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National Governors Association-Department of Energy collaboration is the latest initiative in governmental efforts to increase US energy self-sufficiency, which includes a role for distributed generation.
By Don Talend
Amid concerns about energy security in the United States, 2007–2008 National Governors Association (NGA) chair and Minnesota governor, Tim Pawlenty, unveiled the “Securing a Clean Energy Future” (SCEF) initiative in September 2007. Significantly, the unveiling of the program in Washington DC included a commitment from US Department of Energy (DOE) secretary Samuel W. Bodman to provide $550,000 for SCEF and $60,000 for NGA’s efforts to increase electricity assurance. The electricity assurance effort includes conducting forums and workshops and advising states on securing critical energy infrastructure to increase states’ resiliency to electricity supply disruptions.
“The [George W.] Bush Administration shares the NGA’s sense of urgency about increasing our nation’s energy security, and we are eager to jointly advance bold energy policies at the state level,” said Bodman, who joined SCEF co-chairs Pawlenty and Kansas Governor Kathleen Sebelius at the unveiling. “States provide the necessary and critical link to ensuring clean, reliable, and affordable supplies of energy, and the Energy Department challenges local governments to take similar action.”
Among other measures at the state level to improve national energy security, Bodman stressed the importance of regional electricity infrastructure coordination. He pledged the department’s technical assistance in these efforts.
In addition to reducing the production of greenhouse gases, the SCEF initiative will focus heavily on promoting practices such as conservation and the use of alternative energy sources. Governor Pawlenty clearly indicated a sense of urgency as motivation for choosing energy security as the initiative for his 2007–2008 term as NGA chair. “America is at a tipping point,” he said. “Our country is too dependent on imported sources of energy and greenhouse gas emissions continue to grow too quickly. Governors have a tremendous opportunity to lead the country toward a cleaner, more independent, more secure energy future,” he said, adding that 45 governors focused on the use of alternative energy sources or conservation in their 2007 State of the State addresses.
Pawlenty noted that the SCEF initiative would focus on four main tactical areas: increased production of cleaner domestic fuels, advanced electricity generation, improved energy efficiency and conservation, and research and development of clean energy technologies. As part of the SCEF initiative, NGA will provide tools such as guides, reports, regional workshops, and national summits to governors.
From an overarching strategic perspective, one of SCEF’s main objectives is to improve national security. The tactics for achieving this in regard to energy policy include making the nation less dependent on foreign energy sources and making the nation’s energy infrastructure less vulnerable to natural and manmade disruptions. Distributed generation (DG) does have a role to play from this strategic perspective.
“The governors recognize the value distributed generation can play in solving the nation’s energy challenges,” said NGA spokesperson Christopher Cashman. “From the 2003 blackout [which affected about 50 million people in eight states and Canada] to rolling brownouts in the summers, history has shown us that easing demand from the grid is tremendously important to ensure continued and reliable delivery of electricity.”
Actually, the idea of improving the nation’s energy security and security of the US electrical grid network is not particularly new to the DOE. In an age when disasters such as the terrorist attacks of September 11, 2001, the 2003 blackout, and the 2005 Gulf Coast hurricanes have become more likely, the department has undertaken major initiatives with a focus on energy security. Undoubtedly, an area of America’s infrastructure that is one of the most vulnerable to widespread manmade or natural catastrophes is the electrical grid.
DOE Energy Reliability Office
As he announced the formation of a new Office of Electricity Delivery & Energy Reliability (OE) in June 2005, Bodman acknowledged that disasters affecting the grid earlier this decade made upgrading the grid a priority. “DOE’s new office will focus efforts on the essential mission of modernizing our electricity grid,” he said. “As we saw in the blackouts of 2001 and 2003, a faulty infrastructure can cost our economy billions of dollars. America’s electricity infrastructure is old; in some places it is approaching antiquity. It is critical that we take a comprehensive look and proactively work to address any potential problems.”
The new office resulted from the merger of the former Office of Electric Transmission and Distribution and the Office of Energy Assurance. The goal of the new OE is to lead national efforts to modernize the electric grid, enhance security and reliability of the energy infrastructure, and facilitate recovery from disruptions to energy supplies. Its specific activities include supporting research, development, demonstration, technology transfer, and education and activities necessary to enhance national energy security. Another main goal and activity of the OE is to form partnerships to engage industry, utilities, states, other federal programs and agencies, universities, national laboratories, and other stakeholders to achieve national electricity reliability, efficiency, and affordability objectives.
OE’s specific areas of groundbreaking work include research and development, infrastructure security, and energy restoration. OE’s research and development function, largely tasked through a National Energy Technology Laboratory (NETL) Site Office, is responsible for managing a portfolio of projects for next-generation electric delivery technologies and supporting activities to accelerate their introduction to the marketplace. In terms of infrastructure security and energy restoration, it is OE’s role to coordinate DOE’s response to energy emergencies and assist state and local governments and the private sector to recover from disruptions to the energy infrastructure. Accordingly, the office works with governments and industries to develop a critical infrastructure protection program.
DG Program from DOE
During the 2001 fiscal year, the DOE established a Distributed Energy Program for development of a portfolio of advanced, onsite, small-scale, modular energy conversion, and delivery systems for various applications, including industrial, commercial, residential, and utility. The program has two main thrusts.
The objective of DG technology development is to develop a portfolio of electricity generation and heat utilization technologies with a focus on efficiency; emissions; reliability, availability, maintainability, and durability (RAMD); and meeting cost targets. The intended result of meeting these efficiency, emissions, reliability, and cost objectives is providing the building blocks for advanced, integrated systems. The second thrust is development of highly efficient integrated energy systems that can be replicated across end-use sectors and help demonstrate an R&D objective or address a technical barrier.
The Distributed Energy Program also involves several partnerships at the state level. Two examples are the State Energy Program and the State Technologies Advancement Collaborative, which are intended to increase awareness, promote benefits, and remove barriers to the use of DG.
Another is the California Energy Commission’s Public Interest Energy Research (PIER) Program, which supports energy research and development and demonstration (RD&D) projects with a goal of bringing environmentally safe, affordable and reliable energy services and products to the marketplace. The PIER Program annually awards up to $62 million to conduct the most promising public interest energy research by partnering with businesses and public or private research institutions on RD&D projects. One of PIER’s seven research program areas is Energy Systems Integration, whose research is focused on several areas, including the use of Distributed Energy Resources Systems Integration as part of the larger interconnected electricity grid. Issues addressed include interconnection standards and technology, grid impacts, and market integration.
Another Distributed Energy Program partnership is with the New York State Energy Research and Development Authority’s Distributed Generation and Combined Heat and Power (DG-CHP) Program. This program is funded at a level of $15 million per year and supports the development and demonstration of DG systems, components and related power systems technologies, and combined heat and power (CHP) application in industrial, municipal, commercial, and residential sectors.
Federal Study on DG Use
Section 1817 of the Energy Policy Act of 2005 (Epact 2005) called for DOE to analyze the benefits of widespread DG use. In March 2007, DOE released for public comment, “Study of the Potential Benefits of Distributed Generation and Rate-Related Issues That May Impede Their Expansion” (www.oe.energy.gov). Public comments were solicited beginning January 2006, and were followed by a 30-day public comment period on the draft that closed in April 2007.
The study analyzed the potential benefits of cogeneration and DG. Specific areas of potential benefits covered included increased electric system reliability, an emergency supply of power, reduction of peak power requirements, and reduction in vulnerability to terrorism and improvements in infrastructure resilience. In addition, Congress requested an analysis of any rate-related issue that may discourage the expansion of DG.
The study and comments revealed several benefits to the nation’s energy security of more widespread DG implementation, as well as several reasons why more widespread implementation has not yet occurred: DG can help decrease the vulnerability of the electric system to threats from terrorist attacks and other potentially catastrophic disruptions. As a result, DG has the potential to increase the resiliency of the grid and other critical infrastructure sectors as defined by the Department of Homeland Security’s National Infrastructure Protection Plan (NIPP).
Electric utilities can use DG on a local basis to supplement a distribution system’s ability to supply sufficient power during periods of peak demand, provide ancillary services such as reactive power and voltage support, and improve power quality. In this supplemental role, DG can enhance overall electric system reliability. Several regions have implemented demand response programs in which financial incentives and/or price signals are provided to customers to reduce their electricity consumption during peak periods. Some customers who participate in these programs even use DG to reduce the amount of power they use from the local grid by using DG to maintain near-normal operations.
A supplementary benefit of DG is that under certain circumstances, it can also have beneficial effects on land use by reducing the size or number of rights-of-ways that would otherwise be needed to build or upgrade power stations, electric transmission, and electric distribution lines.
A major impediment to more widespread use of DG is regulation of electric rates by the states; federal, state, and local environmental siting and permitting; and grid interconnection policies and practices, all of which can significantly reduce the financial attractiveness of DG projects. However, there have been attempts to address some of these issues in recent years. One example is the work of the Institute of Electrical and Electronic Engineers (IEEE) to implement uniform DG interconnection standards.
Many of the potential benefits of DG are most readily available to consumers since the incentives for customer-owned DG are often far greater than those for utility-owned DG. For example, the study cites the fact that some utilities have diesel-powered backup power units, but these are rarely used. The lack of incentives for DG implementation at the utility level has caused a lack of standard business model(s) for electric utilities to invest profitably in DG.
Another barrier to greater DG implementation simply results from the lack of widespread implementation to date. That is, even in instances where financially attractive DG opportunities for electric utilities have been identified, lack of experience with DG technologies often creates a perception of added risks and uncertainties. This perception of risk is exacerbated by a lack of standardized equipment, operational data, models or similar analytic tools for evaluating DG-grid interoperability.
The study drew several conclusions that largely impact the extent to which DG will serve an integral role in improving the nation’s energy security:
DG can provide multiple benefits such as peak load reduction, voltage support, and power quality improvements for the nation’s electric grid. But a concerted and cooperative effort is essential for the numerous benefits of DG to be realized and for more DG to be deployed on the grid. The study stresses the importance of cooperation among electric system planners, operators, and industry groups; federal, state, and local government agencies; equipment manufacturers; electricity consumers; and academic, research, and public interest organizations.
A key development for making DG a viable resource option for electric utilities is the successful integration of DG into electric system planning and operations processes. For this to occur, state utility commissions, as well as local and regional electric system planning processes, models, and analytical tools should be modified to include DG as potential resource options and thus, provide a mechanism for identifying opportunities for integrating DG into the grid.
A major factor that is lacking in terms of expanding the role of DG in the grid of the future is reliable data on the operating characteristics, costs, and the full range of potential benefits (including environmental) of various DG systems so that they can be compared equally and consistently with central generation and other conventional electric resource options. The problem is that calculating DG benefits is complicated and characterized by site-specific operational characteristics and circumstances. Utilizing a single comprehensive analysis tool, model, or methodology to estimate national or regional benefits of DG is thus unlikely.
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| Kansas Governor Kathleen Sebelius |
Subtitle E, Amendments to the 1978 Public Utility Regulatory Policies Act, as mandated by the Epact 2005, could affect the consideration of DG by the electric power industry. This is particularly true for Subtitle E provisions that promote smart metering, time-based rates, DG interconnection, demand response, net metering, and fossil fuel generation efficiency.
Another complicating factor is that a number of states have mandates that require utilities to increase the amount of renewable and alternative energy sources in their generation portfolios.
Section 138 of the Epact 2005 calls for a study of policies and practices to promote greater use of energy efficiency programs and strategies by the nation’s electric and natural gas utilities. The resulting National Action Plan for Energy Efficiency (www.epa.gov/cleanenergy/actionplan/eeactionplan.htm) started by DOE and the US Environmental Protection Agency contains recommendations for modifying policies to align utility incentives with the delivery of cost-effective energy efficiency programs, and modifying ratemaking practices to promote greater levels of energy efficiency investments by electric and natural gas utilities. New electric and natural gas utility policies and ratemaking practices can be used to improve the financial attractiveness of energy-efficient and renewable energy DG to utilities and their customers.
Don Talend is a communications and publicity consultant specializing in the trade media.
DE - March/April 2008
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