DISTRIBUTIVE GENERATION - APPROACHING A PARADIGM SHIFT.

• Author: McMahon, Michael P.

Famous last words:

"Everything that can be invented has been invented."

...Charles H. Duell Commissioner, U.S. Office of Patents, 1899

The electric utility industry is not exempt from change and while the industry has evolved since its early beginnings, some facets have until now remained largely untouched. Remaining as one of the last bastions of monopolistic enterprise, the electrics have had only to deal with governing boards or public utility commissions for maintenance of their treasuries. The customers have had relatively little choice in matters regarding the selection of whom or where their electric power comes from or the price they paid for it. Until now, due to lagging technology, the economic production of electric power was left to the "central station" generation and delivery mechanisms. With invention and a complimentary political mood, a definite shift in the status quo appears imminent. Now long-standing monopolies are headed for extinction with the "freedom of choice" movement commonly acknowledged as "industry restructuring".

However, the state of today's technology may have a more significant impact on the electric industry than any restructuring initiative could have envisioned. There is ample evidence that on-site electric power generation is poised and ready to move onto the electric customer's premises.

Thus, the industry is faced with yet another challenge for which a new term has been coined. Basically, customers will generate power for themselves with the ability to sever ties with the traditional electric utility. This new issue, "distributive generation" will challenge the electric industry's longheld standing as the only show in town.

Distributive generation or dispersed generation will begin to amplify its presence during the first decade of the new millennium. Distributed generation is the installation of power generation resources at the point of power consumption, permitting choice of association or non-association with the existing electric utility infrastructure. This fundamental change in energy resource application has become feasible and acceptable with advances in technology, accompanied by political and environmental advocacy. The net affect of what is anticipated to be a shift from traditional sources of central station electric power, including fossil fuels, hydro, and nuclear electric generation, to renewable fuel-sourced energy is currently unclear. However with the coming transition, distributive generation presents the potential to subjugate traditional power resources, ultimately forcing them into a diminished role in the nations overall power production and delivery system.

New technology is not expected to completely displace the traditional sources in one, two or perhaps even three decades. However, significant shifts are likely to occur thereby steadily changing the complexion of the industry. For this transition to occur, the factors that could affect outcomes include Further technological breakthroughs, successful methodologies for producing specialized fuel and public acceptance of these innovations.

Another lurking problem in the coming transition is encroachment of electric utility deregulation. While deregulation has not enveloped all states, its presence may play a larger part in the emerging mix. Dependent upon the level of public confidence, cost, and legislative initiatives, the actual transitional period and subsequent outcomes could vary significantly. At this juncture, the movement appears to be traveling at a moderately accelerated rate resulting from rapid technological advances, coupled with a strengthened advocacy for renewable fuels, brought about by mounting environmental pressure. One may also postulate that this shift may have its roots in a desire for energy self-sufficiency by those seeking independence from the inherent monopolistic characteristics found in most if not all of the traditional utility services.

We are witnessing the early signs of a paradigm shift, whereby the "early adapters" are now taking the steps to install and test alternate energy sources. From these initial activities, the successful applications will begin to filter into the mainstream of the energy market. The transition will likely occur slowly at first and then gain momentum, as the cost for making the transition is comparable to that of the traditional power supply.

Distributive Generation

Distributive generation consists of electrical generation that is not centrally located. Distributive generation has been with us for some time and in fact was the starting point prior to the development of the central station concept which now involves power plants, transmission and distribution assets. With distributive generation, there is generally little or no reliance on heavy transmission or distribution lines or the other attendant facilities since it is often located at the same site where the power is ultimately used.

Distributive generation has been in use historically in applications where economics, the environment, legal or political constraint has precluded the use of central station power. Traditional distributive generation consisted of diesel generation, and in limited applications, solar collectors and wind turbines. The common types of on-site generation carry the inherent disadvantage of high purchase cost and more frequently, limits imposed by operational reliability coupled with high maintenance costs.

With advancing technology, some of the slower evolving technologies are now coming of age. Microturbines are now producing high quality and economical power with adequate capacity to supply commercial needs. Electrical World (September / October, 1999) reported a recent installation where a gas fired 75-kW microturbine was installed at a McDonald's restaurant in Bensenville, Ill. While the turbine has the capacity to serve all of the restaurant's needs, an interconnect has been maintained with the local utility for back-up power. These new microturbines are compact in size and operate quietly. The design and purpose for the installation was to reduce energy costs and to enhance reliability.

Renewable's as Catalysts

To qualify as a "renewable" energy source, the resulting energy production (through its source supply or fuel-to-energy conversion process) can not totally destroy the initial energy source. In the renewable scheme hydroelectric power is not considered a renewable energy source due to damage to land that is flooded. However, wind, solar, geothermal and other naturally renewing energy sources fit nicely into a renewable definition. Harnessing these renewable's has captivated science for years and is only now beginning to bear some fruit. Since renewable's appear to be gaining ground in political circles as well as in the public eye, close attention should be paid.

Technological advances, which have occurred in the renewable energy arena, have put an old story back on the front page. Wind turbine technologies have charm value with the public, particularly when the perception is that the wind is a free source of electricity when compared with traditional generation. Wind turbine technology has overcome some of its earlier failings and is viewed in some circles as a more mechanically reliable generation source. Wind-turbines have found a political niche in the promotion of "Green Power" whereby wind turbine energy is made available to those willing to pay a higher price in furtherance of environmental discourse. According to Rural Electrification (October 1999) electric customers are now willing to pay as much as 40-60% more for what they see as renewable sourced electric power.

With solar applications, we see evidence of advancement in small ways. Examples of solar powered equipment are now coming into public view. Some devices are appearing in highway construction areas where lighted regulatory signs and signal lights powered with photovoltaic equipment help to demonstrate these capabilities.

Solar power, while holding out a huge potential, has been estimated to have a later arrival date with respect to economics. On the downside, both wind and solar have the same nagging and persistent problem and it is one that is unlikely to disappear anytime soon. Essentially, by its nature, electricity cannot be stored, with the limited exception of batteries, and therefore must be used at the point of generation.

Both wind turbines and solar applications are bound by this limitation and while they can both produce "energy," they fail at the production of "capacity" which is critical for consideration as a contributor for serving base electric loads.

On the developmental side, there is ongoing research using solar, geothermal and ocean thermal energy conversion as a renewable source. The National Renewable Energy Laboratory (November 1999) claims that on an average day, 23 million square miles of tropical seas absorb an amount of solar radiation equal to about 250 billion barrels of oil. Further, if less than one-tenth of one percent of this stored solar energy could be converted into electric power, it would supply more than 20 times the total amount of electricity consumed in the United States in any given day. However, economics has been ocean thermal energy's continuing nemesis.

Solar development has advanced to the point of larger working projects. The Sandia National Laboratories has been working with the U.S. Navy at the Superior Valley Tactical Training Range at China Lake, California. The installation of a 300-kW photovoltaic/diesel hybrid system was the result of wining a competitive bid. This installation has proven cost efficient based upon the 20-year project life with a 10-year investment payback and net savings estimated at about $3 million for the service life. The limiting factor for achieving a full renewable status is the need for the diesel backup during times when solar capacity is not available. Again, the capacity...