MICRO COGENERATION: POTENTIAL IMPACT ON THE ELECTRICITY SUPPLY INDUSTRY
CIRED (Congrès International de Réseaux Electriques de
Distribution), Amsterdam/Kuala Lumpur 2001
Micro CHP is a "disruptive technology". It has the
potential to substantially disrupt the established electricity supply industry
both economically and technologically. It has a potential capacity of similar
order of magnitude to the existing nuclear generating capacity in the emerging
liberalised energy markets in Europe.
Micro CHP, installed in individual homes, will in time remove
a substantial electricity demand on a dynamic basis at the low voltage level,
and may, in some instances, neutralise or even reverse the power flows in
distribution transformers. This will clearly have economic consequences for the
Distribution Network Operator (DNO) in terms of lost revenue, but will also have
profound consequences for LV network design.
The economic opportunities, and to a lesser extent
environmental drivers, which are leading to the imminent advent of micro CHP,
will disrupt and will require a response from electricity companies. There are
those who will no doubt seek to obstruct the new technology and maintain the
status quo of their business. However, in the long term, the considerable
economic benefits to the operators of micro CHP should prove irresistible. At
the other extreme are those companies who will enthusiastically embrace the new
technology and significantly improve their competitive position. These latter
companies are already in the process of establishing strategic alliances with
technology providers, manufacturers, service, installation and energy service
companies and are acquiring technical and commercial experience by undertaking
laboratory and field trials.
A range of micro CHP technologies are approaching commercial
launch and the remaining challenges relate less to the core technology and more
to the peripheral and interface components and commercial packaging. Two (1kWe)
Stirling engine based micro CHP units are undergoing field trials in the UK and
commercial launch is anticipated during 2002. A somewhat larger (3kWe) unit from
Sigma in Norway, is expected to reach market the following year. The 1kWe units
are aimed at the mass housing market and one of them (the WhisperTech unit)
although having a low efficiency (12%) is relatively cheap and durable. The
majority of power produced by this unit would be consumed within the home.
However, the 3kWe unit has a higher efficiency (and total cost), being aimed at
larger family homes which offer the potential for rapid paybacks from the
substantial fuel bill savings. Over half the power produced is likely to be
exported so that the opportunities and threats to energy companies raised by
this unit are significant.
It is at this stage that the implications for energy
companies, suppliers and network operators, are becoming clearer. In general
these challenges fall into two main areas, commercial and technical. Within the
commercial area, the complexity of metering and settlement of domestic
import/export represents a formidable challenge, whilst the technical standards
appropriate to integrating numerous very small generators raises entirely new
issues both at the customer interface and throughout the LV network.
However, even half-hourly settlement may become viable with
the advent of advanced metering and in the short term, profile settlement
appears to offer the basis of an equitable trading system. The technical
challenges affecting network operators such as anti-islanding protection, fault
levels, reliability and power quality have been successfully addressed in the
Netherlands, but the cost of connection interfaces remains a distinct burden on
This paper forms part of EA Technology’s micro CHP
programme and summaries the status of micro CHP technologies, potential
applications and scope of markets. It describes the potential commercial and
technical impact on existing electricity companies, their networks and customer
base as well as identifying likely new market entrants.