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new zealand centre for advanced engineering The Economic and System Impacts of increased DG Connection within New Zealand’s Electricity Networks The New Zealand Centre for Advanced Engineering November 2007 Mail: Private Bag 4800, University of Canterbury Campus, Christchurch 8140, New Zealand Street Address: 39 Creyke Road, Ilam, Christchurch, New Zealand Phone: 03 364 2478 Fax: 03 364 2069 e-mail: [email protected] www.caenz.com Page added to allow for double-sided printing The Economic and System Impacts of increased DG Connection within New Zealand’s Electricity Networks The New Zealand Centre for Advanced Engineering November 2007 CAENZ is an independent-think tank and research facilitator funded by grants and sponsorships. CAENZ’s mission is to advance social progress and economic growth for New Zealand through broadening national understanding of emerging technologies and facilitating early adoption of advanced technology solutions. www.caenz.com Prepared by: Geoff Cardwell, CAENZ; Bart van Campen, Energy Centre, University of Auckland with contributions from: Nikki Newham, University of Canterbury; Rowan Hooper, CAENZ; Russell Longuet, Exergi Consulting Limited Sponsors: CAENZ gratefully acknowledges the financial support of the following in undertaking this study: • Energy Centre, University of Auckland; • Mainpower New Zealand Limited; • Powerco; and • Transpower NZ Ltd. Approved by: RJ (George) Hooper Issued: November 2007 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, transmitted, or otherwise disseminated, in any form or by any means, except for the purposes of research or private study, criticism or review, without the prior permission of the Centre for Advanced Engineering. Copyright ©2007 New Zealand Centre for Advanced Engineering Address for Correspondence New Zealand Centre for Advanced Engineering University of Canterbury Campus Private Bag 4800 Christchurch 8140 New Zealand Phone: +64 3 364 2478 Fax: +63 3 364 2069 [email protected] CONTENTS 1 Introduction .............................................................................................................................................. 1 2 Scope of the current study ..................................................................................................................... 3 3 Distributed Generation Characteristics and System Performance .......................................................... 5 A definition of DG ................................................................................................................................... 5 Potential Impact of DG on network operation ....................................................................................... 6 Potential contributions/benefits of DG deployment .............................................................................. 10 DG Investment Criteria .......................................................................................................................... 12 Locational Value of DG .......................................................................................................................... 13 Overview ......................................................................................................................................... 13 DG Technology Type ........................................................................................................................ 14 Technological Impacts of DG on the Distribution Network ............................................................. 14 Value to Network Company ............................................................................................................ 15 Policy and DG Planning .................................................................................................................. 15 Value to Investor ............................................................................................................................. 16 Location of DG ................................................................................................................................ 17 4 DG in New Zealand ................................................................................................................................ 19 Commercial DG models ......................................................................................................................... 19 Existing DG in New Zealand ................................................................................................................. 22 DG Regulatory Environment ................................................................................................................. 23 Current Status of DG Regulation .................................................................................................... 23 DG Pricing Structures ..................................................................................................................... 24 Network connection Charges ......................................................................................................... 24 5 Case Study Analysis ............................................................................................................................. 27 PowerCo Case Study ............................................................................................................................ 27 General parameters of the case study ........................................................................................... 27 Description of the line company ................................................................................................... 27 Description of the network ............................................................................................................ 27 Network issues ............................................................................................................................... 29 DG profile within the network ....................................................................................................... 30 Powerco DG policy ......................................................................................................................... 30 Case studies ................................................................................................................................... 32 Palmerston North Council Landfill gas generation ...................................................................32 Wanganui Valley hydro scheme ................................................................................................ 34 Conclusions .................................................................................................................................... 35 Orion Case Study ................................................................................................................................. 35 General parameters of the case study ........................................................................................... 35 Description of the line company ................................................................................................... 36 Description of the network ............................................................................................................ 36 Network issues ............................................................................................................................... 36 DG profile within the network ....................................................................................................... 38 Orion DG policy .............................................................................................................................. 39 Contents Page i Case studies ................................................................................................................................... 42 Chateau on the Park - Diesel .................................................................................................... 42 Southbridge wind generator ..................................................................................................... 43 CCC landfill gas cogeneration engine ....................................................................................... 44 Conclusions .................................................................................................................................... 45 Network Tasman Case Study ............................................................................................................... 45 General parameters of the case study ........................................................................................... 45 Description of the line company ................................................................................................... 45 Description of the network ............................................................................................................ 46 Network issues ............................................................................................................................... 46 DG profile within the network ....................................................................................................... 47 Case study ..................................................................................................................................... 47 Onekaka mini hydro scheme ...................................................................................................