Understanding the impact of large-scale penetration of micro combined heat & power technologies within energy systems/

Abstract

Significant energy challenges today come from security of supply and environmental concerns. Those surpass the quest for economic efficiency that has been the primary objective until recent times. In an intensive fossil-fuel energy world, it is critical to find more effective ways of using the existing resources and of identifying technologies that can improve the sustainability of the energy model. Both, distributed energy resources and renewable-based electricity generation technologies are considered, by energy experts and also policymakers, to be essential for this purpose. Co-generation of electricity and heat at the residential level, known as micro-CHP, is an attractive alternative because of the potential for enhancing energy efficiency, reducing GHG emissions, and improving the utilization of primary energy resources. This thesis aims at quantitatively assessing the impacts of a large-scale penetration of micro-CHPs within an energy system. Based on system-wide and residential metrics, this work intends to understand whether or not this technology is a valuable contribution to social welfare. For this purpose, a methodology is developed to integrate increasing numbers of micro-CHPs into a system's generation capacity expansion process over a 20-year timeframe, and into an electric power system's daily operation for a single year. Findings from our long-term analysis demonstrated that micro-CHPs helped in reducing cumulative C02 emissions. Under high-to-medium carbon price scenarios, they mostly displaced installed capacity from gas-based technologies, such as natural gas combined cycle units. Other results suggest that a larger micro-CHP penetration could be encouraged through economic incentives such as capital costs reduction, and/or lower natural gas retail prices, where conditions may favor one micro-CHP technology over another. Better economic conditions stimulate the deployment of micro-CHPs with low heat-to-power ratio (HPR), while machines with very high HPR do not appear to be a competitive alternative when compared to other micro-CHP technologies and conventional heating systems. Findings from our short-term analysis demonstrated that widespread deployment of micro-CHPs results in positive effects, such as C02 emissions reductions, energy efficiency improvements, decrease in system energy production costs, and summer peak load reduction at both system and residential levels. It was also found that these benefits could increase with the incorporation of additional features such as a hot water storage unit integrated with the heating system, micro-CHP modulating capability, and a micro-CHP price-based control strategy. However, the benefits at the system level seem to be relatively low for the level of penetration, assumed to be 10% of the total electric installed capacity. Moreover, the operation of a large number of these units considerably increases on-site natural gas fuel consumption all year round. Results also suggest that an adequate tariff design improves the economic efficiency of the system and the operation of micro-CHPs under an intelligent control strategy. When the price signal sent to customers reflects the system's short-term marginal price, the operation of the micro-CHPs is more efficient, and with minimum excess heat. Moreover, findings show that a production subsidy in the form of a buy-back rate impacts the operation of micro-CHPs which may distort the short-term marginal price signal. Depending on the tariff rate, micro-CHPs may favor electricity-only production, resulting in increased costs, increased excess heat, and decreased efficiency. In addition, it was shown that a flat electric tariff rate may result in similar results as with an hourly retail rate, in particular for micro-CHP technologies with medium to high heat-to-power ratio. In the end, the goal of this research is to have a better understanding of the conditions that influence the penetration of micro-CHPs, the economic signals that impact their operation, and the complexities that a widespread penetration brings to energy systems. We observe that this technology lends itself to qualitatively different ways of providing electricity service at value as seen by the customers. Future research is needed to explore potential of micro-CHPs for including customer choice.