Distributed Generation Potential of the U.S. CommercialSector Page: 4 of 18
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validity of these contradictory results are discussed, and possibilities for improving estimates of commercial U.S. DG
potential are explored.
Introduction
While pressure on the current power system continues to grow, its expansion is constrained and unlikely to keep pace
with the developed world's insatiable thirst for electricity. Also, little compelling evidence exists to suggest that
improved power quality and reliability is possible under the traditional electricity structure (Siddiqui et al 2005).
Consequently, small-scale (100 kW-5 MW) thermal on-site distributed generation (DG) economically driven by
combined heat and power (CHP) applications and, in some cases, reliability concerns will likely emerge as a common
feature of commercial building energy systems in developed countries over the next two decades. According to one
estimate, the share of CHP and renewable energy supply in the European Union is expected to rise to 36% in 2030, up
from 31% in 1990 (Scheepers, 2004). In Japan, an over 26% increase in energy consumption in the last decade has made
DG an attractive option given the country's heavy dependence on imported energy and its ratification of the Kyoto
Protocol (Zhou 2004). In Europe this trend is usually viewed as part of a broader process of electricity market
restructuring and deployment of new technologies, especially renewables. However, deployment of DG has not been
strongly associated with electricity market restructuring. In the European case, Netherlands, Denmark, and Germany
have made significant advances in the quest for distributed energy solutions, while the deregulated markets of the U.K.
and Spain have not resulted in exceptional innovation. Active research intended to establish a favourable research and
regulatory framework for DG in Europe is underway (Navarro and Diaz 2001, European Commission 2003 and 2004,
OTTI 2004). Attempts to learn from comparisons of the disparate existing market structures across Europe have led to
policy recommendations for encouraging DG (Uyterlinde et al 2002, Connor and Mitchell 2002). There is no question
that all these elements are contributing to a radical rethinking of the traditional paradigm of thermal electricity
generation at remote large central stations and its delivery over (often long) transmission and distribution networks. The
primary benefit of thermal energy conversion to electricity closer to loads is the opportunity it creates for utilization of
otherwise lost waste heat.
Other possible benefits of DG include direct electricity price reduction and stability, improved electricity reliability and
quality, emission reductions, and a simple feeling of control and/or independence. Recent improvements in small-scale
thermal electricity generation and CHP technologies, resulting in part from U.S. Department of Energy (DOE) research,
are enabling a dramatic shift from traditional monopolistic electricity supplier to empowered semi-autonomous self
generator. Nonetheless, this transition will require considerable research and confirmation. Because of the significant
effect widespread DG adoption could have on the design and operation of building and utility systems, reasonable
forecasts of DG penetration are vital, and correctly predicting DG deployment is a worldwide issue.
Somewhat by contrast, in the U.S., deployment of the small-scale thermal generation that is the focus of this paper is
generally analyzed independently of renewable generation or the devolution of grid operations. More generally, there is
little agreement on what technologies should be included under the DG label (see Pepermans et al. for a broader
discussion). For the purposes of this paper, distributed generation specifically describes a selected list of technologies
currently existent in the commercial module of the U.S. Energy Information Administration's (EIA) National Energy
Modeling System (NEMS): small (<5 MW) gas turbines, gas engines, and microturbines.1 Berkeley Lab uses NEMS to
assess the potential of DG in the U.S. commercial sector. Working under the auspices of the Distributed Energy (DE)
office of DOE, the goal is to annually estimate the likely beneficial results from DOE research and development (R&D)
programmes, as required by the Government Performance and Results Act (GPRA) of 1993. This paper explores how
NEMS models DG adoption and how annual model updates can have a significant impact on forecasts of DG
penetration, and therefore on the annual GPRA analysis.2 The focus is on the commercial sector, but other sectors are
mentioned, and alternative approaches are discussed.
1 Gas engines are reciprocating engines fueled by natural gas. Microturbines are small (30-200 kW) turbine engines, also
usually fueled by natural gas.
2 EIA requires that any modified version of NEMS be named differently, to distinguish them from EIA's official AEO
Reference Case version. Throughout this paper, NEMS-GPRA is used to refer to the modified version used at Berkeley
Lab, while the AEO version of the model is referred to as simply NEMS.4 of 18
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LaCommare, Kristina Hamachi; Edwards, Jennifer L.; Gumerman,Etan & Marnay, Chris. Distributed Generation Potential of the U.S. CommercialSector, article, June 1, 2005; (https://digital.library.unt.edu/ark:/67531/metadc785123/m1/4/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.