Distributed Generation Feasibility

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Presenter: Jon Fortune, CCSE

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Distributed Generation Feasibility

  1. 1. CCSE Solar Conference: Distributed Generation Feasibility Presented by Jon Fortune, P.E. September 29th, 2009
  2. 2. Overview • Introduction • Terms • Feasibility Studies • Example: Photovoltaics • Site Specifics • Utility Tariffs • Critical Economic Components • Results 862 kW Solar - Santee Lakes Covered RV Storage • Fundamental Questions 2 2
  3. 3. California Center for Sustainable Energy Greening Your World! • An independent voice on energy issues and a trusted, unbiased resource for businesses, consumers, public agencies and local governments offering balanced, objective information throughout the San Diego community and California • The California Center for Sustainable Energy is a nonprofit corporation that helps San Diegans and others adopt greener practices and save energy and money through rebates, technical assistance and education. 3 3
  4. 4. CCSE’s Energy Advisory Service Empowering clients with objective information and sound analysis to green your bottom line Service Offerings • IDENTIFYING ENERGY EFFICIENCY OPPORTUNITIES • Determining how much energy you are consuming and evaluating what measures will save you money • DEVELOPING RENEWABLE ENERGY SOLUTIONS • Evaluating and designing integrated, practical alternative energy systems for maximum efficiency and minimum costs • QUANTIFYING YOUR CARBON FOOTPRINT • Developing carbon reduction strategies and greenhouse gas accounting that meet regulatory requirements • CREATING INCENTIVE AND OUTREACH PROGRAMS • Identifying potential financial assistance through incentives and rebates and developing training, outreach and partnerships • ESTABLISHING MANAGEMENT AND GREEN BUILDING SOLUTIONS • Applying systematic principles and approaches to energy efficiency and environmental considerations in all phases of building development 4 4
  5. 5. Terms • kW: kilowatt = Unit of instantaneous power. (speedometer) • kWh: kilowatt-hour = Unit of energy used over time. (odometer) • Tariff: utility rate schedule. • DG: Distributed Generation. Name for on-site power usually less than 20 MW. • PV: Photovoltaics. Technological term for direct solar electricity. Different than electricity generation from thermal generation (aka solar thermal trough, dish, or power tower) 5 5
  6. 6. Why Feasibility Assessments? • Most organizations have their core competencies and do not have time to become experts • Energy costs are just one component of providing the main services your organization delivers. New technologies and policy changes can quickly and dramatically change the cost-benefit analysis. • Value of systems is unique per application • No “one size fits all” answers • Value differs by site, load, tariff, utility provider, etc. • Same terminology does not mean the same performance/value • 100 kW of Wind ≠ 100 kW of PV ≠ 100 kW Fuel Cell • kW may be Alternating Current (AC) or Direct Current (DC) • Feasibility reports direct action by defining constraints and objectives 6 6
  7. 7. Is it worth the added cost? • Client X desired additional solar power to reduce utility costs and prepare for future expansion of water treatment • Already had solar installed onsite with positive outcome • Prepared an RFP and received bids from reputable developers for desired installation of 500-1500kW of new solar • CCSE was hired during the RFP process, conducted a thorough analysis of proposed meters and system sizes • Results: • Determined that switching to a new tariff for one meter would yield ~$16k in savings without solar • Only 140kW of solar on second meter (with a change in tariff) would yield maximum savings • Identified true cost of proposed system sizes, maximizing avoided cost and minimizing operational cost 7 7
  8. 8. Example: PV • When some materials are exposed to sunlight, they release small amounts of electricity giving off what is known as the "photovoltaic effect.“ 8 8
  9. 9. Is PV a good fit? • Advantages • Easily deployable and scalable • More predictable than wind • Produces energy during Peak times (most expensive/most valuable times) • Minimal required maintenance (cleaning) produces excellent returns • Disadvantages • May not cover peak times completely • Will not reduce site demand translating into no demand cost savings • Cost per kWh can appear higher than other technologies such as wind and IC engines 9 9
  10. 10. Collect Data to Identify Constraints • How does your site use energy per day/month/year? • Collect at least 12 months of discrete load data from utility for kW and kWh during On, Semi, and Off-Peak periods of each month • Net-metering savings work when your load can be met by a PV system 1MW or smaller • How will your site use energy in the future? • Identify future energy plans, potential for shutdowns, expansion of loads • How much square footage is available for PV? • Are there dual benefit opportunities such as covered parking or LEED certifications? 10 10
  11. 11. Consumption/Production Profile kWh Used/Produced per Hour Site Load PV Production 250 200 150 Kilowatts 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hours 11 11
  12. 12. Net Consumption Net kWh Used per Hour Site Load PV Production Net Consumption 250 200 150 100 Kilowatts 50 0 -50 -100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hours 12 12
  13. 13. Tariffs, Tariffs, Tariffs • Unique opportunities for Water Agencies • Some new – Critical Peak Pricing, limited size feed-in tariff • Some closed – Non-time of use • Most common – Large Commercial, Agricultural 13 13
  14. 14. Tariff Lowdown • All tariffs are NOT created equal • One tariff does NOT fit all customers • Consumption and production during time-of-use are key to savings • Net-metering works because you charge the utility at practically the same rate they charge you at the time you produce it: (Utility energy rate)*(kWh Meter Load) = Utility Bill (Utility energy rate)*(DG kWh Production) = Utility Bill Offset • In general, net-metering is economically better than full sale of generation through the currently available feed-in tariffs • Offset your bill costs, not your energy use 14 14
  15. 15. Available Incentives • Federal Tax Credits • 30% first year with MACRS depreciation • ~45% of project costs during first year • Creates value for power purchase agreements • California Solar Initiative • http://www.gosolarcalifornia.org • Performance based incentives over 5 years • ~20% of project costs • Renewable Energy Credits • Earned by any system owner who does not directly sell their renewable energy to the utility. 15 15
  16. 16. Critical Economic Components • Self-Ownership • Up-front financing required • Knowledge of tax-credits (commercial only) • Specialized management on-staff • Power Purchase Agreements • No up-front capital costs • Ideal for tax-exempt customers who have no tax appetite • Customer value based on immediate potential for savings • $/kWh is the magic number • Long term risk due to long term contract 16 16
  17. 17. The Feasibility Assessment Ownership Model • System management • Project Economics The Report • Utility savings Consumption Energy Produced • • System sizing Quantity • Quantity • • Payback Time of • Time of delivery Consumption Utility Rates • Demand Charges (kW) • Energy charges (kWh) 17 17
  18. 18. Fundamental Questions • What technology will work best for me? • Are there energy efficiency measures I should explore before examining distributed generation? • What tariff am I on now? • What tariff will provide me with the most savings when the project is complete? • Where will the equipment be installed? • How will that impact future facility maintenance? • How much energy in kWh do I use? • Do I expect to use more/less in the future? • What is my peak kW demand? • Do I expect to use more in the future? 18 18
  19. 19. Fundamental Questions • How will I finance this project? • What incentives are available and for how long? • Can I lease to own? • What are the maintenance requirements of this equipment? • What is the life-cycle of this equipment? • Will the performance degrade and by how much? 19 19
  20. 20. Bottom Line • A independently validated feasibility assessment answers the fundamental business question about the dollar value of energy generated from solar. 20 20
  21. 21. Thank You! Contact Me: Jon Fortune, P.E. Manager, Energy Advisory Service jon.fortune@energycenter.org 858-244-1196 21 21

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