Improving Energy Supply Efficiency A Case for Distributed Generation

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1 Abstract Improving Energy Supply Efficiency A Case for Distributed A.I. Industrial Research Limited PO Box 20028, Christchurch NEW ZEALAND a.gardiner@irl.cri.nz Emerging microscale distributed energy technologies offer the opportunity for transformation to a more efficient and sustainable energy future. This will be achieved by delivering energy services from technologies that convert local intermittent renewable energy resources (eg wind, solar, wave), and small, silent generators that produce both heat and power from a range of locally available fuel stores. In particular, distributed fuel based generators can provide firm generation capacity at higher overall supply efficiency than central generation, through heat recovery and the elimination of transmission and distribution losses. There is a need to plan for the impact of these technologies now, because much of the existing electrical supply infrastructure is in need of upgrading or replacement. New microgenerator technologies will become competitive over the next few years, and will affect the economics of system upgrades being carried out now. 1. INTRODUCTION A great deal of effort has been applied over the years to improve demand side energy efficiency, with only modest success. Household energy used per capita has not changed greatly over the past 40 years. There seems to be a hope that more research to understand what motivates people to use energy will discover a painless way for reducing energy use per capita. In fact an approach is clear, and has been demonstrated in other markets for years. Education, high energy prices and mandatory efficiency standards do work. It is a matter of need, and political will to design regulations that will have the desired effect. However, there is a limit to the demand side energy savings that can be achieved, without adversely impacting on consumer wellbeing and free choice. eanwhile, supply efficiency has been largely ignored by policy makers, on the assumption that competitive pressures will drive the development of technologies with higher and higher efficiency. This has been true to a point, but only in relation to the conventional energy supply model, consisting of in the main, large remote generation plants delivering electricity over a country-wide transmission grid and into local distribution infrastructures. Now, large scale supply options are reaching their limit, both in production efficiency and the availability of resources. Traditionally, technology options which offered competition from outside the supply industry were discouraged (eg, rooftop solar hot water, microhydro generation). It has recently been realized, notably by the EU and Japanese governments, that there is an alternative supply chain model, which can offer much higher overall efficiencies. For many small-scale energy requirements such as homes, microscale customer-generation can offer substantially improved energy efficiency from hydrocarbon (HC) primary fuels. This is achieved by making use of both the heat of conversion and the electricity generated from the fuel (Combined Heat and Power, or CHP), using small appliance-like generator systems. This opportunity also exists for New Zealand, but in the context of a different energy supply mix. How significant is the potential in New Zealand? Surprisingly substantial! 2. EXISTING ELECTRICITY GENERATION LOSSES Energy losses during the centralized transformation of primary fuel resources to electricity are substantial. The energy is lost as heat, and is generally not captured for other purposes due to the

2 lack of local uses for the large quantities involved. The amount can be deduced from New Zealand energy use statistics for 2004 (ED, 2005) as given below: Total Primary Energy Supply (TPES) Non-energy use Lost in Transformation (including delivery) Primary Energy used for electricity prodn. Consumer Electricity (delivered) Transport Fuels (domestic, non electric) Residential Consumer Electricity Commercial Consumer Electricity 766PJ 63PJ 172PJ 311PJ (deduced) 139PJ 211PJ 48PJ 27PJ The average electricity production-delivery efficiency can be estimated at 45% (139PJ/311PJ). From an estimate of the generation mix of the energy lost in transformation, generation-delivery efficiency using hydrocarbon fuel (coal, natural gas, biomass) is less than 33%. The lost primary fuel energy (at 172PJ/year) is more than the electricity actually delivered from all generation sources, and is dissipated both as heat at the power stations, and in the power lines. It is interesting to note that the amount of primary energy going into electricity production (estimated at 311PJ) is actually higher than that used in non-electric domestic transport (211PJ). 3. POTENTIAL SAVINGS FRO ICROGENERATION How much could we realistically save by more efficient local generation using microchp generators? Residential and commercial consumer electricity combined was 75PJ in 2004, from a total combined energy use of 111PJ. Further analysis is required to establish how much of this electricity was used for heating, and how much of the non-electricity energy use could be substituted for by CHP. However, on the basis that it is technical possible through new microgeneration technologies to increase the delivered efficiency of the CHP demand (currently satisfied by off-site electricity production), it is possible to estimate the potential efficiency savings. If we assume that CHP can increase supply efficiency from an average of 45% efficiency to 85%, we could save 67PJ (45% efficiency delivers 75PJ electricity, so 85% efficiency delivers 142PJ CHP, an additional 67PJ). This potential energy savings is a very large amount, almost as much as the electricity currently used over a year by these consumers, and is over 50% of the total energy demand from these consumers. If distributed energy technologies can be implemented to deliver higher supply efficiency from HC fuels, the unused fuel and line capacity could be released for growth, or simply conserved for the future. Distributed generation is the only way to achieve supply efficiency savings of this magnitude, because there is no means to deliver the heat output from central generation to these general customers. The wasted heat energy (an environmental problem in its own right), combined with transmission and distribution losses of around 12%, results in the very poor estimated 33% delivered efficiency from HC fuelled central generation. New, decentralised on-site generation of electricity and heat can achieve up to 90% CHP efficiency. This has already been demonstrated in functional prototypes by Stirling engine and fuel cell developers. 4. HOW CAN REAL SAVINGS BE ACHIEVED IN PRACTICAL APPLICATIONS? The fuel cell, an emerging technology initially targeted for vehicle power, is the only device that can deliver this CHP potential to the broad electricity market, due to its high electrical efficiency and silent, pollution free operation. Within the next few years, fuel cell appliances will be developed for installation in homes and offices, offering large volume opportunities for early developers, and the start of a possible transformation of parts of the energy supply industry. These systems will require delivered fuel. A range of options is likely, and selection will depend on local availability and economics. Initially, conventional fuels such as piped natural gas, LPG and diesel will be used, and followed by alcohols and other fuels processed from renewable sources. Distributed Energy ANZSES

3 The diagram in Fig.1 depicts a residential microchip fuel cell generator concept. These units create heat for hot water and space heating, and share electricity supply and with the existing network. For economic viability, distributed fuel cells must provide firm capacity (high availability). Firm capacity is possible because the electricity is generated on-demand from a high energy density fuel, which can be stored locally, or piped to the site. This capability will support the uptake of other intermittent local distributed energy resources such as solar and wind, which on their own cannot provide a sufficiently reliable local energy supply. Longer term, residential fuel cells may eventually be fuelled by a hydrogen infrastructure, either piped as hydrogen gas or via an advanced hydrogen energy carrier. This may initially take the form of clusters of hydrogen users and vehicle refueling stations Conceptual Integrated System Solar Energy Delivery (H/P) Power Conversion Fuel Cell Energy Delivery (CHP) Free intermittent solar energy Combined heating and electrical demand Purchased stored fuel Purchased / sold electricity eter GRID connected to distributed hydrogen production units fueled by natural gas, methanol/ethanol, refined biogas, wind, solar PV, etc. Solar heat Power Fuel heat Figure 1: A block diagram of integrated residential microenergy technologies 5. APPLICATION OF ICROCHP IN NEW ZEALAND The pie chart in Fig.2 indicates the typical mix of heat and electricity energy services need to satisfy the requirements a typical New Zealand home. There are approximately 1.6 million private dwelling units in New Zealand, with an average construction rate over the last 5 years of around 25,000 per year. Each one could be a potential distributed generation site. Annual residential energy consumption is 11,000kWh/household. The basic energy services required are: Other Electrical, 20% Lighting, 11% Cooking, 8% Typical Household Energy End Use Water Heating, 29% 10,110 kwh/yr 1.15 kw average H:P RATIO Overall 1:1 Summer 0.6:1 Winter 1.8:1 on-demand 230Vac electricity (49%) potable hot water for a range of convenience and lifestyle purposes (29%) winter space heating (22%). Refrigeration, 10% Space Heating, 22% Figure 2: Pie chart of typical household energy mix (Source: BRANZ HEEP Study) From Fig.1 and other data, it can be deduced that the average year round energy demand for non-heating electricity and hot water are about 560W and 335W respectively. In New Zealand, the heating season is relatively short, ranging from 4-5 months in the south to virtually nothing in the north. Where applied, electric space heating consumes around 677W on average. The target market for competitive microgeneration would therefore be the year-round residential electricity and water heating base load. This requirement defines a basic functional requirement of as much power (electricity) as possible, at lease a 1:1 heat to power ratio, and at least 40,000hrs minimum service operation. 1 kw electrical output and 0.5 kw water heating would be more than adequate, and in fact would probably supply the electrical baseload of two houses. The system would primarily follow water heating need in the summer, and if economics dictated it, contribute to space heating in the winter. Distributed Energy ANZSES

4 6. A SCENARIO FOR LARGE VOLUE UPTAKE OF ICROGENERATION If this technology is introduced in a planned manner, central supply could increasingly be used to provide electricity supply to industrial and the larger commercial users through strong, low loss transmission-distribution backbones. Additional expansion of the central supply infrastructure to cater for growth from small users would be curtailed. Conventional top down distribution losses will reduce, as more of this energy is supplied locally. At some point, sufficient residential and small commercial customer-generators will be in service to be self-supporting in generation. Surplus supply from local networks would support the larger industrial/commercial demand. This could release more central capacity for large user growth, with corresponding supply efficiency improvements. uch of the peak demand problem is caused by small general consumers, but all consumers suffer from the resulting increased I 2 losses. With microgeneration, general customer tariffs and incentives could be designed to encourage smoother daily and annual network power demand from this class of customer, overall achieving a more robust, efficient energy nation-wide infrastructure. The ripple control system can be used for signaling peak periods (as practiced and proven by Orion Networks for larger customers), or newer two-way communication technologies could be adopted. Fuel 100% 50% loss Transmission 8% loss Distribution 9% loss Conventional Fuel Based - 33% left Industrial / commercial 90% Fuel 100% icrogeneration - 90% left Figure 3: Transformation of general customer networks as microgeneration density increases 7. CHANGING NETWORK ROLE AT THE END OF THE SUPPLY CHAIN Fig.3 illustrates the potential transformation of parts of the electricity infrastructure as microchp technologies are introduced. An aspect of large volume uptake of distributed generation would be the changing role of the local network. In places its role would change from one-way delivery of gridsupplied energy, to a bidirectional interconnection that primarily provides load diversity, one of the least understood, but important functions of the distribution network. The typical maximum demand of a residential consumer is kw/phase. Because of the different time displacement of individual electricity use, the aggregated diversified peak demand from a block of residential customers is significantly lower than the sum of the peaks. This is called the After Diversity aximum Demand (ADD). Accordingly, the network is typically designed to provide for an average peak of only 3 to 4 kw/residential customer load. With no network, each generator would need to supply 10-20kW peaks, instead of only 3-4kW. The ADD depends on many factors, including the number of separate loads served. Typical design values for diversity factors are shown in Table 1 below. It can be seen that for 100 houses the ADD has leveled out to 24%, or about 1/5 of an individual household peak. This shows that if a group of houses are networked together to share their power generation capacity, a relatively small cluster is needed to reach an optimum level for a self-contained residential microgrid. Table 1: The Effect of Diversity on Residential aximum Demand # of Houses Ratio of D Distributed Energy ANZSES

5 8. CONCLUSIONS The retail value of 1PJ of electricity is about $30 million. Therefore, the estimated 67PJ lost per year through electricity supply to the residential/small commercial sector from central fuel based generation could represent around $2 billion as electricity sales, or CHP if some of the electricity delivers heat services. 1PJ is enough energy to supply about 30,000 houses. So, improving supply efficiency by microchp offers a substantial national benefit, and this is the reason that many countries are putting a major research effort into residential fuel cell system development. Put another way, potentially an impressive 100% or more efficiency improvement is possible on every kwe produced by microchp. We can more or less guarantee this, because if the fuel savings are not achieved, the technology will not become cost effective against the incumbents, and will not be used. This is the challenge for technology developers. The opportunity for achieving high supply chain efficiency improvements through microchp has largely been ignored to date in New Zealand energy efficiency and conservation policy. A strong regulatory framework to encourage micro-scale distributed generation and early adopter incentives are required to create an appropriate market environment for technology evaluation and uptake. It should be noted that high supply efficiency achieved with microchp does not mean that the energy will suddenly be 50% the cost of centralized supply. The savings in fuel costs are counteracted by the higher capital and maintenance cost for small systems. Only when the volume drives production cost sufficiently low (the typical industry rate is 75% to 85% for each doubling of cumulative production), will distributed generation offer lower overall energy supply costs than central generation. The substantial fuel savings achieved are primarily of national benefit, through conservation of energy resources, and for fossil fuels such as natural gas and LPG, through reduction of greenhouse gas emissions. The introduction of icrochp could be the trigger for separation of parts of the rural distribution infrastructure into semi-autonomous microgrids. These may normally be loosely inter-tied to maintain overall supply security, and automatically split into stand-alone sections if faults occur in the external networks. Or possibly, uneconomic sections of the existing distribution feeders may be decommissioned, and remote community networks deliberately operated as stand alone microgrids. There are many questions to be solved around the efficient management, control and market arrangements for such infrastructures, where potentially there is no central generation, all demand being balanced by the supply from network customer-generators. Three or four different fuel cell technologies are seen as contenders for this market. Several dozen systems developers and hundreds of research groups are working in this area internationally. In New Zealand, Industrial Research Limited is the sole organisation with a substantial activity in the development of fuel cell based distributed generation. Currently, IRL are involved with overseas technology developers in three different microgeneration fuel cells trials in New Zealand, involving PE, SOFC and alkaline fuel cell technologies. 9. ACKNOWLEDGENTS This and ongoing work is being carried out under a Renewable Distributed Energy programme funded by the New Zealand Foundation for Research Science and Technology. 10. REFERENCES inistry of Economic Development (2005), Energy Data File - July 2005 Distributed Energy ANZSES