Distributed Generation

Draft Report Outline and Discussion Questions

General Questions for Each Chapter

The following should be kept in mind during the discussion of each chapter:

1. Are there any portions that you think should be changed or eliminated?
2. Are there any issues or data that have not been included?
3. Are there areas where we can better address potential impacts or opportunities from evolving market structure
4. Will you need to see more detail before you are willing to accept the report?

Executive Summary

I. Introduction

1. Overview
2. Recent activities, interest, and studies (Best summary in 1996 Dunlop REPP paper)
3. Previous recommendations and needs for further research (Tennis, Dunlop, others)
4. Goals of this project

II. Approach

1. Objectives of each report section
2. Proper use of European lessons learned and data - filtered for applicability to U.S., but detailed enough for readers to draw insights
3. Limited, applicability of several U.S. projects - Several to draw from, but must be used carefully since still in demonstration or first of a kind stage

III. Best Practices And Other Major Findings

IV. Conclusions

Outline of Chapter 1 - Interconnection and Power Quality Requirements

 I. Introduction

1. Distributed wind generation is often connected to the distribution system, rather than higher voltage transmission systems. Why is this so? (location, cost savings, possible distribution system benefits)
2. If connected to distribution system, then more power quality impact on other customers (description of power quality impacts)
3. Interconnection requirements by utilities
4. Distribution systems have limitations on the amount of wind generation that can be connected. (single/three phase, voltage, conductor size, distance to substation)
5. Case study will provide example

II. Interconnection to Distribution versus Transmission System

1. Describe difference between distribution and transmission

1. My definition is different from FERC's "7 Factor Test"
2. Include pictures of each

2. Describe when a turbine or cluster would be connected to distribution versus transmission system
3. Describe typical interconnection to each

1. Show electrical 1-line diagram
2. Pictures

4. Typical European interconnections

III. Power Quality

1. What is Power Quality

1. Voltage flicker and voltage changes
2. Harmonics
3. Effects on other customers

2. Power Quality standards

1. IEEE, IEC

3. Why do wind turbines cause power quality problems

1. Turbine switching operations
2. Wind gusts

4. Effect of turbine design on power quality

1. Tubular vs. lattice towers
2. Generator design (asynchronous direct, slip ring, double fed, synchronous, permanent magnet)
3. Effect of having controlled reactive supply capability

5. How Power Quality impacts are calculated

IV. Interconnection Requirements by Utilities

1. Guidelines used in Germany and Denmark
2. Typical requirements by US utilities

1. Power Quality
2. Protection
3. Metering
4. Interconnection cost recovery

V. Limitations to Penetration on Distribution Systems

1. Differences due to urban and rural systems
2. Limitations due to Power Quality
3. Limitations due to operational considerations (reverse power, system design, ability to control by utility)

VI. Case Study

1. Real data was used from area in Iowa, although disguised to protect confidentiality
2. Multiple utility systems in area (show map with electrical lines)
3. Load density and wind resource potential (show map of load density vs. wind resource)
4. Discuss criteria used to determine amount of wind generation that can be added to systems

1. Simple asynchronous generators versus more sophisticated design units
2. Size of wind turbines added (small net-billing units vs. 600-1500 kW)
3. Impacts on utility operations (reverse power, voltage regulation, fault current)

5. Addition of wind turbines with no system reinforcements (map, costs)
6. Addition of wind turbines using modest system reinforcements (map, costs)
7. Addition of wind turbines using significant system reinforcements (map, costs)
8. Supply versus cost curve based on this case study
9. Inference of distributed generation potential to larger areas

Issues and areas that discussion and feedback from NWCC is sought

1. Turbine design makes a difference on the amount of wind generation that can be added to rural systems. The design of the Zond Z-46 series, the Tacke 1.5 MW, DeWind, Wintec 646, Genesys, Enercon, and Vestas V44, turbines have much less power quality impacts, and thus can allow higher penetration levels. Our report might be interpreted as recommending this type of design. Such a recommendation would preclude most NEG Micon, Nordex, and Bonus units from significant distributed applications.
2. Should we make comments or suggestions about uniformity of interconnection requirements?
3. Should we make comments or suggestions about adequacy of interconnection requirements?
4. Policy: Should we propose possibility of policy to share system reinforcement costs, as they do in Germany and Denmark?
5. Should we limit our comments on benefits of distributed wind generation, rather than to any type of wind generation?
6. We need to discuss extrapolating the results of the study. What are the limitations and implications of such an extrapolation? The makeup of the distribution system changes somewhat from rural Iowa/Minnesota to North Dakota, South Dakota and Nebraska due to load density.

Outline of Chapter 2 - Distributed Benefits

I. Introduction

II. Potential Benefits And Conditions Required For Them To Occur

1. Power System Definitions and Terminology
2. General Overview of Key Factors Determining Potential
3. Generation System Benefits Range and Conditions (from distributed generators)

1. Energy Displacement
2. Capacity valuation and demand charge reduction

4. Distribution System Benefits Range and Conditions

1. Distribution facility deferral
2. Distribution loss reduction
3. Distribution voltage and power factor correction

5. Transmission System Benefits RAnge and Conditions

1. Transmission facility deferral
2. Transmission loss reduction

6. Checklist of Benefits and Conditions for Screening Benefits

1. Distribution versus transmission system connections
2. Power supply contract considerations, net billing
3. Transmission service charges

III. Wind Technology Capabilities and Opportunities for Enhancing Value.

Outline of Chapter 3 - Costs

I. Introduction

II. Best practices

III. Costs

1. Capital and O&M costs, and COE in Denmark
2. Capital and O&M costs, and COE in Germany
3. Distributed generation costs in UK
4. Costs in Norway
5. Energy prices paid from wind energy in Europe
6. US capital costs - large wind farms, large distributed, small turbines
7. Case Studies in Denmark and Germany

IV. Cost drivers and threshold discussion

V. Conclusions

Issues and areas that discussion and feedback from NWCC is sought

1. Additional US data will be helpful, particularly data on O&M costs and actual turbine and project capital costs
2. GMP project costs are high, how typical are these? Can we better understand the breakdown?
3. Although the US projects do not have the same ownership structure as European distributed projects it is possible to get useful insights by comparing US and European costs. These include:

• Capital cost - US could be competitive with Europe
• Data on relative cost differences between project cost elements may be similar
• O&M - US should be lower than Europe due to lower labor costs
• Wind resource - US should have more available sites than Europe
• Land cost - US is lower in cost than Europe
• Financing costs - US might be lower than Europe due to favorable interest rates depending on perceived risks and subsidies. Europe is currently subsidized.
• Approval process - US process is more involved than Europe
• Grid upgrading - US could be higher than Europe due to lower population density

4. Currency conversion - our approach was to convert European currencies to US$ with a recent conversion factor

Outline of Chapter 4 - Economic and Market Infrastructure and Policy

I. Introduction

II. Economic and Market Infrastructure and Policy

1. Industry & Market Infrastructure and Characteristics

1. Danish and German Experiences

a. Market Descriptions

1. History and descriptions of key policy and infrastructure drivers
2. Role of wind energy in national and public context
3. Roles of participants (social fabric, contexts, and mechanisms)
4. Market infrastructure characteristics and demographics

- Supply/Industry
- Demand/Consumers
- Utilities
- Selected pictures from Europe
- Typical wind resource levels

2. Best Practices relevant to US

a. US participant precursors - existing and potential

1. Resource assessment

- Predictive windflow models

  European lessons learned - reducing transaction
  costs
  Quantifying model uncertainty
  Validating commercial models
  Addressing U.S. aversion to model use
  US successes and examples to build on

- Improving access to existing wind resource data
- Improving understanding of wind speed variability on short time frames
- Investigation of simplified wind resource assessment techniques
- Dissemination of information on available measurement and estimation approaches and costs

2. Other participant precursors

b. Other US Options (including policy)

3. Partial list of distributed wind generation installations in Midwest

1. Description of characteristics (pictures)
2. Key drivers for these installations

2. Financial Characteristics and Conditions

1. Summary of European programs and structures

1. Denmark: success story of Danish wind cooperatives and "institutional framework" behind the story

i. Describe institutional framework and its components

ii. Describe important aspects of Danish wind cooperatives: ownership, financing, etc.; provide quantitative examples on key financial parameters

iii. Lessons from Denmark, with focus on applicability to U.S.

b. Germany: How did Germany overtake global leadership in wind energy?

i. Describe institutional framework and its components.

ii. Discuss specialized financial institutions such as Deutsche Ausgleichbank (DAB); provide data on financial elements

iii. Summarize lessons from Germany with focus on applicability to U.S.

c. U.K.: Non-Fossil Fuel Obligation (NFFO).

i. Describe NFFO system

ii. Summarize U.K. experience and explain why adoption of wind power in general and distributed wind in specific have been slow

2. Existing and Potential future U.S. financial/ownership structures

a. Current structures - Describe and discuss:

i. Individual ownership

ii. Utility/developer ownership

b. Potential structures: Describe and discuss

i. Individual ownership

ii. Wind cooperatives

iii. Investment pool

iv. Utility ownership

v. Specific wind cooperative models

c. Potential financial strategies, approaches and incentives

i. Information dissemination

ii. Pilot projects

iii. Reduction in transaction costs

iv. Reduction in financing costs: new bank and insurance products

v. Raising capital through new mechanisms

vi. Use of existing or future financial incentives

Issues and questions that discussion from NWCC is sought:

Relative to the "Financial Characteristics and Conditions" Section:

1. Usefulness of UK experience. NFFO model is a unique model. However, it does not provide insight on distributed wind developments.

2. Feedback requested on US financial strategies, approaches and incentives:

• Is our treatment comprehensive?
• Have we addressed the proper sensitivities?
• Is our approach useful?

Outline of Chapter 5 - Local Economic Impacts

I. Introduction

A. Overview of local economic impacts of wind energy in general and distribution generation models in particular

B. Limitations of European experience - impacts are understudied

C. Only one US study explicitly addresses local economic impacts of wind development

II. Literature, methodology and key issues

A. Summarize findings of literature review and provide quantitative data

B. Discuss and compare US and European methodologies

C. Key issues in understanding local economic impacts of distributed wind energy

III. Role of Wind Energy Development in Local Economies

A. Direct and indirect effect of wind energy on the local economies

B. Role of expenditures, employment, rental income, state and local taxes

IV. Conclusions

A. Impact of distributed wind projects:

B. Comparison to non-local ownership

1. Quantitative range of impacts is possible to estimate
2. Key drivers within range are known (installation/development, ownership, O&M, location and ownership of utility, etc.)

C. Single study in US gives perspective, but may not be sufficient to draw overall conclusions on points between the range.

Outline of Chapter 6 - Social (Identity) Issues

I. Introduction

A. Overview of Issue

1. Local social identity, perspectives, and needs

2. Sorting out local ownership, private ownership, and distributed applications

B. Summary/overview of recent research and activities

C. Major Issues

1. Ownership is key to local acceptance

a. Financial implications - social and policy
b. Successful European policies targeted ownership

2. Barriers (lessons and differences from Europe experience)

a. Visual & land use/planning
b. Noise
c. Financial Equity
d. Others

3. Economic development

a. Existing research, interviews, and experience
b. Current political and economic conditions and opportunities

i. Local and Regional
ii. National - Energy, Environment, and Agriculture Policy
iii. Green Power

4. Key market needs and corresponding resources

a. Information
b. Models and traditions to build on, using insights from Europe

i. Cooperative traditions
ii. Manufacturer/developer interest currently exists
iii. Significant grassroots interest and previous activity
iv. Significant utility and local/regional government interest

Report Format Questions

Currently envisioned short Reports (about 5-8 pages)

1. Executive Summary (will also serve as the introduction to the large report)

2. Interconnection Requirements/Issues and Distributed Benefits (possibly 2 separate reports?)

3. Costs

4. Infrastructure and Policy

5. Local Economic Benefits and Local Identity (Social) Issues

Is the order of chapters acceptable for the long report? (Short reports will stand on their own.)

What is the preferred placement of best practices sections in Long chapters and Short Reports?

Discussion and Plans Questions

What are the steps and schedule for completion of the report?

What product does the group require prior to the October meeting and what is the deadline for this?

What does the group expect us to present at the October meeting - What should the presentation format be? How much time will be allotted?