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Distributed Energy Resources: Bringing Energy Closer to Home

Distributed Energy Resources: Bringing Energy Closer to Home. Presentation by the Industry Task Force on Distributed Generation July 28, 2005. Industry Task Force on Distributed Generation.

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Distributed Energy Resources: Bringing Energy Closer to Home

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  1. Distributed Energy Resources: Bringing Energy Closer to Home Presentation by the Industry Task Force on Distributed Generation July 28, 2005

  2. Industry Task Force on Distributed Generation • 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, high-efficiency cogeneration (natural gas & biogas), district energy and others

  3. 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

  4. Distributed Generation • 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: • Market uncertainty • Value not monetized and delivered to proponents / hosts

  5. Procurement • DG Task force members participated in RES I and CES, some successful. • Most potential DG sites were not represented. Reasons included: • 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

  6. Procurement • Positive features of the process: • Competitive nature • A portion of fuel costs (and risks) transferred into price of power • Private investment

  7. Procurement Suggestions • Simple process – smaller projects • smaller developers with fewer resources • Timing – must be flexible: • 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

  8. 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.

  9. Procurement Suggestions • When evaluating bids or setting a standard offer price, these projects need to be valued based on “delivered power” • Capital & Energy savings on transmission and distribution networks • DG value can exceed “base energy rate” by $20 to $25 per MWh

  10. Procurement Suggestions • 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)

  11. Procurement Suggestions • 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.

  12. Benefits of DG • 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

  13. Benefits of DG • 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

  14. Questions For more information, please contact:James Sidlofsky, Chair, DG Task ForceBorden Ladner Gervais LLP416-367-6277Barry Chuddy, Vice-Chair, DG Task ForceEnersource Corporation905-283-4250

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