Distributed Generation, Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors I May 2020

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Distributed Generation, Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors I May 2020 Distributed Generation , Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors May 2020 Independent Statistics & Analysis U.S. Department of Energy www.eia.gov Washington, DC 20585 This report was prepared for the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA’s data, analyses, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in this report therefore should not be construed as representing those of the U.S. Department of Energy or other federal agencies. U.S. Energy Information Administration | Distributed Generation, Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors i May 2020 Distributed Generation, Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors Distributed generation in the residential and commercial buildings sectors refers to onsite, behind-the- meter generation of energy. This often includes electricity from renewable energy systems such as solar photovoltaics (PV) and small wind turbines, but it can also include electricity and captured waste heat from combined heat and power (CHP) systems. Many factors influence the market for distributed generation, including government policies at the local, state, and federal levels, and project costs, which vary significantly depending on location, size, and application. Current and future equipment costs of distributed generation are subject to uncertainty. As part of its Annual Energy Outlook (AEO), the U.S. Energy Information Administration (EIA) updates projections to reflect the most current, publicly available historical cost data and uses multiple third-party estimates of future costs in the near and long terms. Performance data are likewise based on currently available technology and expert projections of future technologies. Before the AEO2020 reporting cycle, EIA contracted with an external consultant to develop cost and performance characterizations of PV, small wind, and CHP installations in the buildings and industrial sectors.1 The consultant provided cost and performance data for systems of various sizes at various intervals for 2012–2050. Two levels of future technology optimism were offered: a Reference case and an Advanced case that included lower equipment costs, improved performance, or both. From this information, EIA used national-level average annual costs for a typical system size in each sector. Abbreviated tables of these system sizes and costs are presented in the residential and commercial chapters of the Assumptions to the AEO. Additional information in the contracted report— including equipment degradation rate, system life, annual maintenance cost, inverter cost, and conversion efficiency—was adapted for input in the Distributed Generation Submodules of the Residential and Commercial Demand modules of the National Energy Modeling System. As described in the assumptions reports, other information not included in the report—such as resource availability, avoided electricity cost, interconnection limitations, incentive amounts, installed capacity- based cost reductions, and other factors—ultimately affect the capacity of distributed generation and CHP added within a given sector and year. The report, Analyze Distributed Generation, Battery Storage, and Combined Heat and Power Technology Data and Develop Performance and Cost Estimates and Analytic Assumptions for the National Energy Modeling System: Final Report, is available in Appendix A. When referencing the report, cite it as a report by Leidos, Inc., prepared for the U.S. Energy Information Administration. 1 Distributed generation systems often cost more per unit of capacity than utility-scale systems. A separate analysis involves assumptions for electric power generation plant costs for various technologies, including utility-scale photovoltaics and both onshore and offshore wind turbines used in the Electricity Market Module. U.S. Energy Information Administration | Distributed Generation, Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors 1 May 2020 APPENDIX A U.S. Energy Information Administration | Distributed Generation, Battery Storage, and Combined Heat and Power System Characteristics and Costs in the Buildings and Industrial Sectors 2 EOP IV Contract #DE-EI0002956 Task Order #89303019FEI400025 Subtask 5.1 Analyze Distributed Generation, Battery Storage, and Combined Heat and Power Technology Data and Develop Performance and Cost Estimates and Analytic Assumptions for the National Energy Modeling System: Final Report U.S. Energy Information Administration Office of Energy Analysis Office of Energy Consumption and Efficiency Analysis April 28, 2020 EOP IV Contract DE-EI0002956 Task Order #89303019FEI400025 Subtask 5.1 Analyze Distributed Generation, Battery Storage and Combined Heat and Power Technology Data and Develop Performance and Cost Estimates and Analytic Assumptions for National Energy Modeling System: Final Report U.S. Energy Information Administration Office of Energy Analysis Office of Energy Consumption and Efficiency Analysis April 28, 2020 This report has been prepared for the use of the client for the specific purposes identified in the report. The conclusions, observations and recommendations contained herein attributed to Leidos constitute the opinions of Leidos. To the extent that statements, information and opinions provided by the client or others have been used in the preparation of this report, Leidos has relied upon the same to be accurate, and for which no assurances are intended and no representations or warranties are made. Leidos makes no certification and gives no assurances except as explicitly set forth in this report. © 2020 Leidos, Inc. All rights reserved. Review of Distributed Generation and Combined Heat and Power Technology U.S. Energy Information Administration Table of Contents Table of Contents List of Tables List of Figures Section 1 INTRODUCTION .................................................................................... 1-1 1.1 Technologies Assessed ............................................................................ 1-3 Section 2 GENERAL BASIS FOR TECHNOLOGY EVALUATION ................ 2-1 2.1 Leidos Background .................................................................................. 2-1 2.2 Base Fuel Characteristics ......................................................................... 2-1 2.3 Base Technology Descriptions ................................................................ 2-2 2.3.1 Photovoltaic ................................................................................. 2-2 2.3.2 Wind ............................................................................................. 2-8 2.3.3 Fuel Cell ..................................................................................... 2-10 2.3.4 Reciprocating Engine ................................................................. 2-16 2.3.5 Natural Gas Microturbine .......................................................... 2-19 2.3.6 Natural Gas Turbine ................................................................... 2-20 2.3.7 Combined Cycle......................................................................... 2-22 2.3.8 Battery Energy Storage Systems (BESS) .................................. 2-22 2.4 Cost Estimation Methodology ............................................................... 2-24 2.4.1 Capital Cost ................................................................................ 2-24 2.4.2 Operation and Maintenance Costs ............................................. 2-25 2.4.3 Regional Cost Factors ................................................................ 2-27 2.4.4 Technologies Performance Specifications ................................. 2-27 Section 3 RESIDENTIAL ......................................................................................... 3-1 3.1 Residential – Small Solar Photovoltaic (RSS) ......................................... 3-1 3.1.1 Equipment and Systems ............................................................... 3-1 3.1.2 Technology Specifications ........................................................... 3-1 3.1.3 Capital Cost Estimate ................................................................... 3-2 3.1.4 O&M Estimate ............................................................................. 3-3 3.1.5 Reference Technologies Projections ............................................ 3-3 3.1.6 Advanced Technologies Projection ............................................. 3-5 3.2 Residential – Wind System (RWS).......................................................... 3-6 3.2.1 Equipment and Systems ............................................................... 3-6 3.2.2 Technology Specifications ........................................................... 3-6 3.2.3 Capital Cost Estimate ................................................................... 3-7 File: EIA | BC0269 Table of Contents 3.2.4 O&M Cost Estimate .................................................................... 3-8 3.2.5 Reference Technologies Projections ............................................ 3-9 3.2.6 Advanced Technologies Projections .......................................... 3-10
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