| This
article first appeared in Global Power
Infrastructure magazine by
Martin C.T. Anderson
CEO, Bridgestone
Associates Limited
and Managing Director of Bradley Energy
International
Often, as we look to the
future, we forget the lessons we have learned in
the past. We seek to find trends and
opportunities, to identify new markets, to move
forward with new ideas, and to be out front on
the marketing wave. However, by not looking back,
by not studying the past, and by not analyzing
the successes and failures of our history, we may
miss or overlook significant opportunities. There
is an old saying that it is important that we
study and learn from history as history is likely
to repeat itself. Nowhere is this truer today
than in the worldwide energy industry, where the
installation of distributed generation units may
be considered as history repeating itself.
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| OESP
Generating Plant, Sao Paulo, Brazil -
Generating Plant Building with air intake
louvres removed |
Over the past few decades the power industry
throughout the world has moved towards larger and
larger plants. The theory of this has great merit
as larger plants do typically provide economies
of scale, lower generation costs and reduced
environmental impact on a per kWh basis. Smaller
generating facilities often lack any economies of
scale and have higher costs of generation because
of the inherent inefficiency of smaller machines.
As a result, small plants, except those
cogeneration units providing combined thermal
energy and power, have frequently been abandoned
or avoided in favour of central station
facilities.
With an ever increasing worldwide demand for
electricity and with larger and larger central
station units being constructed, often located
well away from major load centres, the need for
increased transmission capacity has risen
sharply. Construction of new transmission
capacity to meet this need has run into
significant problems in many countries. With
issues relating to permitting, to licensing, to
interference with or damage to sensitive natural
areas, and to the general congestion in and
around major load centres, new transmission
construction is a time consuming, expensive, and
sometimes almost impossible undertaking. Lead
times of five to ten years are now common for new
transmission construction. As a result, in many
areas, transmission capacity is significantly
constrained. Because of this, reliability of
supply during peak times has become a significant
issue. Even in North America and Europe, with
their tightly integrated and controlled grid
systems, reliability during peak hours is an
issue begging for a long-term solution. That
solution may be from our past.
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| OESP
Generating Plant, Sao Paulo, Brazil -
Generating Plant Building |
Widespread deregulation of power generation and
power sales, contrary to often written comments,
may in fact help reliability. The flexibility of
competitive suppliers to provide real-time
pricing mechanisms will encourage lower on-peak
energy use as electricity customers are given the
incentive to lower their power use during peak
hours to save money. Mechanisms of this type,
where on-peak rates are often significantly
higher than off-peak rates, have been relatively
common with existing utility rates under
traditional rate making. On-peak, off-peak
pricing differentials do help reduce on-peak
hours system constraints and increased
flexibility and real-time pricing resulting from
deregulation of power sales will help this
further. With improvement in system constraints,
there will be improvement in reliability.
However, generation close to and within load
centres can still provide the most significant
load support to a grid system suffering from
constraints.
In countries where loads are increasing rapidly
and the generation, transmission and distribution
infrastructure are hard pressed to keep pace,
local distributed generation provides a solution.
Smaller generating facilities can be constructed
quickly, and be located close to load centres to
provide support to the distribution and
transmission systems. These distributed
generating plants can be operated on a continuous
basis or on a peak-hours-only basis. They may be
stand-alone generating units or cogeneration
plants providing both thermal energy and
electricity. Both electric customers and electric
suppliers can benefit from these facilities.
Overall system reliability can be improved, not
only for an end-user owner of the generating
plant, but also for the local utility.
One country where load growth has been dramatic
over the past decade, and where generation,
transmission and distribution have been hard
pressed to keep pace with demand, is Brazil. In
the past and to this day Brazil has relied
heavily on the supply of electricity from large
and often remote hydroelectric power generating
plants. Because of their remote locations,
transmission lines interconnecting generation
with load centres often stretch many hundreds of
kilometers. In the São Paulo metropolitan area
for example, power from the hydro plant at the
Itaipu Dam has to travel over 700 kilometers.
These long transmission lines, especially in an
area where there are frequent electrical storms,
translate into reliability problems for the
utilities and the consumers in São Paulo and its
suburbs.
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| OESP
Generating Plant, Sao Paulo Brazil -
Caterpillar 3516B 1, 825 kW
engine-generator set |
In addition to reliability concerns, the
consumers of Eletropaulo, the utility serving
much of São Paulo, are also faced with very high
on-peak rates. During on-peak hours large
commercial customers can face rates that are more
than six times those during off-peak hours. With
little natural gas distribution infrastructure in
the city and its suburbs, São Paulo’s over
15 million residents rely heavily on electricity
to heat water and to provide air conditioning.
Industry and commercial establishments also rely
very significantly on electricity for their
day-to-day operations. The utility’s highest
demand periods are in the early evenings between
5.30 p.m. to 8.30 p.m. These times also coincide
with the poorest system reliability and the
highest probability of partial system failures.
Improvement in reliability of supply and
distribution in the São Paulo area is likely to
result from new thermal plants being developed
and under construction in the region. Using
natural gas from the new gas pipelines being
constructed from Bolivia and Argentina, this new
breed of gas-fired generation can be constructed
closer to the major load centres, providing an
improvement of system reliability. However,
reliability improvements in the overall
generation, transmission and distribution system
will take considerable time, leaving consumers to
continue to suffer through poor reliability and
very high on-peak prices. Distributed generation
can help provide a quick solution to this
problem.
The new 3,650 kW generating plant built at O
Estado de São Paulo in São Paulo, Brazil
provides a good example of how a small
distributed generating plant can provide
significant benefits. This plant was designed to
provide reliable power during the utility’s
peak hours and to provide back-up power at all
other times. O Estado de São Paulo is the major
newspaper serving the metropolitan area of São
Paulo, Brazil. Reliability of electric service is
critical to the production of the daily
newspaper. Because of its printing schedule,
early and late evening reliability is of great
importance to the newspaper. Any power supply
failure can mean delay in production and
distribution, and a consequent loss in sales and
advertising revenues.
Over the past few years, faced with the need for
improved reliability of supply, O Estado de São
Paulo had been renting a back-up generator
system. This reciprocating engine was available
for manual start-up and connection into the
newspaper’s substation during utility power
outages. In recent times it was operated
frequently because of grid supply failures and
overall poor reliability of supply. Because of
this and the costs associated with renting
equipment, the newspaper sought a permanent
supply solution. As part of their plans, they
also sought to lower their costs of supply,
especially during on-peak hours.
Under the electric tariff of Eletropaulo
Metropolitan Electricity of São Paulo, the local
electric utility supplying O Estado de São
Paulo, during the peak hours between 5.30 p.m.
and 8.30 p.m. each weekday, the cost of power
jumps dramatically (Table 1). With the
newspaper’s load factor, their per unit cost
of power increases from app. 58 Reais per
Megawatthour (R$/MWh) to 400 R$/MWh (31 US$/MWh
to 210 US$/MWh) during on-peak hours. In addition
to this large on-peak price increase, the
reliability of supply significantly deteriorates
during these on-peak hours.
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| Table
1: Electropaulo, Sao Paulo, Brazil
- Partial A4 „Blue Tariff“ |
The solution for O Estado de São Paulo was
provided by Bradley Energy International, Inc., a
company specializing in developing, financing and
owning distributed generation plants. Bradley
Energy International constructed a 3,650 kW
generating plant to take over the
newspaper’s total load during the on-peak
hours each day and to provide back-up and
stand-by power at all other times. The plant
design includes automatic start up and
synchronizing, separation from the grid at the
beginning of the peak-hour period, re-connection
to the grid at the end of the three-hour peak
period, and automatic shutdown. Two diesel oil
fired Caterpillar 3516B reciprocating engines
with SR4B generators generating power at 4,160
Volts are connected via two step-up transformers
to the newspaper’s existing 13,200 Volt
substation.
As O Estado de São Paulo is in the newspaper
business, not the business of power generation,
they were pleased to entrust the development,
construction, financing, ownership, operations
and maintenance of this facility to an outside
party. Bradley Energy International provided the
complete business structure and plant on a
minimal risk basis to the newspaper. With a
long-term supply contract guaranteeing
performance and a reduction in supply costs, the
newspaper is assured of a reliable supply and a
reduction in costs. Under the structure developed
by Bradley Energy International, the plant
remains able to purchase power at any time from
Eletropaulo in the event that the generating
units malfunction. Overall supply reliability is
improved significantly.
The OESP Generating Plant is the first in a
series of similar distributed generation plants
under development by Bradley Energy International
for large commercial, industrial and
institutional energy users in Brazil. Each of
these plants is being designed to overcome two
key issues facing these energy users –
reliability and on-peak hour costs. The systems
may also be designed to provide additional supply
capacity and thermal energy if required. All the
plants will be monitored and operable from a
central remote location and, as part of the
overall benefit of distributed generation, may be
operated individually or as a block of generation
to benefit the utility in the future. This plant
demonstrates that distributed generation and the
installation of small generation facilities can
provide both reliable power and a reduction in
costs. O Estado de São Paulo, Eletropaulo, and
the other consumers of the utility all benefit
from this plant. Whether it is in Brazil or in
any other country on the globe, whether the grid
system is fully integrated and capacity rich, or
poorly integrated, constrained and short of
capacity, distributed generation can provide a
quick, cost effective solution to improved
reliability, increased supply, and lowering of
costs. Distributed generation is not only a
technology of the future, its part of our past.
History does repeat itself and we should learn
from it.
Contact Bridgestone
Associates to see how we can help you
at:
(610)
388-6191 or email us
at solutions@brdgstn.com
© Copyright 2000
Bridgestone Associates, Ltd.
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