!NTERNATIONAL ENERGY AGEN(i'f COGEN EUROPE ANNUAL CONFERENCE 2002 operate their facilities in way to minimise emissions of greenhouse gases. Energy security The energy security considerations affecting distributed power involve two principal dimensions: the impact on the diversification of primary energy supplies and secondly, the impact on the reliability of electricity supplies. lmpact on primary fuels depends on the technology requirements. On the one hand, photovoltaics provide additional diversification of supply away from tossil fuels. Most of the other technologies rely directly or indirectly (in the case of fuel cells) on natura! gas. Given !hat much of the new investment in generating technology is directed towards natura! gas, the effect of distributed generation is therefore quite limited in changing the degree of diversity in Future of Distributed Generation in Electricity Networks The wide range of potential applications and favourable government policies for CHP and for renewables should ensure a greater market share tor distributed generation over the next decade. However, further research and development is also needed to reduce costs and improve environmental performance. Substantial research and development money is being directed to fuel cells and PV. lnvestments are also needed to reduce the capital costs and improve the efficiency of micro turbines. lmprovements in the environmental performance of engines and small turbines will also be needed in order to ensure !hat NOx emission limits do not rule out their deploythe power system. in the case of CHP, the higher fuel efficiency should mean lower overall fuel consumption and theretore should be favourable to energy security. Electric system reliability can be enhanced by distributed generation. The main potential negative ment. Further developments in combining distributed power with cooling or with uninterrupted power supply technologies are also potentially fertile markets. impact from distributed generation could lie in the capability of the network to Despite their limited penetrations in markets today, one has to consider the implications ofa future where the power system is much more decentralised than currently. Such a system would have The availability of standby generators in tight US electricity markets in the summer of 2001 helped reduce the risk of blackouts. Betler integration of standby resources into system operations would further enhance electricity system security of supply. supply primary reserve power if distributed generation technologies are certain potential advantages with respect to security and reliability of supply. One can envisage such a system emerging from the present system in three stages from not capable of responding Furthermore, the use of distributed generators at selected locations helps to load changes. accommodation of distributed generation in the current system, to the creation of decentralised network system that works in tandem with a centralised generation system, and finally a dispersed system distributors overcome loca! bottlenecks in the distribution system. lncreased distributed generation could reduce demand tor transmission and thereby increasing margins on transmission lines. Ultimately, a power system based on a large number of reliable small generators can operate with the same reliability and with lower capacity margin than a system with equally reliable large generators. The main potential negative impact from distributed generation could lie in the capability of the network to supply primary reserve power if distributed generation technologies are not capable of responding to load changes. This would be the case if the distributed generation technologies were nondispatchable because of natura! variability (wind and PV) or because of operating characteristics (e.g., CHP where power output is matched to heat demand). This would tend to increase transmission requirements, if reserve power is most economically available through interconnection with neighbouring systems. The operators of the Nordel system have identified the expansion of wind and CHP as a design concern and are studying how besi to address it. They have suggested that "distributed network regulation", where sub areas of Nordel each have their own regulator, may be needed. where most power is generated by decentralised stations, and central generation plays a limited role. There are a few signs !hat electricity networks are beginning this evolution. Technologies are already being employed to dispatch distributed generation and loads at several sites in response to market conditions. This decentralised dispatch is creating a kind of "virtual utility" that meets some of its own need while interacting with the electricity market. However, the operation of a network with large number of virtual utilities will require much greater real-time intormation flow than distribution networks, and distribution network operators currently have at their disposal. This includes upgrading its basic requirements to be capable of accommodating two-way flow, including increased communications and control capabilities. The skills required to operate and manage a distribution system will become correspondingly more complex. These technical and institutional changes would make a more decentralised electric power ECOGEtıERATION WORLO ı s 3
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