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Cost-Effectiveness of Distributed Generation Technologies

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Cost-Effectiveness of Distributed Generation Technologies ( cost-effectiveness-distributed-generation-technologies )

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Cost-Effectiveness of Distributed Generation Technologies Operations, Maintenance, Fuel, and Emission Offset Purchases Related to the cost of the system are the ongoing or variable costs of the DG equipment. These costs are included in the PCT, the TRC, and STRC. For the PCT, TRC, and STRC the O&M costs include insurance and yearly maintenance that was derived for all the technologies on a $/kWh basis. The maintenance costs included those costs required to maintain the system including periodic overhauls or replacement of system components (e.g., the stack in the case of fuel cells). The non-fuel related O&M costs are available in Table 3-2. Fuel expenses for natural gas and directed biogas-fueled technologies are also included in the costs for the PCT, TRC, and STRC. For the PCT, values of the natural gas are based on the non- core gas rates for commercial and government/nonprofit participants and based on core rates for residential customers. For commercial and government/nonprofit customers, the utility-specific DG T&D charges were added to the wholesale gas rates when calculating the gas fuel costs within the PCT. For the commercial and government/nonprofit analysis, the model employed wholesale gas rates and the rate forecast underlying the E3 avoided cost forecast. The TRC and STRC also include a fuel cost. This fuel cost is valued using the avoided cost gas commodity rates in the E3 avoided cost model for commercial and government/nonprofit participants and the avoided cost gas commodity and T&D rates from the E3 avoided cost model for residential participants.15 Directed biogas is biogas that has been procured off-site and is then injected into the natural gas pipeline.16 The cost increase for the use of directed biogas as a fuel source was based on data received from the CPUC and from discussions with technology providers who were exploring the use of directed biogas in their projects. The directed biogas adder used by the evaluation team for the base year of 2009 is $0.412 per therm. This value is added to the natural gas rate used for the PCT. The growth rate of the direct biogas adder is 2.97% per year. This cost increase was applied only to the adder. Different cost increases were applied to the natural gas rates. The STRC and the TRC use the same avoided cost values for both natural gas and directed biogas. The model also accounts for any increased GHG emissions resulting from using DG technologies to produce electricity instead of procuring this electricity from the grid.17 The 15 The transportation and distribution charges were not included in the government and commercial customers because these customers were modeled as non-core gas customers for whom the utilities do not have to plan in the T&D planning. 16 For more information on directed biogas, please see D.09-09-048. http://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/107574.pdf 17 The avoided cost benefits associated with the reduction in utility-provided electricity included the value of reduced GHG emissions from central station power stations. The TRC and the STRC must, therefore, include costs associated with the GHG emissions produced by DG technologies. Itron, Inc. 3-19 Critical Inputs and Assumptions

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