Distributed Energy Resources:
The How's and Why's of On-Site Installations
One of the emerging trends in the electricity industry is a shift
from large centralized power plants to smaller, often higher efficiency
plants located at the point of consumption. These smaller energy
resources are called "distributed generation" sources because they
are distributed throughout the electricity grid. The power produced
is typically consumed on-site.
The restructuring of California's electricity industry is stimulating
new interest in distributed generation sources such as solar photovoltaics
(PV), solar thermal systems, fuel cells, micro-wind turbines and
small and micro-gas-fired turbines. What state and federal sources
of funds can help a local government reduce the initial cost of
installing one of these systems at its City Hall?
Background:
Polls of consumers consistently rank distributed generation technologies
such as PV panels as the most popular of all power sources, yet
they contribute minute amounts of the total electricity consumed
in California. While far more expensive than conventional power
plants when evaluated against a central station source generating
bulk power, dozens of PV distributed applications are now particularly
cost effective in rural settings because they do not require investments
in extending distribution lines.
Many of these systems usch as traffic control, emergency warning,
communications systems, flood control, irrigation and lighting are
owned and operated by local government agencies. Many distributed
generation options can save local governments labor costs, since
once installed, they require little ongoing maintenance.
Fuel cells may be able to power the complete needs of large buildings
such as hospitals and offer increased assurances of reliability
in the event of power outages.
Small wind turbines may be cost effective in rural, remote locations
particularly those sited within one of California's prime wind resource
regions.
Opportunities:
The AB 1890 restructuring legislation provides special new incentives
for consumers to install what the California Energy Commission has
deemed "emerging technologies." These technologies are solar PV,
solar thermal, fuel cells and micro-wind turbines.
The Energy Commission has designed and is managing a $540 million
funding program for renewable resources whose goal is to make renewable
energy technologies market ready by the year 2002. Some $54 million,
10 percent of the total renewable energy fund, has been set aside
for emerging technologies. Only those distributed systems connected
to the utility grid are eligible for Commission funding. The program
is described as a "buydown," since the Commission funds will be
deducted directly from the initial technology purchase price.
The table (on the back page) highlights the different blocks of
Commission funding available over time. The level of buydown payments
declines over the four year period of funding. When the funds in
one block have been reserved, the next block with a lower level
of payment becomes available. The amount of the buydown payment
depends upon the following factors:
- The block of funds available to pay buydowns at the time the
system is purchased and a buydown is reserved or installed;
- The size or rated electrical output of the system;
- The total eligible costs of the system.
Another key element of the program is that at least 60 percent
of the total $54 million (and 60 percent of each block of funds)
must be awarded to systems rated at 10 kilowatts or less. The most
a local government could save under this program for systems installed
after September 1, 1998, is $500,000 for any single project from
any single block of funds and $1 million total for any single project.
AB 1890 also directs the Energy Commission to oversee a $60 million
Public Interest Energy Research Program. Distributed generation
technologies, including distributed gas-fired turbines, are expected
to compete for program dollars. Local governments can submit bids
for distributed generation installations at local government sites.
Challenges:
Because they appear to be more expensive than conventional power
sources, a proposal to install distributed generation systems may
encounter resistance from local elected officials. The diversity
of benefits associated with distributed generation sources will
have to be articulated by advocates of a more sustainable energy
system in order for local decision-makers to move forward with installation
programs [See Renewable
Energy: Valuing Clean Power Benefits Fact Sheet] .
Proposed Solutions:
Distributed generation systems may be a critical part of any local
government's public relations campaign on behalf of clean power.
A high profile installation at City Hall or any other prominent
site will help build community support for renewables and cleaner
power because residents will be able to see these clean, cutting
edge technologies at work. In addition, local governments can design
community energy plans and land-use policies encouraging the siting
of distributed generation technologies. The Bay Area Solar Coalition
is one example of a regional effort to involve local governments
in the installation of PV systems on residences, businesses and
municipal offices. It is seeking federal funds to install "community-based"
PV systems throughout the San Francisco Bay Area. The goal of President
Clinton's "Million Solar Roofs Initiative" is to install one million
PV panels on roofs of buildings by 2010. The Department of Energy
and organizations such as the Utility PhotoVoltaic Group (http://www.ttcorp.com/upvg/)
are good sources to find out about federal funding opportunities.
For More Information:
California Alliance for Distributed
Energy Resources/California Energy Commission
Judy Grau
1516 9th St., Sacramento, CA 95814
(916) 654-4206 • FAX (916) 654-3882
e-mail: jgrau@energy.state.ca.us
Bay Area Solar Coalition
Mary Tucker
2819 San Ardo Way, Belmont, CA 94002
(650) 637-0665 • FAX (650) 637-0663
e-mail: marytucker@mindspring.com
U.S. Department of Energy
Peter Dreyfuss
1000 Independence Ave. SW
Washington, D.C. 20585-0121
(202) 586-8779 • FAX (202) 586-5145
e-mail: peter.dreyfuss@hq.doe.gov
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