Download Distributed Energy Resources: Bringing Energy Closer to

Distributed Energy
Resources: Bringing
Energy Closer to Home
Presentation by the
Industry Task Force
on Distributed
Generation
July 28, 2005
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Industry Task Force on
Distributed Generation
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Volunteer Ad Hoc group of industry
participants with an interest in furthering the
development of policies supporting
distributed generation in Ontario.
Members include Owners, Manufacturers,
Developers, LDC’s, and other industry
experts
Projects represented include wind, highefficiency cogeneration (natural gas &
biogas), district energy and others
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Characteristics of
Distributed Generation

Distributed Generation
small -- typically embedded
 local -- close to load
 decentralized -- connected to
distribution, but not centrally planned
 smart -- complements, but will not
replace power stations and
transmission grids
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Distributed Generation
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Based on our definition of DG,
approximately 300 MW is in-service in
Ontario.
Many more good projects are developed
enough to proceed quickly (200-300 MW
estimated)
Projects have not proceeded due to:
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Market uncertainty
Value not monetized and delivered to
proponents / hosts
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Procurement
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DG Task force members participated in
RES I and CES, some successful.
Most potential DG sites were not
represented. Reasons included:
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Complexity
Appeared to be designed for larger Combined
Cycle projects
Limitations and additional risks faced by
cogeneration proponents (thermal host)
No economic value attached to producing
power close to the load i.e.. “Delivered Power”
Time frame too tight
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Procurement

Positive features of the process:
Competitive nature
 A portion of fuel costs (and risks)
transferred into price of power
 Private investment
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Procurement Suggestions
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Simple process – smaller projects
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Timing – must be flexible:
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smaller developers with fewer resources
allowing high efficiency cogen to be built on
timing in synch with host .. i.e Toyota,
Hospitals
Liabilities more consistent with smaller
projects, LD’s and commitments –

these are small projects, and if one does not
get built, or close the doors before the end of
20 years, it is not material to OPA
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Procurement Suggestions
 Create
a standard offer with
uniform terms and conditions for
any embedded generation
 Remove the current stipulation
that proponents must be IESO
market participants.
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Procurement Suggestions

When evaluating bids or setting a
standard offer price, these projects
need to be valued based on
“delivered power”

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Capital & Energy savings on
transmission and distribution networks
DG value can exceed “base energy
rate” by $20 to $25 per MWh
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Procurement Suggestions
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Standard offer should be set at a value
that includes hidden benefits of DG, and
available for a period that will recognize
host’s approval and development times
Continue to work with OEB to make
hidden benefits part of standard tariffs or
have the OPA pay value to proponents
If RFP, make it an “RFP Lite” that is very
simple
Power price indexed to fuel cost (natural
gas projects)
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Procurement Suggestions
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Self-scheduling, or defined “on-peak”
operation
DG should be treated similarly to demand
response and DSM projects … be able to
avoid all upstream charges including DRC
If this cannot be done in practice, it still
should be taken into account when
evaluating DG vs. other options in OPA’s
procurement decisions.
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Benefits of DG
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Delay or avoid need for capital expenditures
to upgrade congested transmission or
distribution network, and offer local solutions
to transmission constraints
Reduce T&D system losses and improve T&D
load factors
Increase reliability at LDC level and provide
support or ancillary services to LDC network
Help reduce peak prices and transmission
charges
Reduce financial, development, construction
and operating risk for ratepayers because of
smaller increments of investment
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Benefits of DG
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Make more efficient use of fuel, particularly in
case of cogen
Offset T&D charges – economic advantages to
ratepayers or to generators
Environmental
Capital Savings
Peaking use of DG can be very effective
capacity
Power Factor correction and voltage support
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Questions
For more information, please contact:
James Sidlofsky, Chair, DG Task Force
Borden Ladner Gervais LLP
416-367-6277
Barry Chuddy, Vice-Chair, DG Task Force
Enersource Corporation
905-283-4250
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