"It is worth investing in DR resources if its cheaper than the alternative resources"

Interview with Ulrik Stridbaek, Chief Economist, Regulatory affairs at DONG Energy

smartelectricnews.com Special

During the hottest days or any other period of maximum demand, demand can rise to a level where even if generating capacity is available, the delivery infrastructure or the grid may be pushed to the point of failure. According to experts, demand response (DR) can be used at such times to reduce spikes and increase grid reliability.

This type of DR usually involves end users on `standby' able to be dispatched - often times automatically - by grid operators or utilities when demand is spiking and grid equipment failures are possible.

Apart from increasing grid reliability, another option would be to reduce short-term price volatility.

Depending on the configuration of generation capacity, DR may be used to increase demand (load) at times of high production and low demand. Some systems may thereby encourage energy storage to arbitrage between periods of low and high demand (or low and high prices).

As the proportion of intermittent power sources such as wind power in a system grows, demand response may become increasingly important to effective management of the electric grid.

According to Ulrik Stridbaek, Chief Economist, Regulatory affairs at DONG Energy, greater volatility in supply from variable resources such as wind power will create greater value in shifting demand from hours with a high price to hours with a low price.

"So if power is priced correctly the incentives for customers to respond will increase with the expansion of e.g. wind power. If incentives are sufficient to trigger DR, this can contribute balancing the system. Otherwise other sources of flexibility will have to be found. New intelligent generation and demand such as micro generation and electric cars can help creating the framework where demand becomes more responsive, by triggering the necessary investments for intelligent demand," says Stridbaek, who is scheduled to speak during Intelligent Demand Response for Electricity Summit 2009, to be held in Amsterdam on 28-29 January 2009.

Stridbaek also spoke about few other issues in an interview with smartelectricnews.com. Excerpts:

smartelectricnews.com: What according to you is the appropriate way to merge pre-existing energy infrastructure to intelligent ICT, Smart grids and Virtual Power plants?

Ulrik Stridbaek: Investments in the grid, including smart grids, will probably require regulatory incentives. When necessary regulated infrastructure is in place, there must be proper incentives to make use of the infrastructure (e.g. for VPPs) and integrate traditional and new types of resources.

The best way to create these incentives is through well designed markets, competition and market forces.

smartelectricnews.com: How should companies go about planning and executing DR and DSM programmes and also partnering with specialists for the same?

Ulrik Stridbaek: It is worth investing in DR resources if this is cheaper than the alternative resources. So first step must be to have a good feel for the cost and value of marginal resources in any given system. Next step is to have knowledge about the cost of DR.

This also requires close relationships with customers. Partnerships with consultants, aggregators and vendors comes after that, and must depend on the specific circumstances.

smartelectricnews.com: How can DSM play an important role in helping balance supply and demand in any energy market as well as help reduce price volatility and increase system reliability and security?

Ulrik Stridbaek: DR is a resource to be compared with other alternative resources to balance power supply and maintain reliability. DR can help reduce prices and volatility but volatility is also what gives incentives for DR in the first place.

smartelectricnews.com: When it comes to installation, maintenance and data management of such programmes, what factors do you think need to be taken into consideration for enablement cost where one-time cost includes equipment installation and administration and annual maintenance cost?

Ulrik Stridbaek: This is complex. One point for consideration is that a lot of potential DR resources requires up front investment, but once these have been incurred and demand has been automated, the cost of responding may be low. So once the investment has been incurred it is highly competitive with other alternative resources, such as generation from peakers.

smartelectricnews.com: It is said that Automated Demand Response (Auto-DR) programme costs are less than half the cost of peak generation resources. How do you assess developments related to Auto-DR platform designed to automated, electronic price and reliability signals as well as site-specific demand response strategies?

Ulrik Stridbaek: This is under development but probably focused on specific sectors and applications, rather than in a broad roll-out. Initial target sectors could be electric cars and specific appliances.

Intelligent Demand Response for Electricity Summit 2009

Ulrik Stridbaek is scheduled to speak during Intelligent Demand Response for Electricity Summit 2009, to be held in Amsterdam on 28-29 January 2009.

For more information, click here: www.smartelectricnews.com/demand08

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Smart Electric News,
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T: +44 (0)207 375 7581

Flywheel systems bound to gain ground in the UPS space: analysis

Environmental factors and low-cost have propelled the European flywheel UPS market, according to an analysis from Frost & Sullivan.

The firm, in its analysis, European Flywheel UPS Markets, has shared that the market earned revenues of over €25.4 million in 2007 and estimates that it will reach €58 million in 2014. It highlighted that "green" initiatives have encouraged the gravitation towards environmentally friendly technologies such as flywheel UPS systems. The European Commission energy efficiency action plan has also helped drive the uptake of flywheel UPS systems.

"Although the technology has been in existence for a long time, it has seen widespread acceptance and increased uptake only over the past three or four years," said Frost & Sullivan's programme manager Malavika Tohani. "Flywheel UPS systems use kinetic energy, eliminating harmful emissions and disposal issues and reducing the impact on the environment."

"The total cost of ownership for a flywheel UPS is less than that of the battery-based UPS, primarily because of the lower operational costs," she said. "Moreover, this technology is energy efficient and space saving since it does not require huge storage space for batteries or cooling systems that are a part of conventional UPS systems."

It stated that ongoing efforts to reduce carbon dioxide emissions and prevent climate change have triggered interest in alternative energy storage technologies. As awareness spreads and manufacturers ramp up R&D efforts, flywheel systems are bound to gain ground in the UPS space.

NCSU chosen to lead smart-grid project

The National Science Foundation (NSF) has chosen N. C. State University (NCSU) to lead a $28.5 million research initiative to transform the nation’s century-old power transmission system into a smart grid network.

The center will be known as the NSF Engineering Research Center for Future Renewable Electric Energy Delivery and Management Systems (FREEDM Systems). It will work to develop “smart grid” technology that can store and distribute alternative energy. The technology developed at this center will distribute renewable energy on a large scale, helping to build a society based on green energy.

The Center will partner with universities, industry and national laboratories in 28 states and nine countries. It will be supported by a five-year, $18.5 million grant from NSF, with another $10 million in institutional support and industry membership fees. More than 65 utilities, electrical equipment manufacturers, alternative energy companies and “other established and emerging firms” have agreed to join the partnership, NCSU says.

“The unique vision of this (center) to enable the smooth inclusion of renewable energy sources into the power grid in a ‘plug-and-play’ mode will provide the knowledge and technology platforms the country needs to help reduce our dependency on fossil fuels,” NSF Deputy Division Director Lynn Preston said in a statement.

Alex Huang, N.C. State’s Progress Energy professor of electrical and computer engineering, will be the center’s director.

Scottish hydro power untapped: study

A study has highlighted that there is enough untapped hydro potential to power nearly 600,000 homes in Scotland.

It shows there are still 657MW of financially viable hydro electricity schemes to exploit. That is about half the amount of hydro capacity already installed in Scotland. The study says there are 1019 financially viable schemes and a total of 128 new dams would be required.

The study, carried out on behalf of the Scottish Government to assist the Hydro Sub Group of the Forum for Renewable Energy Development in Scotland (FHSG), recommends that immediate attention should be paid to speeding up the application process for hydro-electric schemes. At present, applications for projects bigger than one megawatt are dealt with by ministers and smaller ones by local authorities.

“While we are unlikely to see much in the way of further large-scale developments, it is clear there is huge untapped potential – and a sustainable and profitable future in smaller and micro hydro schemes. Each scheme would have to be assessed on its own merits, but if we can turn the tap on to new hydro power we can tackle climate change and continue to stimulate economic growth,” said Energy Minister Jim Mather.

Sites with capacities of more than 1MW totalled 176, and the total capacity possible being almost 313MW. Six of the sites were in the 5MW-10MW range (total capacity 36.2MW) and 170 in the 1MW-5MW band (total capacity 276.6MW). The study identified 300 financially viable sites with capacities in the 500kW-1MW range (total capacity 193.2MW), and 543 sites with capacities below 500kW (total capacity 151MW).

Scotland has 1380MW of installed hydro capacity, excluding pumped storage, a further 104MW under construction, just over 5MW with consent to build and 16.1MW in planning. A further 27.2MW is in the scoping stage.

New England Power Pool to create pilot programme for energy storage

New England Power Pool (NEPOOL), the group of electric utilities, generators, and service providers within the ISO New England region, has unanimously chosen a pilot programme for alternative technologies, including energy storage, to provide regulation service.

According to Beacon Power Corporation, the programme’s schedule would allow service providers to be paid as early as mid-November. Beacon Power is currently building flywheel-based energy storage systems in Tyngsboro and intends to participate.

The “Alternative Technologies Regulation Pilot Program” allows for up to 13 megawatts of alternative technologies to be connected to the grid by various suppliers to provide regulation services.

Beacon Power, which is the only company that has yet publicly announced its participation, plans to connect up to five megawatts of energy storage adjacent to the company’s headquarters, beginning later this year.

Referring to the pilot programme, Bill Capp, Beacon Power president and CEO said, “Not only does Beacon intend to participate under the programme’s guidelines, we will also be able to earn revenue from the regulation services we provide.”

In early August, ISO New England and NEPOOL jointly submitted market rules to establish the programme to the Federal Energy Regulatory Commission (FERC) for approval. FERC’s decision is expected within 60 days.

A CAES plant in Central Iowa gets US$1.5 million funding

Central Iowa is preparing to construct a Compressed Air Energy Storage (CAES) plant to provide clean, dispatachable power using wind energy while simultaneously enhancing the value of stored natural gas reserves.

The development emerged as Senator Tom Harkin (D-IA), a senior member of the Senate Appropriations Committee, announced that the Committee will fund $ $12.8 million for transportation, economic development and flood control projects in central Iowa. The funding will be included in the 2009 Transportation, Housing and Urban Development (THUD) and Energy and Water Appropriations subcommittee bills.

In the break-up of the funding, it was shared that budget worth US$1.5 million was marked for Iowa Stored Energy Plant (ISEP).

A group of 150 municipally-owned electric utilities in Iowa and surrounding states proposed and financially supported the idea of regional grid stability throughout the Midwest.

On the occasion, Harkin said “As energy costs continue to soar, we must search for new, sustainable and cost-effective methods of production. Iowa is a leader in the production of wind energy, and the Iowa Stored Energy Plant is the first renewable energy-based, energy storage system for wind energy.”

ISEP is a joint project of municipal utilities in Iowa and several nearby states.

In a CAES at the ISEP facility, air will be compressed using low-cost, off-peak electricity, and wind that is not being sold on the grid at that time. The air is stored in a deep underground geological formation for later use in making electricity. When energy is needed, the stored air will be released, heated and used to drive generating turbines. The electricity it produces can be used as needed, especially during high-demand peak hours. This process uses less fuel than a conventional combustion-turbine facility.

By using compressed air energy storage and wind power together, an environmentally friendly, alternative energy source is available to homes and businesses.

The Iowa CAES site will be located near the optimal geological site for storing air, with wind turbines near the best wind resources.