Local Opportunities in Power Generation
by Gil Garcia

Today, economic forces, combined with the never-ending search for efficiency and economy of scale, has resulted in vertically integrated electric utilities that own both the large centralized power plants, and the transmission & distribution infrastructure. Today, more than 90 percent of the electricity consumed in the United States is generated by these utility companies. Less than 10 percent is produced on a site at or near the point of consumption. Today, 8 to 10 percent of power generated at large central stations is lost during transmission to the user over high-voltage lines.

At the dawn of the 20th century, vertically integrated utilities generated only 40 percent of the electricity consumed in the United States. The other 60 percent was produced on site at industrial facilities. In the late 19th century, small power plants were scattered throughout a service territory and most industrial facilities generated their own electricity.

Due to advances in technology and changes in how electricity is regulated, the electric energy crisis has highlighted a new energy industry with enhanced opportunities for innovative municipalities, companies and individuals. Decentralized generation — a system of small, modular electrical generation systems located at or near the load — is increasingly being seen as an economically and environmentally sensible approach to providing power to industry.

With decentralized generation, electricity is delivered directly to the power distribution network or consumed on site, in either case, reducing power line construction costs and power losses that result from long distance transmission.

Decentralized generation is a return to the electric industry’s roots in the late 19th century and will eventually change the U.S. electric industry from an interconnected network of regulated monopolies into a deregulated, open access, more competitive system. New rules in electric deregulation that encourage innovation in power generation are causing a shift from large and expensive central power stations, with the electricity delivered through thousands of miles of high-tension overhead wires, to smaller, more flexible and efficient generating facilities close to the consumer.

Changes in regulation, combined with increasing energy demand and advances in small electric plant generation technologies, create opportunities for large energy consumers to own and operate their own power plant [see story about the Rosebud Agency on page 23] and to connect to the regional system of high voltage transmission lines — “the grid” — only for reserves or emergency power. Customers can even sell their excess power to the retail energy provider.

Reliability of power from vertically integrated utilities, in spite of government intervention, will continue to be a concern of customers. Increase in supply (generating capacity) has not kept pace with demand over the past 10 years, leading some experts to predict shortages of readily available, cheap electric power during peak periods.

Some politicians and regulators believe that over the next few years, enough new generating capacity will be built to eliminate power shortages. Nothing could be further from the truth. No new major power plants have been brought on-line in the past decade, a period when power demand has grown at unprecedented rates. Much existing infrastructure is old, inefficient and frequently shuts down for repairs. New generating capacity is extremely expensive and, in today’s political climate, very risky.

The financial incentive for building new large power plants has been removed in deregulation, creating a need for many smaller decentralized power plants, owned and operated by municipalities, companies or individuals. Decentralized generation can be the best option, even if at first glance it isn’t the lowest-cost alternative. Customer benefits of decentralized generation that can be captured include:

The technologically advanced, highly efficient power equipment at a decentralized generation installation often reduces emission by more than half for each kilowatt produced, when compared to today’s large central generation plants. If the waste heat is captured for energy production or thermal applications, efficiencies can increase significantly, with a resulting drop in emissions.

In order to take advantage of these interesting times for local distributed generation, I convened an Energy Symposium of Business Leaders, renewable energy and small clean energy generation plant experts. This was an opportunity to brainstorm ideas and explore the potential for Santa Barbara South Coast-distributed energy generation. This well-attended meeting produced exciting options to pursue. The following is a list of potential opportunities.

Wind generation.
Among its benefits are its reliability, emission-free energy, and no subsequent energy costs. However, wind generation is generally not suited for residential areas due to visual impacts, and the cost/unit output could be a drawback.

Photovoltaic solar cells.
This is a reliable source of no cost, emission-free energy. The output varies by the number of modules: if in high volume, the cost will decrease proportionately. A large array of modules may cause a negative visual impact. Photovoltaic solar cells are considered well-suited for residential and small commercial uses.

Fuel cells.
Considered a high-efficiency system, hydrogen fuel cells provide emission-free energy and pure water as a byproduct. If operated with hydrocarbon fuel, the emissions are classified as “ultra-low.” As a developing technology, fuel cells are not broadly available, the output is insufficient for larger applications, and the cost remains relatively high. Efficiency is increased when used in concert with steam generation.

Microturbines.
This system is adaptable to different fuels and duty cycles, has low emissions, and capital costs are relatively low. The output capability is 300 kw, which may be too low for mid- to large applications. It is possible to use microturbines in mixed energy production.

Turbines (natural gas).
Large turbines are the most capable, cleanest technology for large capacity plants, especially when used in conjunction with cogeneration. Reliable, low emission models are readily available. Considerations are siting constraints, plus its use of natural gas, which currently is costly and may not be available.

Other innovative programs could include waste-to-energy experiments conducted in partnership with UCSB and the Air Pollution Control District; roof conversions to photovoltaic solar cells; ocean energy; solar-powered fuel cells; landfill incineration/energy generation; and other conservation measures.

The concept of waste-to-energy production through Anaerobic Digestion is an especially interesting prospect because it could solve two problems: an overflowing Tajiguas landfill, and the need for energy generation. Anaerobic digestion is the decomposition of organic matter that eventually results in the production of biogas with a high methane content. Methane gas is easily converted to electricity, can be sold as is, can be used for steam production and for producing a high quality soil amendment for agricultural use. Improved technology has reduced smell nuisances but only in less square footage than required by conventional landfills.

The years of concentration on large central plants and high-voltage transmission networks have resulted in great advances in the reliability and efficiency of power production systems including the smaller ones. It is no longer necessary to build huge generating plants to achieve the economics of scale enjoyed by 500-MW to 1,000-MW facilities. Technologies such as microturbines, natural gas engines and fuel cells extend these efficiencies to ever smaller installations. Standardized, off-the-shelf modular generator packages and increasing production volumes have steadily lowered costs of distributed generation equipment.