Electricity produced by distributed energy resources (DER) located close to end-use loads has the potential to meet consumer requirements more efficiently than the existing centralized grid. Installation of DER allows consumers to circumvent the costs associated with transmission congestion and other non-energy costs of electricity delivery and potentially to take advantage of market opportunities to purchase energy when attractive. On-site, single-cycle thermal power generation is typically less efficient than central station generation, but by avoiding non-fuel costs of grid power and by utilizing combined heat and power (CHP) applications, i.e., recovering heat from small-scale on-site thermal generation to displace fuel purchases, DER can become attractive to a strictly cost-minimizing consumer. In previous efforts, the decisions facing typical commercial consumers have been addressed using a mixed-integer linear program, the DER Customer Adoption Model (DER-CAM). Given the site s energy loads, utility tariff structure, and information (both technical and financial) on candidate DER technologies, DER-CAM minimizes the overall energy cost for a test year by selecting the units to install and determining their hourly operating schedules. In this paper, the capabilities of DER-CAM are enhanced by the inclusion of the option to store recovered low-grade heat. By being able to keep an inventory of heat for use in subsequent periods, sites are able to lower costs even further by reducing lucrative peak-shaving generation while relying on storage to meet heat loads. This and other effects of storage are demonstrated by analysis of five typical commercial buildings in San Francisco, California, USA, and an estimate of the cost per unit capacity of heat storage is calculated.

Electricity generated by distributed energy resources (DER) located close to end-use loads has the potential to meet consumer requirements more efficiently than the existing centralised grid. Installation of DER allows consumers to circumvent the costs associated with transmission congestion and other non-energy costs of electricity delivery and potentially to take advantage of market opportunities to purchase energy when attractive. On-site thermal power generation is typically less efficient than central station generation, but by avoiding non-fuel costs of grid power and utilising combined heat and power (CHP) applications, i.e., recovering heat from small-scale on-site generation to displace fuel purchases, then DER can become attractive to a strictly cost-minimising consumer. In previous efforts, the decisions facing typical commercial consumers have been addressed using a mixed-integer linear programme, the DER Customer Adoption Model(DER-CAM). Given the site s energy loads, utility tariff structure, and information (both technical and financial) on candidate DER technologies, DER-CAM minimises the overall energy cost for a test year by selecting the units to install and determining their hourly operating schedules. In this paper, the capabilities of DER-CAM are enhanced by the inclusion of the option to store recovered low-grade heat. By being able to keep an inventory of heat for use in subsequent periods, sites are able to lower costs even further by reducing off-peak generation and relying on storage. This and other effects of storages are demonstrated by analysis of five typical commercial buildings in San Francisco, California, and an estimate of the cost per unit capacity of heat storage is calculated.

This paper describes the economically optimal adoption and operation of distributed energy resources (DER) by a hypothetical California microgrid consisting of a group of commercial buildings over an historic test year, 1999. The optimisation is conducted using a customer adoption model (DER-CAM) developed at Berkeley Lab and implemented in the General Algebraic Modeling System (GAMS). A microgrid is a semiautonomous grouping of electricity and heat loads interconnected to the existing utility grid (macrogrid) but able to island from it. The microgrid minimises the cost of meeting its energy requirements (consisting of both electricity and heat loads) by optimising the installation and operation of DER technologies while purchasing residual energy from the local combined natural gas and electricity utility. The available DER technologies are small-scale generators (< 500 kW), such as reciprocating engines, microturbines, and fuel cells, with or without combined heat and power (CHP) equipment, such as water and space heating and/or absorption cooling. By introducing a tax on carbon emissions, it is shown that if the microgrid is allowed to install CHP-enabled DER technologies, its carbon emissions are mitigated more than without CHP, demonstrating the potential benefits of small-scale CHP technology for climate change mitigation. Reciprocating engines with heat recovery and/or absorption cooling tend to be attractive technologies for the mild southern California climate, but the carbon mitigation tends to be modest compared to purchasing utility electricity because of the predominance of relatively clean central station generation in California.

This paper describes the economically optimal adoption and operation of distributed energy resources (DER) by a hypothetical California microgrid ((mu)Grid) consisting of a group of commercial buildings over an historic test year, 1999. The optimisation is conducted using a customer adoption model (DER-CAM) developed at Berkeley Lab and implemented in the General Algebraic Modeling System (GAMS). A (mu)Grid is a semiautonomous grouping of electricity and heat loads interconnected to the existing utility grid (macrogrid) but able to island from it. The (mu)Grid minimises the cost of meeting its energy requirements (consisting of both electricity and heat loads) by optimising the installation and operation of DER technologies while purchasing residual energy from the local combined natural gas and electricity utility. The available DER technologies are small-scale generators (< 500 kW), such as reciprocating engines, microturbines, and fuel cells, with or without CHP equipment, such as water- and space-heating and/or absorption cooling. By introducing a tax on carbon emissions, it is shown that if the (mu)Grid is allowed to install CHP-enabled DER technologies, its carbon emissions are mitigated more than without CHP, demonstrating the potential benefits of small-scale CHP technology for climate change mitigation. Reciprocating engines with heat recovery and/or absorption cooling tend to be attractive technologies for the mild southern California climate, but the carbon mitigation tends to be modest compared to purchasing utility electricity because of the predominance of relatively clean generation in California.

In this report, an economic model of customer adoption of distributed energy resources (DER) is developed. It covers progress on the DER project for the California Energy Commission (CEC) at Berkeley Lab during the period July 2001 through Dec 2002 in the Consortium for Electric Reliability Technology Solutions (CERTS) Distributed Energy Resources Integration (DERI) project. CERTS has developed a specific paradigm of distributed energy deployment, the CERTS Microgrid (as described in Lasseter et al. 2002). The primary goal of CERTS distributed generation research is to solve the technical problems required to make the CERTS Microgrid a viable technology, and Berkeley Lab's contribution is to direct the technical research proceeding at CERTS partner sites towards the most productive engineering problems. The work reported herein is somewhat more widely applicable, so it will be described within the context of a generic microgrid (mGrid). Current work focuses on the implementation of combined heat and power (CHP) capability. A mGrid as generically defined for this work is a semiautonomous grouping of generating sources and end-use electrical loads and heat sinks that share heat and power. Equipment is clustered and operated for the benefit of its owners. Although it can function independently of the traditional power system, or macrogrid, the mGrid is usually interconnected and exchanges energy and possibly ancillary services with the macrogrid. In contrast to the traditional centralized paradigm, the design, implementation, operation, and expansion of the mGrid is meant to optimize the overall energy system requirements of participating customers rather than the objectives and requirements of the macrogrid.