be halved

Increased network resilience Higher reliability and power quality are possible

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Network Design Issues

Central generation Energy Firm Capacity and power quality

Delivery High T&D infrastructure costs One way power flow Large scale wholesale market

Distributed generation Energy Capacity???

Delivery Low infrastructure costs Low losses 2 way power flow Small scale wholesale market???

Customer-generator General customer pays for

metered energy and an estimated share of various ancillary services (firm capacity, power quality, reliability, etc.)

If also a generator, should be

rewarded for both types of services supplied to the network

Offers a new paradigm in demand response/participation

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Network Design Issues

Two areas to be addressed in a regulatory framework

Technical design Market design

Network integration can be enhanced by clear signals to device developers that

Encourage desirable network characteristics

Encourage public good benefits

Technical Most generic issues are

understood for low penetration levels

Inverter systems offer a trouble free standardised interface

System changes needed for high penetration levels

Market Dominated by centralised

wholesale market thinking New approach needed Transformational - must be

government led

Integration of community distributed energy solutions (IDES)

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Current DG Status

Technical 2003 MED discussion paper proposed <10kW/40,000kWh category Sep 2006 draft regulations released for comment Jul 2007 - still no specific regulations for microgeneration

Market EC - Proposed model contract, no minimum price

Barriers? 4 sets of “consents” potentially required

Lines company – technical Retailer – purchase agreement Regional council – resource consent City/County Council – building permit

Many other “market entry” barriers

Leading to a more sustainable energy system

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What Would I Like to See in NZ?

Technical: <10kW/40,000kWh is a good start but Simplify the application procedure and detail Mandate a standard “minimum certfication spec.” which Lines Cos

must accept, eg AS4777 plus any others required A new very small class of net metered microgeneration

(<5,000kWh/yr?) which is non-notifiable if it meets proscribed standards (ie treated as an appliance)

Market: Mandate a minimum payment /kWh exported which includes a 2 rate

option for on/off peak reward (feed-in tariff concept) On peak payment to include avoided GXP and line costs,

transmission and line upgrade costs based on asset management plans

Leading to a more sustainable energy system

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Measurement of Capacity Value A simple method for metering average capacity support

provided by general customer-generators

Integration of community distributed energy solutions (IDES)

Existing Revenue Meter(s): As required by energy retailer

kWhExisting

customer loads

kWh

Distribution System connection

Capacity Meter:Two Register Meter with reverse stop, connected as Export

Distributed Generation

On-pk/ off-pk register switch from lines company

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What Would I Like to See in NZ?

PCE “Get Smart, Think Small” report Recommendation 1: That the Minister of Energy, as part of the New Zealand

Energy Strategy, develops a specific local energy work programme for New Zealand that

Endorses the concept of local energy Identifies contributions LE could make Set short, med long term uptake targets Sets our govt roles and responsibilities Provides a framework (for action)

There are 6 comprehensive recommendations

IE – the government takes a leadership role in facilitating the introduction of these systems

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Micro Distributed Energy Potential transformation of the Electricity Supply

Infrastructure through microgeneration and microgrids Strategy:

Central generation increasingly supplies large-scale users MicroDE initially provides supply to small owner-generators at the end

of the network Eventual penetration of customer microgeneration into urban areas

Management of microDG should be through a national regulatory framework and commercial pricing strategies – eg as for hot water load control

The network is still needed for this scenario – it provides load diversity, for which customers must continue to pay (but not the generators as well!)

Significant improvements in GHG reduction and energy efficiency are possible if this technology can be delivered

Integration of microscale energy systems

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Micro Distributed Energy New Zealand business opportunities

Supply-demand side interaction Paradigm shift in thinking

New network technical issues 2 way power flow protection

New network management issues Capacity and despatch

New products Materials and components Systems and control

New market mechanisms A comprehensive RD&D programme is needed

Feasibility and benefits Systems and technology research “Light house” community pilots to evaluate techologies and mechanisms

Integration of microscale energy systems

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Regulatory Framework Design

What might happen if the framework is inadequate? Microgenerators may take the baseload residential demand microCHP may destroy the ability to control water heating load Residential network economics may worsen Gas distributors may get rich

What could happen under the right framework? Network capacity support from general customers Improved demand factor (more cost-effective networks) Also kVAr voltage support and other ancillary services (improved

power quality and reliability) Increased network efficiency (lower losses) Improved supply resilience (segmenting and self healing

networks)