Embedded Generation

‘Embedded’ generation refers to generation connected to the distribution network rather than the transmission network. It is important to note that, as discussed previously, embedded generation is far from a new concept, having “been a feature of the electricity industry since it began more than a century ago” (EGWG, 2001). There is no universal definition of what constitutes embedded generation nor how it differs from conventional central generation. However, common attributes have been identified as (Jenkins et al, 2000):

• Not centrally planned • Not centrally despatched

• Normally smaller than 50 to 100 MW

• Usually connected to the distribution system

economically in a range of sizes (ETSU, 2001). Such technologies are well matched to generating electricity where it is needed, therefore lending themselves to being embedded in the electricity distribution networks.

Drivers for the Expansion of Embedded Generation

The International Conference on Electricity Distribution Networks (CIRED) 1999 sought the views of representatives from 17 countries as to the policy drivers that encouraged the development of embedded generation. These drivers included:

• Reduction in gaseous emissions from electricity generation (mainly CO2) • Energy efficiency and rational use of energy

• Deregulation of competition policy • Diversification of energy sources • National power requirements

Other motivations for embedded generation include:

• Improved technological performance of modular generating plant and control technologies

• Increased difficulty – planning, public concerns, etc. – in locating large generating units • Shorter construction times, lower capital costs, quicker payback periods of smaller units • Location of generating plant nearer to the load thus reducing transmission charges • Cultural drivers – political and cultural desires to develop low carbon energy

technologies

The development of new technologies such as modular CCGT, micro and mini CHP, fuel cells and renewable energy, alongside the increasing awareness of the environmental impact of power generation has resulted in increasing commercial interest in their exploitation (ETSU, 2001).

Poor power quality and security of supply concerns, alongside the recognition of environmental benefits, have driven the recent growth of embedded generation

technologies in the USA, e.g. California (Brooks and Butler, 2001). The principal drivers to date in Europe have been concerns over the environment and increased awareness of the newer technologies as market liberalisation progresses in the EU member states.

The DTI has stated that ensuring that the UK is in the forefront of the liberalisation of electricity markets and the advancement of embedded plant is of potential profit to UK plc. It will enhance industrial competitiveness and provide greater opportunities in overseas markets (DTI, 2001). Such opportunities may relate to the application of new technologies

and the management of active distribution networks. With the move towards increased liberalisation of world electricity markets, UK companies could be well placed to exploit opportunities in establishing embedded generation projects and services.

A number of embedded generation technologies emit relatively low levels of CO2 compared

to large coal or gas fired plant. An increase in the contribution of such technologies to overall electricity supply could assist the UK in meeting greenhouse gas emissions

reduction targets. The expansion of embedded generation can add to fuel diversity and UK energy security. Diverse forms of generation may be developed, including renewable technologies, such as wind, that are not reliant on imported sources of fuel.

Box 10 provides a case study of embedded generation in the Netherlands, highlighting a number of policy considerations, discussed below and in Chapter 6.

Box 10 Embedded Generation Case Study – The Netherlands

One of the responses in the Netherlands to the oil crises of the 1970s was to structure the ESI to provide incentives for the development of small-scale, decentralised generation. Local utilities with dense network infrastructures, built with of future capacity growth in mind.

A recent report produced by COGEN Europe looked at embedded generation in the Netherlands. Cogeneration has a 40% share of current installed capacity. A significant share of installed capacity is therefore decentralised. The Netherlands 1989 Electricity Act separated generation and distribution activities. But, distribution companies were allowed to continue their activities in generation plant under 25 MWe. This continued involvement of distributors has proved a key driver and motivation for them to address and resolve issues related to the increase in decentralised/embedded generation.

The Dutch experience has shown it is possible for decentralised generation to develop without major difficulties, although strong political will to achieve this is a key element. The development of active distribution networks was achieved through formulating adequate technical regulations and measures that did not entail prohibitive costs. A survey of Dutch utilities concluded that the main issues for the grid in case of a growth of cogeneration capacity are not technical, rather organisational and

commercial/contractual (COGEN Europe, 2001).

Overview of Technical Implications of Embedded Generation

As discussed previously, distribution networks have been constructed to accept bulk power transfers from the transmission system for distribution to customers. A significant increase in embedded generation may result in a reversal of electricity flows, subject to generation and demand levels at certain periods. This would require distribution networks to adapt their passive nature to become ‘active’, having the ability to accept bi-directional electricity flows. The major technical implications of increased embedded generation include (Jenkins et al, 2000):

Network voltage changes

DNOs are required to supply customers at a voltage within specified standards (Box 9, Chapter 4). This requirement has often determined the design of distribution networks,

and techniques to maximise the use of distribution circuits while maintaining voltage levels have been developed over the years (Jenkins et al, 2000). Network voltage is in part determined by the level of electricity flow, and embedded generation and subsequent changes in electricity flows must be taken account of.

Network fault levels

Embedded generation increases the distribution network fault levels – the voltage that trips the network. In urban areas, it is common for distribution networks to be operating near to the existing fault level, therefore providing an obstacle to embedded generation (Jenkins et al, 2000). Connected embedded generation may require upgrading of the distribution network, an expensive undertaking currently borne by embedded generators under existing charging principles in the UK.

Quality of Supply

Embedded generation can produce voltage variations on distribution networks, although variations can be minimised through careful design of embedded plant and the correct synchronisation of generators (Jenkins et al, 2000).

Protection

Embedded generation requires additional controls and monitoring to protect the generating equipment itself, and to protect the distribution network from fault level currents and issues associated with ‘islanded’ operation (see below).

Other technical issues related to embedded generation are assessed in more detail in Chapter 6 and include:

• ‘Islanded’ operation - embedded generators operating disconnected from the distribution network and supporting local supplies in the event of network failure

• Ancillary services – embedded generators providing reserve and frequency response • Bulk power transfers - reduced electricity flows from the transmission to distribution

networks as a result of increased penetration of embedded generation development will not necessarily result in a corresponding reduction in the bulk transfers

• Network modelling, management and control - need for network modelling to assess the technical issues will arise in a decentralised network

• Net-metering and smart-metering - allowing customers to offset their electricity consumption from distribution network by selling their own embedded generated electricity to the network

5.2 Intermittency

Several of the embedded and renewable energy technologies, e.g. wind and solar, raise issues relating to the intermittent and variable nature of their output. This characteristic suggests that electricity from such sources can not be guaranteed. But, intermittency should not be confused with unpredictability, e.g. tidal electricity generation may be intermittent but is very predictable.

The greater the contribution of intermittent generation sources to total supply, the greater the effects of intermittency will be. However, a minority share of intermittent and variable generation should not be a significant technical constraint (Anderson and Leach, 2001). In providing evidence to the House of Lords Select Committee on ‘Electricity from

Renewables’ in 1999, NGC outlined the criteria that would likely trigger extra operational costs, one of which was generation subject to fluctuating greater than 20% of peak system demand. Using this criteria, 7,500MW of wind capacity could be accommodated within the system (Millborrow, 2001). However, the overall output of wind generation rarely changes enough to cause a problem for a system which must be able to cope with sudden and substantial losses of power (Hartnell, 2000). Denmark is a country where wind contributes significantly to total electricity supply and demonstrates the ability to accept significant wind generation on electricity networks (Box 11).

Box 11 Intermittent Generation Case Study – Denmark

In Denmark, the capacity of installed wind generation is 2,380 MW, the overall contribution to total electricity generation being 13%. (James & James, 2001). The contribution of wind in certain districts is as high as 80% (Hartnell, 2000). Accurate prediction systems for wind generation were identified as essential to allow electric utilities to plan for likely fossil-fuelled generation required. Prediction systems have been developed using Danish Meteorological Institute data, and have proved sufficiently accurate (Hartnell, 2000).

Variation in the location of plant is another important factor. A large network of

geographically diverse wind turbines, e.g. 10 MW of capacity, would dramatically improve the predictability and reliability of output. Estimates suggest that a separation of between 5km and 10km for two wind turbines is enough for their output to be treated as

independent (Grubb, 1991). However, some concerns remain as to the instances of totally calm days affecting large areas of the UK

Intermittent and variable output must also be considered in relation to the role the generation source is providing. Intermittent and variable generation sources may not be best suited as base-load plant, contributing more to ancillary services, peak demand and

seasonal variations, e.g. higher demand for electricity in the winter when the wind speed tends to be higher. Alternatively, the right mix and location of intermittent and variable output, alongside appropriate aggregation, may provide opportunities for the provision of base-load output. Certain renewable energy sources show a degree of inverse correlation that may help flatten and ease the predictability of output, e.g. low winds on sunny days and high winds on overcast days. By using combinations of different variable source, hydro, storage and/or trade (interconnectors), there seems no technical reason why large systems should not derive well over half their power from variable sources (Grubb, 1997). At high levels of intermittent contribution to overall supply (perhaps over 20%), the effects of intermittency will be more prominent. Back-up facilities and/or electricity storage have been highlighted as potential technologically and economically necessary responses to such effects (Anderson and Leach, 2001). But, although increased generation from variable renewable sources may increase the value of storage and vice versa, storage is in no sense the only answer (Grubb, 1997). Electricity storage is analysed in more detail in Section 5.4.