DG Interconnection & the Business Deal

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Distributed Generation & On-Site Power Conference New Orleans March 21-22, 2001 Presented by N. Richard Friedman DG Interconnection & the Business Deal Resource Dynamics Corporation 8605 Westwood Center Drive Vienna, Virginia 22182 703/356-1300, Ext 203 | nrf@rdcnet.com ©Copyright 2001 Resource Dynamics Corporation

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 2 The Return of Distributed Generation •"Reappearing" After a Long Absence •The Concept of Distributed Power is Not New -"Total Energy" experiment in the 1960s -Packaged cogeneration of the 1980s

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 3 What's the DG Buzz About? •Restructuring Presents DG Opportunities -Price rises & supply availability cause concern -Numerous applications are cited, including grid support •Many DG Technologies in Marketplace -New technologies being commercialized -Ambitious improvements slated for old standbys •Environmental Restrictions Add Complexity -High price regions overlap with non-attainment areas -NOx control cost burdens smaller units

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 4 What's the DG Buzz About? (cont.) •Availability and Price of Natural Gas •Increasing Sensitivity of Electrical Equipment and Concern for Power Quality •Heightened Reliability Awareness •New Business Opportunities for Energy Companies •Interconnection A Potential Barrier - "But Help is On the Way"

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 5 Electric Power Systems Not Designed for Distributed Power Resources •Utility Circuits Typically Radial, Designed for "1-Way" Operation •Selling Power into the Grid Was Not an Issue Until PURPA

The Electric Power System

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 7 A Number of Service Layers

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 8 Transmission and Distribution System Voltage - DG Interconnection Where?

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 9 Interconnection is Not a New Issue •Customer Generation Has Been Around for Over 50 Years (Frequently CHP) •Interconnection of Larger Generator (> 25MW) Accomplished at Customer-Owned Substation •Smaller Projects Used All Power On Site, Paralleling Grid for Backup/Supplementary Power •Power Sometimes Provided to Grid in Emergency and Special Situations

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 10 When Did Interconnection Become a Concern? •Smaller, Most Gas-Fired Reciprocating Engine •Manufacturers and Gas Companies Frustrated by Inability to Sell Their Technology to Customers in Late 60s -- Zeroed in On Gas Cogeneration •Market Problems They Identified: -Not Economic to Install Full Capacity Backup -Utility Refusal to Interconnect for Backup

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 11 When Did Interconnection Become a Concern (cont.)? •Impact of Arab Oil Embargo Dramatic -New Energy Conservation Initiatives -Lines for Gasoline -Image of President Carter in Sweater in 650 Office -Pushed 1978 National Energy Act •National Drive to Achieve Energy Independence

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 12 Interconnection Then Gets Some Attention •PURPA and NGPA Highlighted Renewables and Cogeneration (Lobbyists Active) •Focus Was on Availability of Backup Power and Sale of NUG Power at Utility "Avoided Cost", Not On Details or Costs of Interconnection Arrangement •Result: Utilities Left Alone to Specify Requirements

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 13 Utility Motivations in Past •Maintain Grid Stability and Reliability •Minimize Problems from Uncontrolled Customer Generation •Obtain Protective Relaying to Protect the Grid •Discourage Customer Generation -Discount Retail Rates -Discredit Customer Cogen Proposals -Take a Position in Development of Project

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 14 Interconnection is Not a Simple Issue Utility Concerns •Electric Power Distribution Systems Designed for One-Way Operation •Personnel Safety and Grid Stability Are Dominant Concerns •Utilities Reluctant to Rely on Unfamiliar, Customer-Supplied Protective Relaying Schemes •Integrated Interconnection "Packages" Not Generally Accepted and Known

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 15 Interconnection is Not a Simple Issue Customer Concerns •Utility Interconnection Costs Can Be a "Deal Breaker" for Smaller-Sized Projects •Some Requirements Not Understood by Customer, and May Appear Unreasonable •Manufacturer, Customer and Utility DG Activities are Frequently Not Coordinated •Interconnection Requirements Are Far From Standard

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 16 Interconnection Getting More Attention Today •New Vendor Packages Available, Often Integrated With the Inverter •Under the EEI Umbrella, Utilities Identifying Issues of Concern •Interconnection Being Addressed at State Level •Interconnection "Flagged" in Senate Proposed Legislation •IEEE Standards Coordinating Committee Developing Interconnection Standard

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 17 IEEE Interconnection Standard •Being Developed by IEEE SCC21-P1547 •Responsible for Standards Development in Areas of -Fuel Cells -Photovoltaics -Dispersed Generation -Energy Storage •Reports to IEEE Standards Board

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 18 IEEE Interconnection Standard • Title: Standard for Interconnecting Distributed Resources With Electric Power Systems • Purpose: Provide a Uniform Standard for Interconnection of Distributed Resources With Electric Power Systems, and Requirements Relevant to the Performance, Operation, Testing, Safety Considerations, and Maintenance of the Interconnection

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 19 IEEE Standards Committee Plans •Spring 2001 Balloting Completion Date •Working Group of Over 300 •Meetings Every 2 Months •Richard DeBlasio, NREL is Chair

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 20 Examples of Some States Not Waiting for IEEE •New York •California •Vermont •Texas •Delaware

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 21 Interconnection Concerns Covered in Standard •Safety •System and Equipment Protection •Power Quality and Reliability

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 22 Technical Requirements Fall Into Several Categories •General •Response to Abnormal Conditions •Power Quality •Islanding

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 23 Defining Area and Local EPS Local EPS 1 Area EPS Load DR unit Local EPS 3 Load PCC Point of DR Connection PCC DR unit Local EPS 2 Point of DR Connection PCC Note: Dashed lines are EPS boundaries. There can be any number of Local EPSs.

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 24 DG Interconnection Process DR Area EPS Interconnection

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 25 General Requirements •Voltage Regulation & Reactive Power Support •Integration with EPS Grounding •Synchronization •DR on Distribution Spot Networks •Inadvertent Energizing of Area EPS •Monitoring

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 26 Response to Abnormal Conditions •Voltage Disturbances •Frequency Disturbances •Disconnection for Faults •Loss of Synchronism •Feeder Reclosing Coordination

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 27 Power Quality •Limitation of DC Injection •Limitation of Voltage Flicker Induced by the Distributed Generator •Harmonics •Immunity Protection •Surge Withstand Capability

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 28 Islanding •Prevention of Islanding at Point of Common Coupling •Intentional Islanding

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 29 Future IEEE SCC21-P1547 Activities •Draft 7 Out for Ballot Now •Next Meeting - April 18-20, New Orleans •Several New 1547 Projects Initiated -Applications Guide -Communications -DG Textbook -Networks

2/2001-3/2001 WG Ballot Liaison Final Review 4/2001 Ballot Resolution P1547 Meeting 4/2001(6/2001) Working Group approves draft to REVCOM and IEEE-SA Standards Board 6/2001 IEEE Standards Board approval 1st try 12/2001 Publish as IEEE Standards FINISH Working Group Goal Editing and Printing 9/2001 IEEE Standards Board approval 2nd try 4/2001 Require Working Group Re-ballot Proposed Timeline for IEEE SCC21 Standards Development Project P1547-Standard for Distributed Resources Interconnected with Electric Power Systems

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 31 Source: EPRI Report TR111489 Typical Engine Generator DR

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 32 Interconnection & the Business Deal •Power Quality and Reliability -Interconnection Hardware May Reduce Costs -DG Can be a Negative Impact •Dispatchability -Interconnection Hardware May Reduce Costs -Communications the Open Issue •Serving the Internet Economy -Interconnection "Black Box " Developments -Complex Interconnection Arrangements

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 33 Power Quality & Reliability •DC Injection •Light Flicker •Harmonics

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 34 Dispatchability •Genset Control Module •Human-Machine Interface (HMI) •Communications Interface/Hardware & Software •Power Management Software •Monitoring & Metering Module

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 35 Genset Control •Supplied by -engine manufacturer -software vendor (retrofit & OEM market) •Must communicate with power management module •Integrated control software offering increased flexibility

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 36 HMI at the Genset •Membrane keypad typical •Status monitor for operator HMI at the Control Room •Data & event logging •Data trending •Alarm display and annunciation

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 37 Communications Interface & Controller Hardware/Software Platforms •Widely accepted protocols preferable -e.g., Modbus, Echelon LonWorks -PC technology/Windows operating environment -Relational databases (e.g., SQL, OLE) •Proprietary microprocessors an alternative (e.g., Onan)

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 38 Power Management Software Characteristics •Interface with digital electronic governor •Synchronize frequency •Share real & reactive power loads •Manage power factor and VAR •Protect genset and personnel •Ramp genset loading •Offer data processing options Goal - complete array of functions

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 39 Monitoring & Metering Module •Monitor major parameters for genset operation •Key functions -utility grade metering -data trending for display •Option to regulate and operate with grid •Addition of remote communications for dispatch

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 40 Applications of the Internet Economy •Web-Hosting Companies •Internet Service Providers •Call Centers •Credit Card Processing Centers •Telecom Service Centers •Other

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 41 Data Centers Typically Have: •Robust physical security •Raised floors •Fire suppression equipment •Strict climate control, including large HVAC systems •UPS systems •Backup power •Redundant connections to the Internet backbone and grid Complex interconnection arrangements

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 42 What is the Issue? •Availability of electricity to serve Internet- related applications •10-40 MW per location/50-130 w/ft2 •12-18 month lead times •10-25 percent of new load •60 million ft2 of new facilities by 2001 •Some 6,000-8,000 MW of new load The Ultimate Need ------------> Information Quality Power

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 43 Examine Customer Business Perspective •Energy cost reduction -part of general business goal to lower/control costs -reflected in minor budget savings -frequently obtain new equipment with no upfront capital outlay •Outage cost reduction -gets to the core customer business -requires customer sophistication to value outage cost -much higher value savings

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 44 Assured Power Services Attraction •High 6 - 9s reliability for mission critical operations (e.g., internet, telcom, other) • Outage cost reduction perspective high value to customer •Need to understand what this really means to customer

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 45 The Reality of the 9s Reliability (%) 1 - 9 90 876 Hours 2 - 9s 99 88 Hours 3 - 9s 99.9 9Hours 4 - 9s 99.99 53 Minutes 5 - 9s 99.999 5 Minutes 6 - 9s 99.9999 32 Seconds 7 - 9s 99.99999 3Seconds 8 - 9s 99.999999 19 Cycles 9 - 9s 99.9999999 2Cycles Total Outage Time/Year

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 46 How Much Reliability Do You Get? •Utility power: 2 or 3 - 9s, maybe •Grid plus UPS: 4 - 9s •Grid, UPS, DG: 5 - 9s •Grid, UPS, DG, nearly full battery backup: 6 - 9s Interconnection & Transfer Switch Arrangements Can Help!

ASD Input Voltage 0 102030405060 Cycle ASD DC Bus Voltage 0102030405060 Cycle Motor Current 0 102030405060 Cycle Motor Speed 0 102030405060 Cycle ASD Motor Consequences of a 2-Cycle Interruption

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 48 What Might the Future Hold? •DG as an integral and growing component of data center design •Near-term delays in service to data centers •Increasing peak power demands of internet applications •Inability of many distribution systems to serve the data centers •Emergence of premium power parks solely for data center location •Major new business for DG

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 49 What to Expect Next? •Continued Attention to Easy, Low Cost and "Standardized" Interconnection - Will Not Work at All Points on Utility System •Utilities Still Nervous and Uncertain of Impact on Their T&D Operations •Standardized Interconnection May Not Apply Universally •Improved Manufacturer Interconnection Packages - Lower Cost, Improved Performance

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 50 What to Expect Next (cont.)? •Accelerated Activity at State Level Regarding Interconnection, But Deferral to IEEE Standard •Standard Completed by Fall 2001 - Functional Rather Than Prescriptive Approach •Utility Specification of "Preferred Points of Interconnection" Likely

Distributed Generation & On-Site Power: Impact of DG Interconnection Requirements on the Business Deal 51 What could the power system of the future look like?

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