ABSTRACT
Hype Overshadows Promise There has been a good deal of hype and more than a small amount of polarization within the power industry over DG and the promise it holds for the future. There are staunch proponents of DG who firmly believe in it and who are always trying to “sell” the concept of its widespread use, and many others who just as steadfastly maintain that DG is not and never will be viable, and that its use is nearly always a mistake. Something close to controversy exists because DG is potentially a disruptive technology: if everyone bought small generators and produced their own power, utilities, and the entire utility industry, would be out of a job. Blurring the facts is a good deal of political input to the process: DG is often perceived or at least represented by proponents as cleaner and more environmentally “friendly” than large central station generators and utility systems. As is so often the case with a controversy, both proponents and opponents of DG make cases for or against their position using facts and analytical studies that are based on favorable conditions or interpretations that favor their viewpoint. But on balance, the authors are convinced that DG isn’t and probably will never be efficient enough, economical enough, clean enough, or reliable enough to displace well-run, traditional utility power systems. On the other hand, DG has improved tremendously in the past two decades, to the point that it is competitive and beneficial in a much wider set of market niches than only its traditional backup-power role. It has a good future. This first section will continue the discussion of DG by looking at some basic “rules” with regard to the laws of physics and how they impact generation design and costs, that will help put DG’s advantages and
disadvantages into clear perspective. The discussion will then turn to an examination of each of the major types of DG generator systems: piston, micro-turbine, and fuel cell, in Section 8.2. An allied technology, distributed energy storage (abbreviated as DS, for distributed storage), will be discussed in Section 8.3. DS may actually offer more value and promise for the future than DG, and when used in conjunction with well-designed, compatible DG, provides what utilities call “premium power quality” – exceptional reliability and voltage stability. Finally, Section 8.4 summarizes key points about DG’s and DS’s place in the power industry and their potential for the future.
Shifts in the Economies of Scale for Generator Design Traditionally, electric utility systems used large, central station generators (as described in Chapter 6) because of the significant economy of scale that exists in electric generation technologies. Large generators produced power at less than one half the cost per kilowatt of small generators. The bigger the generator, the bigger that advantage it had over smaller units. At the time of this writing (2005) there still is and apparently always will be a significant economy of scale favoring larger generators. This will be discussed below in “Physics Is Always on the Side of the Larger Unit.” Traditionally (into the early 1990s) central-station generation + T&D had an overall cost advantage of about two to one or DG. That dropped to only about one and one half to one by 2000, enough to make a difference in some situations. Three reasons were behind that shift in economy of scale:
