Investigating the financial recovery of embedded generation in medium voltage distribution systems.

Abstract

Embedded generation (EG) provides many benefits in terms of reduction of system technical losses and increased load carrying capacity. In this study the sustainable EG carrying capacity permutations in a medium voltage distribution system, will be determined. Using these results, the financial investment recovery potential of EG will be studied and the impact on the cost recovery by the Utility as a result of compensating the EG at the current system marginal price, will be analysed. The study was done to show what capitalisation can be done on a medium voltage distribution system, by the owners of EG plant receiving revenue from the Utility, at the system margin price with the anticipated inflationary increases. The study will also cover the effect on the revenue stream of the Utility as a result of voltage changes caused by the EGs to the loads being supplied. The electrical system used in the study consisted of a radial system with distributed load and generation. The distributed loads were modelled using the average load capacity supplied by the Utility in medium voltage system. The average volume of sales lost as a result of non-technical losses was included in the load model so that the overall accuracy of the revenue effect by EG on the Utility, could be increased. The amount of capitalisation that is achievable by the owners of the EG was tested against various practical permutation scenarios, including variation of location, system impedance (different X/R ratios), time of operation and changing load volume and type. The extent of successful penetration of EG into the distribution system was found to be between 20% and 60% of the load carrying capacity of the system. The simulated results revealed “bathtub curve” behaviour for the cost of energy losses and this reconciled with the theoretical analysis of other studies done in this area. Lower volume penetration of EG results in higher investment potential of up to ten million rand per MW with a 5% MARR per year. This is very low when compared to the levelised cost of the expensive renewable energy technologies that are currently available in the market. With higher penetration of EG on low impedance systems, the gross contribution of the Utility is negatively affected which would introduce instability in the SMP yearly increases.