DG Technologies and Applications

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This section provides a brief overview of DG systems, operating schedules and system applications considered in DG Marketplace. Topics include:

Summary
DG Technologies
Operating Schedule Options
DG Application Options
Other Issues
Analysis Process

Summary

Distributed Generation (DG) is the generation of electricity at or close to its use. Generation technologies considered in DG Marketplace at this time include:

Reciprocating engines
Microturbines
Combustion turbines
Fuel cells

Nearly all DG technologies use fossil fuels as their energy source converting from 20 to more than 50 percent of the energy input into electric power. Other fuel sources such as biomass can be used in some cases; however, these applications are not currently included in DG Marketplace.

Operating schedule options include:

Continuous power
Intermediate power
Peak shaving
Standby generation

DG application options include the following options:

Generation only
Premium power
Combined heat and power

Other issues to be considered in DG applications include:

Emissions
Standby and backup rates
Off grid applications

DG Marketplace evaluates DG applications using each of the DG technologies, operating schedules and application options identified above. A brief review of these technologies, terms and several other issues are described below.

DG Technologies

Reciprocating engines have been used for decades in distributed generation applications and are by far the most widely used prime mover. Otto cycle (spark ignition) and compression-ignited (diesel cycle) engines are the most common types of reciprocating engines. Engines, which range in size from less than 1 kW to more than 50MW have electric efficiencies ranging from 25 to 50 percent. For DG applications, reciprocating engines provide low cost solutions and relatively high efficiencies and high availability; however maintenance requirements can be high and diesel-fired units have high emissions. Natural gas-driven units provide significantly lower emissions levels and while somewhat expensive, emissions controls can be added to reciprocating systems.

Microturbines are small gas turbines. Designs are similar to those of a gas turbine (see below), except that most microturbines recover some of the exhaust heat to preheat air used in combustion. Microturbines range in size from 30 kW to 500 kW and can be integrated to provide higher electric output and greater reliability. Microturbines are compact, quiet and provide high quality power and low emissions levels; however, their costs are greater than reciprocating engines.

Combustion turbines have progressed considerably beyond their roots as jet engines, especially over the last two decades. Efficiency, reliability and emissions improvements have propelled gas turbines to the preferred central plant generator technology for electric utilities and independent power producers. Smaller industrial-sized turbines in the 1 MW - 15 MW range are being used in DG applications, typically in industrial situations. Turbines are attractive because of their low costs and low emissions; however their size restricts their use to larger commercial and industrial customers.

Fuel cells generate power electrochemically in a process that is similar to a battery, except that instead of generating electricity from stored chemicals, fuel cells generate electricity when hydrogen is delivered to the cathode and oxygen is delivered to the anode of the cell. Hydrogen atoms split into a proton, which passes through the electrolyte to the cathode, and an electron which travels through the external circuit creating DC current.

The hydrogen input to the fuel cell can come from various sources; however, most applications use a chemical process called steam reforming of natural gas which extracts the hydrogen from the steam and the gas. Several different materials can be used for the electrochemical process, providing a distinction among the various fuel cell system types.

Fuel cells are more expensive than the other DG technologies described above; however, they offer great advantages in certain applications. Fuel cells provide almost no polluting emissions and deliver highly reliable power of perfect quality. Fuel cells are also quiet and some versions have the greatest electricity efficiency (approximately 60 percent) of all of the DG technologies.

While fuel cells are in the earliest stages of commercialization, the rapid cost reductions which have been achieved over the last several years and which are expected to continue suggest that fuel cells will be highly competitive in many DG applications.

Operating Schedule Options

Onsite generation can operate continuously during a substantial part of the day or only for selected time periods. Appropriate operating schedules depend on the economics of site electricity and thermal demands, utility rates and fuel prices. Four operating schedules are distinguished in DG marketplace.

Continuous power is exactly what it says, electric generation for all 8,760 hours of the year, except maintenance downtimes.

Intermediate power is generated with an operating schedule determined by the difference in the cost of generating electricity onsite and the cost of purchasing electricity from the utility (or utility and retail energy provider in competitive markets). Intermediate power applications can include both generation only and combined heat and power applications and usually run for a significant part of the business day.

Peak shaving is the application of onsite generation primarily to reduce demand charges which are levied on maximum billing demand (kW) recorded over the month. While the operating period for peak shavers is actually determined from an economic evaluation that considers demand and energy charges along with onsite power production costs, the primary economic contribution of peak shaving applications is to reduce demand charges. Peak shaving is typically a power-only application.

Standby power is installed in many commercial and industrial facilities to provide electricity during periods when utility-supplied power is unavailable. Many of these generators are required by fire and safety codes in commercial buildings while generators in industrial processes are used to limit production losses that occur with power interruptions. These DG applications are becoming increasingly important as utilities in many locations are offering special payments to customers who volunteer their use of standby generators as a source of emergency power for the utility system.

DG Application Options

Onsite generation can achieve several objectives including the following.

Generation only applications are used only to generate electricity to replace utility provided power.

Premium power applications are used to increase reliability and/or power quality relative to grid-supplied power. Fuel cells provide the purest form of premium power; however, microturbines and turbines are often used in premium power applications.

Combined heat and power applications generate electricity and use at least a portion of the waste heat for space heating, air conditioning, water heating, dehumidification and process uses.

Other Issues

Several other issues must be considered in DG applications. Some of the most important include:

Emissions requirements will limit the kinds of DG prime technologies or will require emission controls in certain geographic areas and for certain (larger) system sizes.

Standby and backup rates Most utilities assess DG users with capacity charges based on the size of the DG system and charge different rates for energy and demand incurred when the DG system is down. In some utility service areas these rates can significantly impact the economics of DG systems.

Off-grid applications actually disconnect the site from the electric grid and provide continuous generation with backup capabilities onsite. Increasing electricity rates and onerous standby and backup rates in some utility service areas can actually make an off-grid application the most economical way to procure electricity for certain sites. Typically such sites have relatively high load factors (i.e., reasonably flat load shapes), important waste heat applications and high electric utility prices relative to gas or oil prices.

Analysis Process

DG Marketplace evaluates DG applications using each of the prime movers, operating schedules and application options identified above.