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DER technologies can serve a variety of purposes for a home or business. The following options are the most likely reasons to use DER:
In evaluating each of these options, compare the desirable traits for each application to the table of DER technology characteristics to determine the best technology solution. Of course, intangible needs such as public relations benefits or a desire to use cutting-edge technologies may influence your choice as well as economic considerations.
In addition to these uses for electricity consumers, electric utilities may use DER for grid support, improved power quality, and improved reliability. Judicious use of DER technologies can help electric utilities avoid investments in transmission and distribution infrastructure.
Homeowners who are paying a flat rate for electricity, and businesses with power bills that are not dominated by peak electricity rates, may be most interested in reducing their overall electricity use.
It is important to note that in nearly all cases, energy efficiency technologies are the most cost-effective approach in achieving this goal. Insulation, energy-efficient lighting, and installing high-efficiency refrigerators and air conditioners or chillers are typically among the most cost-effective approaches. For businesses, energy service companies will even pay the capital cost of the upgrades, allowing you to repay them out of your energy savings.
If you are interested in distributed generation technologies to reduce your overall electricity use, nearly any small generation technology could meet this purpose, but you are most likely to want generators that have:
- Low operating costs (e.g., fuel)
- Low maintenance needs
- The capability of operating continuously for long periods of time
- (For businesses:) Acceptable capital costs when amortized over the life of the installation
- (For homeowners:) Acceptable loan payments if the capital cost is spread out over the life of a typical loan (such as a first or second mortgage).
Homeowners who are paying time-of-day rates or businesses with power bills that are dominated by peak rates may want DER technologies to reduce their peak electrical use. For some power agreements — such as business agreements to reduce demand at the request of the utility to avoid power emergencies — there may be a very time-specific need to reduce electrical loads.
Of course, the least expensive solution is to shift loads away from the peak periods, but this is not always possible. For example, an energy-intensive industry may not be able to shut down its demand-intensive equipment without disrupting operations, or a homeowner may need to run an air conditioner during peak periods. Distributed generation could potentially prove cost effective for shaving the peak loads caused by such devices.
It is important to note that a focus on the equipment that consumes the most electricity could miss some important opportunities. Applications such as lighting may contribute most to overall electricity use, but they may also contribute to peak loads. For this reason, a look at approaches to reduce overall electricity use is still warranted.
That said, let's examine distributed generation technologies for peak load reductions. For this application, the desired characteristics are as follows:
- For business peak-demand charges, businesses need to compare their demand curve with their utility rate structure to determine the most cost-effective generation capacity. The idea is to size the generator so that it reduces peak load to the point where rates are significantly lower and cost savings justify the expense of the DER system. Potential future increases in peak loads must also be considered.
- For business peak-demand charges, if peak charges occur rarely, capital costs must be low (particularly true for emergency load-reduction programs).
- For business time-of-day charges, or for peak-demand charges that occur regularly, capital costs must be acceptable when amortized over the life of the installation.
- For homeowner time-of-day charges, loan payments must be acceptable if the capital cost is spread out over the life of a typical loan (such as a first or second mortgage).
- For peak-demand charges, particularly for emergency load-reduction programs, the generator or storage device must have the ability to reach full power quickly and reliably.
- The energy supply must match the demand peak (an important consideration for wind and solar energy).
- The energy supply must be sufficiently large to last through the high-demand period, and must be replenished before the next period (particularly important for energy storage technologies or stored reserves such as diesel fuel). To determine this, you will need to determine the expected length and frequency of high-demand periods.
- Operating costs can be high, and maintenance requirements are less of a factor, particularly when shaving peak demands.
Both homeowners and businesses may want a source of backup power in case of power loss on the electrical grid. It is important to note that the backup power source may not need to meet your full electrical load — there may be specific devices that you want to keep energized, and others you can do without. A backup power system should be sized to meet these "critical" loads — unless, of course, you want the ability to continue unhindered through any power outage.
Critical loads can be hardwired by placing them all on a critical power circuit, or automation can be used to drop nonessential loads, or even a manual approach can be used, particularly for homeowners.
The desired characteristics for your distributed generation technology are as follows:
- The generator or storage device must have the ability to reach full power quickly and reliably — how quickly depends on your equipment needs (computers require a fast response; cooling equipment doesn't).
- The energy supply must be always available, or a storage technology (e.g., batteries) must be used to supplement it.
- For stored energy systems, the storage must be sufficient to meet the expected duration of a power outage.
- Capital costs should be in line with the benefit provided by avoiding power outages.
Note that operating costs and maintenance requirements can be high unless extended grid outages are expected.
Businesses with a strong need for reliable, high-quality power may find grid power to be unacceptable. Some high-tech homeowners, particularly those with home businesses, may also need high-quality, highly reliable power. For these energy consumers, the best option may be to generate their own power and use the grid merely as a backup power source. In some cases, the availability of a grid backup may not even be worth the expense, provided one can handle the contingency of a breakdown or maintenance shutdown of the power source.
The needs in this case are:
- The ability to operate at high reliability for extended periods of time without degradation of power quality.
- Extremely low maintenance requirements.
- Operating and capital costs in line with power requirements.
- The ability to meet the full electrical load (or at least those loads that require high power quality and availability).
- An energy source sufficiently available to constantly meet your power needs, or storage available to ride through any anticipated loss of the energy source.
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