Imagine If We Had Known About This

1. Emissions from Distributed Generation SourcesCan DG Be Regulated to Ensure It is Efficiently and Cleanly Integrated Into Our Energy System?Julie ScanlonChicago-Kent College of Law Energy Law, Spring 2004 Professor Fred Bosselmanjascanlon@sbcglobal.net

2. Imagine If We Had Known About This

3. Back In The Days of This

4. Would We Have This?

5. And This

6. Or This

7. Or Would It Be More Like This?

8. Integrated With This

9. And More of This

10. This is Where DG is Today

11. This Is What DG Is • Small Power Generators • Installed at, Or Near, the Power Consumer’s Location

12. You Would Find DG Most Often • In Settings That Require Reliability In Their Electric Supply • Hospitals for Example

13. Or • In high tech settings

14. And Possibly… • In Your Own Backyard

15. So Who Might Own A DG Unit? • You Could • A Business Could • Or a Utility Could

16. Greatest Benefits of DG: • Flexibility in Use and Location • Modular • Continuous or Back-up Generation • High Reliability Applications • Source of Emergency Capacity • Meet Demand Spikes at Peak Hours and Seasons • Defer Large Capital Investment in Large Generation Facilities • Increase Domestic Energy Security

17. Why Should You Care About Regulating DG Emissions? • Because this is becoming a part of our energy system and if it is not regulated correctly it could wind up DIRTY

18. And In The WRONG Places

19. DG Is Already Impacting Energy Use Patterns • DG is Already Part of Our Energy System • 25% of Top Energy Intensive Industries Exploring DG in 2000 • Called The “Holy Grail” of New Energy Tech in Public Utilities Reports

20. Popular Science Predicts a Fuel Cell in Every Home

21. Electric Sector Capacity

22. Residential and Commercial Sector Capacity by Type

23. Criteria Pollutants Greenhouse Gases DG Facilities Are Also Creating Negative Emissions Impacts

24. These Are The Sources That Require Regulation • Sources Not Already Regulated or Not Regulated Consistently Under State or Federal Law • Generators Under 1 MW Generally Go Unregulated • Typically On-site Applications are not Regulated

25. 1 kilowatt = 1,000 watts1 megawatt = 1 million watts or 1,000 kilowattsKilowatt-hour = unit of energy equivalent to the power of 1 kilowatt working for an hour and the rate at which we pay for our energy.

26. A typical coal-burning power station produces about 1 gigawatt or 1000 megawatts of power.

27. The Siemens Solid Oxide Generator Generates 220kw, or 220,000 watts ~ about ¼ of a megawatt The Natural Gas Microturbine at UIC Generates 30kw, or 30,000 watts ~ about 1/30 of a megawatt Contrasted With

28. What DG Should Be Regulated Most Closely? • Microturbines and Reciprocating Engines Powered By • Fossil Fuels – Diesel and Natural Gas

29. Because:Diesel and Natural Gas Turbines Account for The Lion’s ShareOf Generation andEmissions From DG

30. Especially BUGS !! • BUGS are Back-up Generation Systems that are Usually Diesel Powered • Diesel Generators emit more than 110 times the NOx and PM than the cleanest large scale generator, a combined cycle

31. NOx Emissions From DG and Traditional Sources

32. CO2 Emissions From DG and Traditional Sources

33. Goals of Regulation • Prevent DG from being installed where it ought not to be • Siting and Displacement Issues • And in a form it ought not to be, DIESEL BUGS for example • Encourage clean and efficient wind, solar, cell, and combined heat and power (CHP)

34. Models of RegulationWho and How? • Federal v. State • Input Based v. Output Based • Industry Written v. Government v. Other Stakeholders

35. Federally Regulated • Advantages • Uniformity • Aids R&D • Lowers Compliance Costs for Consumers and Manufacturers • Easier to Enforce • Disadvantages • Lack of Flexibility • Hinders Experimentation

36. State by State • Advantages • Flexibility in Implementation • Disadvantages • Lack of Uniformity

37. Input Measures Emissions Based on Heat Energy In Lb of pollutant/BTu fuel input Output Measures Emissions Based on the Energy Produced Lb of pollutant/MWh energy output Input v. Output

38. Input v. Output Input standards measure emissions by fuel input into the plant: Example: for every unit of fuel input, two units of pollutant are allowed. This disregards the amount of energy created by the amount of fuel input. One plant may create two units of energy from one unit of fuel, while a less efficient plant would only create one. Output standards measure emissions by the units of energy produced: Example: for every unit of energy produced, a unit of pollution may be emitted. The consequence being that a less efficient plant would require more fuel to create the same amount of energy, and more pollution control equipment to assure the plant complied with the output standard.

39. Output Based Standards Encourage Efficiency

40. Who Writes the Standards?What Concerns do they Protect? • Industry • Costs $$$ • Government • Ideally Government should protect industry, consumers, and others impacted by emissions and siting issues • Other Stakeholders • Consumers and others impacted

41. Mobile Source Standards- A Model For Regulation of DG? • Automobiles • There are some parallels – multiple sources, sometimes individually or privately owned • There are some differences – primarily the psychological factors

42. DG May Not Replace Cars as the Mid-life Crisis Toy of Choice • But, there are some shared factors motivating purchase • Fear and insecurity might drive the need for bigger and dirtier DG – as they do for larger vehicles • Fear of the unreliability of the network • Concern about rising electricity rates • Likely blackouts during summer peaks • Increasing cost of IT disruptions

43. Auto Regs Are Set By The Federal Government • They are technology forcing, but with lead time to allow for Research & Development Cycles • They are output based – Grams of Pollutant/Miles Driven • A uniform standard, with a 2nd more stringent standard available • The California Emissions Standard • Successful in lowering emissions and raising mpg

44. HOWEVER, There’s A Loophole So Big You Can Drive Through It • Different emissions standards for light duty and heavy duty vehicles have allowed for SUVs to emit more pollutants and use fuel less efficiently than they could • Allowing higher emissions standards and lower fuel efficiency requirements meant for working vehicles to be applied to family-owned vehicles

45. Model Rule for DG Emissions Regulation • Written by the Regulatory Assistance Project (RAP) and Stakeholder Groups • State Utility and Environmental Regulators • Industry representatives • Environmental advocates • Federal officials

46. OUTPUT BASED UNIFORM TECHNOLOGY FORCING GRADUATED STANDARDS Phase 1 Reasonably Achievable Phases 2 & 3 More Protective TECHNOLOGY and FUEL NEUTRAL One Standard for All DG CATEGORIZED BY DUTY CYCLES EMERGENCY NON-EMERGENCY MULTI-POLLUTANT Features

47. Regulations Already in Effect • California • Texas • Japan • The Netherlands • Great Britain

48. California • Output Based /Multi-Pollutant • NOx, CO, CO2, VOCs, PM • Two Step Phase In • Technology Review Half-Way In • To assure final phase goals may be attained • To make the final phase more protective if the capability exists • Credit for CHP • BUT no BUGS Regulation

49. Texas • Output based for NOx – • Standard written for non attainment and attainment • For facilities under 10 MW • Phased in over 4 Years • Credit for CHP

50. Japan, Netherlands, EU • All output based and provide credit for efficient cogeneration and thermal output.