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Distributed Generation

Key Note address by

Mr. T L Sankar

Roundtable Conference

on

World Energy Council & NTPC

August 16, 2005

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Distributed Generation – What it is and what it isn’t !

Distributed generation is NOT

•A Regression to Old Technology and Ideals•A salutation to an ideology•A temporary solution for a passing phase of shortages

Distributed generation IS

•The application of the latest available technology •To meet the needs of a specified area•To meet the needs of a specialised nature •To fulfill the needs with the resources available

With a cost effective, lasting solution

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Drivers for Distributed Generation

Locally available resource - Fuel

Load available- not connectable to grid

Quality of Power in sensitive processes

Co-generation Needs

Disposal of waste

The quantum of available fuel is so less that transporting it to the generation site may not be economically feasibile

Greenfield Industrial activities which are close to input resources, but far off from power distribution centre, necessitating generation close to resource

Process Industries, Software Technology parks, where the quality and availability are of utmost importance

Processes which mandate generation of power due to steam needs of the industry or where cogen is as a result of input for power produced..viz. sugar industry

Processes where disposal of Industrial or Municipal solid waste is mandated and power generation is a natural result of this requirement.

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Economics of DG

Capital cost Fuel cost Operation and maintenance costs Efficiency Operating mode (hours) / Energy profile support Power quality Siting / environmental and other costs

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Is there a single answer?

Cost-effectiveness is site-specific and has to be judged in light of each site's options and values for availability, reliability, risk tolerance etc.

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Why is DG better? Is it cheaper?

Economics is not the only driver for DG power quality and integrity are major drivers for DG - energy managers. Emerging Technology DGs offer lower maintenance costs than

conventional gen sets. Improvement in environmental performance. Operating hours - base load Vs. peak shaving / standby Shelter from high volatility in electricity prices Combining two energy needs Combining energy and non energy needs

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Overall DG costs will come down when :

Modular design - pre-built packages Lower T&D investment Built in stages as demand grows Situational advantage, using various technologies Gain from reduced T&D line losses

Market Potential for DG

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Market Potential for DG

Where is DG to be used?

On-site generation - at point-of-use

• Residential, commercial, industrial or institutional end-users

Part of the electric grid to enhance reliability and power quality

As an alternative to T&D facility investment

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Applications of DG to realize cost-effectiveness

Isolated from the grid Supported by the grid: continuous DG operation with grid

standby Support the grid: DG provides supplemental power for

quality, peak shaving, back-up, stand-by, etc. Combinations of above

Customer profile defines the optimal method of DG use

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Issues

Installed costs Economies of scale vs. Economies of production

Operations and maintenance (O&M) costs Levelized cost -- busbar -vs- delivered

Economic Issues

Lack of proven performance by newer technologies Lack of coordination with utility system operation Lack of comprehensive list of DG environmental and safety standards

Technical Issues

Simplified , Low Cost Interconnection Capability will see a spurt in Distributed Generation

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Legislative/ Policy Support

New Electricity Act has envisaged a definite role of the Distributed Generation.

Captive Power generation defined as power produced from a plant set up by any

person to generate electricity primarily for its own use or for a group of users. Section 4 of EA 2003 mandates a national policy permitting power generation

from standalone systems based on new or conventional energy sources Section 5 of EA 2003, suggest that a national policy should be formulated for

Rural electrification through rural user association and panchayats and franchisees Section 6of EA 2003 suggests that all efforts should be made to supply electricity

to ALL areas including villages and hamlets. Section 9 of EA 2003 permits a person to construct maintain and operate a captive

generation plant and dedicated transmission lines Section 9 (2) gives the right to any such person producing electricity from captive

generating plant to open access for purposes of carrying electricity from Captive generating plant to the destination of its use.

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DG is a necessity - TODAY

To ensure materialisation of the lofty objectives of Electricity Act 2003,

To fulfill the target of total electrification of all villages and hamlets by 2007,

To achieve the goal of electrifying all households by 2012

To bring modernity and increase productivity in rural areas

To enhance the quality of life in its true sense

To give a meaning to democratic way of life

DG IS A NECESSITY IN MANY AREAS.

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Case Study - KSK Energy Ventures Resource Driven DG Models

RVK is a 21 MW Natural Gas based Merchant Power Plant setup at Machilipatnam, Andhra Pradesh

21 MW - Natural Gas based power plant in Andhra Pradesh

Gas to the project comes from an isolated gas well of ONGC. Prior to utilization of gas by RVK, the well was capped, as GAIL didn’t find it a quantity fit to market the 1,00,000 SCM/day of gas

Project is resource driven and is running for over 4 years. Its an engine based plant so utilizes the modular approach to capacity building.

MMS is a 11 MW Natural Gas based Group Captive Power Plant setup at Naranamangalam, Tamil Nadu

11 MW- Natural Gas based power plant in Tamil Nadu

The Plant is group Captive that serves the requirement of HT Consumers, with Energy being heeled through TNEB Grid

Utilises a meager 55,000 SCM/day of gas allocation

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Case Study - KSK Energy Ventures Load driven DG Model

KPCL is a 21 MW, LSHS based Independent Power Plant (IPP) setup at Kasargod, Kerala

21 MW LSHS based power plant – IPP to Kerala SEB

The project is located in northern tip of Kerala, where there are no base load plants.

Excellent example of load driven Distributed generation to cater to the regional needs of power for industries

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Thanks !!