The business model of the electric industry remained almost unchanged for the entire 20th century. Electricity generation has been centralized in power plants, while a transmission and distribution grid delivers power to residential, commercial and industrial buildings. In other words, electricity only moves in one direction in conventional grids.
However, the evolution of generation technologies has given building owners access to their own power plants, changing the rules of the game after more than a century. In particular, solar power systems have experienced fast growth, since the modular design of photovoltaic arrays can adapt to a wide range of buildings.
After being only power consumers for decades, buildings can now generate electric power as well. In fact, some high-performance buildings have become net generators, having an electricity production higher than their own consumption.
Identify promising building upgrades with an energy audit.
Importance of Net Metering
When only power companies could produce electricity, there was no need to measure the direction of energy flow between the grid and buildings. Plenty of these conventional power meters still operate throughout the world, and they cannot tell the difference between electricity consumed and electricity supplied by the building.
Many countries have introduced net metering as a way to incentive power generation in buildings. Conventional meters have been upgraded to smart meters that can measure energy movement in both directions - when calculating the power bill for the building, consumption is charged and net generation is credited.
The exact net metering rules change by location and by utility company. Some net metering programs offer full credit for every kilowatt-hour supplied by the building, while others only offer partial credit. The way in which net credit is managed also changes: some power companies pay their customers, while others carry it over to the next electricity bill.
How Distributed Energy Systems Benefit Buildings
When distributed energy systems are deployed across many buildings, the main benefit for property owners is a reduction of energy expenses. If they can produce their own electricity, the amount of kilowatt hours purchased from the grid is reduced.
Note that some generation systems allow control over the power output, while others only generate power when the required input is present.
- For example, a biomass power plant can produce electricity indefinitely as long as the biofuel is available, while a solar photovoltaic system only provides electricity during daytime.
- If a solar PV system owner needs an electricity source that is available at any time, the photovoltaic array can be enhanced with a battery system.
With controllable generation and energy storage, building owners can manipulate their daily consumption profile to achieve increased savings. The two following examples are the most common:
- Some tariffs have a kWh price that changes throughout the day. The electricity price is increased when power demand is high, and decreased when power demand is low. A building can use its energy systems to minimize consumption when the kWh price is high, and then take advantage of low kWh prices available during low-demand hours.
- Some tariffs have a demand charge, which is based on the building’s highest consumption peak during the billing period. Even if two buildings consume the same number of kilowatt-hours, a building with a peak demand of 200 kW will pay more than a building with a 100 kW peak. Generation systems and energy storage can reduce demand peaks measured by the power meter, lowering the demand charge.
The approach is different for each of the scenarios described above. However, in both cases you need an energy source that can be counted on to provide kilowatt-hours on demand.
Distributed Power Generation Improves Grid Reliability
Conventional power systems have one major weakness: since the electricity supply is centralized in generation plants and transmission lines, a system fault can leave thousands of buildings without electricity in an instant.
On the other hand, a power grid that draws electricity from distributed sources does not have the weakness described above - neither generation nor transmission are concentrated at any point of the system. Consider the virtual power plant being developed in Australia, which will have a generation capacity of 250 MW and a storage capacity of 650 MWh.
- The system will use 50,000 residential installations. Each home has a 5 kW solar array and a 5 kW / 13 kWh battery, adding up the total capacity.
- If one of the 50,000 systems is affected by a fault, the effect on total capacity is negligible. On the other hand, the output of a centralised power plant can be fully disconnected by a single fault.
Distributed energy resources also reduce the transmission burden on the power grid, delaying expensive network upgrades. Existing power plants and transmission lines are taken to their limit during peak demand hours, and distributed energy systems can reduce the net load. Of course, the impact of distributed generation and storage becomes more noticeable as they are deployed in a larger number of buildings.
Energy efficiency measures can achieve synergy with distributed generation and storage. Meeting energy demand with distributed resources is simpler when buildings deploy measures to reduce their consumption. The best measures for your building can be identified with a professional energy audit.
Depending on your location, renewable generation and energy storage systems may be eligible for incentive programs from local governments or utility programs. Consulting engineers can help you meet the requirements for these incentives.