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Facilitating Microscale Distributed Generation in New Zealand Alister Gardiner Prepared for: NERI Energy Conference, Massey Date:July 07 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 2 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 3 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 4 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”? 5 Distributed Generation 6 MicroGeneration General customers can generate from “behind the meter” Intermittent renewable energy Firm Combined Heat and Power (CHP) ><10kW? Reduced losses Surplus electricity for other network customers M Conversion device Distributed Resources including wind, solar, battery storage, fuels Potentially a substantial increase in system complexity 7 MicroGeneration Through weight of numbers MicroDG could deliver a network transformation BAU LARGE 100MW OPPORTUNITY INITIATED Capacity of Site SUPPLY-SIDE DRIVEN BY BUSINESS ENERGY RETAIL GENERATION MEDIUM TRANSMISSION 10MW DISTRIBUTION SMALL • Large scale DG is supply side / business driven • Small scale DG will be demand side driven, but will be influenced by supply side strategies INDUSTRIAL 1MW COMMERCIAL MINI 100kW Number of Sites COMMUNITIES DOMESTIC MICRO DEMAND-SIDE DRIVEN BY CUSTOMERS NEW TECHNOLOGY INITIATED • A market framework that recognises the value of the full value of agregated microDG is desirable Network Transformational 8 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 9 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 10 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 Conventional Distribution Distribution 1-way power flow M M M ~ ~ Example of a Microgrid connected to the existing Distribution System Other network feeders M 2-way power flow ~ fuel based CHP M M ~ Micro-generation PV, wind, hydro Community Microgrid 11 MicroGrids The value of the network - ADMD capacity reduction # of Houses 1 5 20 100 Ratio of MD 1 0.62 0.34 0.24 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 12 MicroGrid Options Intermittent local generation - Network dependent Network provides power balancing and ancillary services (voltage, frequency, etc.) Microgrid environment Aggregated passive generation Firm local generation - Network independent: capable of islanded operation Microgrid can provide power balancing and ancillary services (voltage, frequency, etc.) Microgrid environment Aggregated smart generation 13 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 15 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 16 Integration of community distributed energy solutions (IDES) 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 17 Leading to a more sustainable energy system 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 18 Leading to a more sustainable energy system 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 19 Integration of community distributed energy solutions (IDES) Measurement of Capacity Value A simple method for metering average capacity support provided by general customer-generators Existing customer loads kWh Distribution System connection On-pk/ off-pk register switch from lines company Existing Revenue Meter(s): As required by energy retailer kWh Capacity Meter: Two Register Meter with reverse stop, connected as Export Distributed Generation 20 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 21 Integration of microscale energy systems 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 22 Integration of microscale energy systems 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 23 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) 24