Potential Benefits of Small-scale Distributed Generation: A Case Study

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Potential Benefits of Small-scale Distributed
Generation A Case Study

• Proposed project for partial fulfilment for a
  Master of Technology
• Mandy Armstrong, July 2007

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Summary

• This project aims to provide a practical example
  of what is needed to implement a residential,
  small-scale DG system (nominally lt10kW) employing
  net-billing, and use this to demonstrate
  potential economic benefits to relevant
  stakeholders.
• The conditions where investment in such systems
  becomes worthwhile should be established to
  confirm
• the practical, economic viability of
  net-billing small-scale DG
• the contribution to design and management of
  low-energy housing.

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Definitions

• Distributed Generation electricity generation
  equipment connected to a local distribution
  network, producing electricity for end users
  connected to the network, and/or for export back
  into the network.
• Net billing where the electricity imported is
  measured separately to electricity exported,
  based on the use of the distribution network for
  both importing exporting electricity.

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Problem Statement

• Accepting that DG is an option for increasing the
  contribution of renewables (particularly for
  local networks)
• Potential benefits and opportunities for
  small-scale on-grid DG employing net-billing for
  surplus energy are not well understood
• Requirements for implementing these systems vary
  in clarity from region to region
• Despite recent regulatory reviews, it is expected
  that support for DG will continue to be
  inconsistent in a complex and political energy
  market.
• Net billing could be an opportunity for
  developing the concept of low-energy housing,
  which is not well supported in NZ currently

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Problem Environment

• We have a complex market with extensive
  Government influence
• Large stakeholders have a variety of drivers
  which they are within their legal rights to
  satisfy
• There is a raft of recent regulation policy
  that should make it easier to pursue DG in a
  technical and legal sense
• BUT will this work in the real world
  particularly for systems lt10kW? Are we deluding
  ourselves?
• Innovative energy management solutions exist
  internationally, down to the household level. Why
  not here?

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According to MED

• One specific outcome is to ensure that the use
  of new electricity technologies and renewables,
  and distributed generation is facilitated and
  that generators using these approaches do not
  face unnecessary barriers.
• (Related to Government objectives for the
  delivery of electricity)

Source MED website
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Objectives

• Gain a practical understanding of the barriers
  opportunities of implementing a grid-connected
  small-scale DG system based on net-billing.
• Establish the conditions if/where investment in
  net-billing small-scale DG becomes economically
  viable.
• Provide guidelines for those interested in
  implementing residential/small-scale DG,
  especially if it has implications on
  house/property design for low -energy housing.
• Provide recommendations on overcoming barriers to
  net-billing on-grid DG.

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Approach

• Situation Analysis
• Understand issues and requirements for
  implementing the system
• Options for economic assessment
• International overview useful lessons
• System implementation Case Study
• Work with appropriate lines company/retailers to
  review system design and work through the
  legislative process
• Talk to other market stakeholders how
  consistent is the approach?
• Scenario Modelling
• Use the case study design, economic assessment
  criteria to model a range of economic benefit
  scenarios

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Case Study

• Wairarapa rural site, with 8 north facing house
  lots, with energy efficiency criteria
  requirements for house design.
• The intent is to utilise one connection to the
  local grid, with a miniature grid within the
  development.
• The final system design generation options are
  still open, and will depend on the viability of
  pursuing net-billing DG.
• Could potentially use a single residence case
  study, also based on energy efficient principles.

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Possible Outcomes

• From Scenario Modelling
• Economic benefits to the generator, to understand
  how system size can influence economic
  attractiveness of supplying back to the grid.
• Economics of small-scale generation where on-site
  energy efficiency/energy management practices
  could affect the size of the system installed
  the subsequent economics of grid supply
• Economics for the local network how many
  small-scale systems are needed to provide a
  benefit how big do they need to be?
• Quantify issues of grid layout, grid capacity,
  and generation type on the viability of such
  systems
• What combination of factors are needed to make
  the investment worthwhile?

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Support Slides to talk to during the presentation
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A bit of background

• 2003 during initial stages of property
  development approached PowerCo re metering
  requirements to enable net-metering. This on
  advice from our architect who claimed net
  metering was possible.
• No success no systems in the Wairarapa, as it
  turned out, no domestic systems in NZ that we
  could use as an example.
• Powerco actively dissuaded us from going any
  further, so conventional meters were installed
  the site is fully grid-connected.
• Buildings were designed oriented for
  installation of micro-generation systems, the
  house designed for a low imported energy demand
  (currently using 3200 kWh/yr electricitygas).
• Hoping to revisit a net-billing system as the
  environment changes.
• Similar scenario with Totara Bank up front
  investments made for future generation options.

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Situation Analysis detail

• Issues requirements to consider
• Technology
• Site system design, including managing energy
  demand size of generation (gt10kW??)
• Applying the new DG legislation
• Social environmental needs, including emissions
• Grid local network infrastructure
• Other capabilities needed for implementing
• Future of low-energy housing link to HERS
• NZ success stories?

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Emerging Questions

• Whats the influence of managing demand profile
  on the system design, economics of net-billing?
• Mini-grid design impact on connection for local
  grid connection?
• Will a housing cluster be more viable for net
  billing than a single residence?
• Availability of technology in NZ vs permitted
  technology by lines cos/retailers
• How well can we value emissions reduction
  social drivers?
• Will the market allow the investment risk to be
  taken by small generators even if it costs in the
  short-term?
• Are there opportunities to incentivise
  residential DG to manage peak demand generate a
  minimum constant base load back into the network?
  Is it worth it? Is it dependent on the 10kW
  threshold?
• Will there ever be incentives to allow energy
  consumers greater participation in clean energy
  technology?
• Is there a political pathway that would produce
  an environment where small scale DG is
  encouraged?
• Implications for remote rural connections after
  2013?