Energy generation: using various power sources

Despite (or as a result of) the economic downturn, the use of renewable energy options have grown over the past several years, supported by federal and state programs including federal tax credits, state renewable portfolio standards, and a federal renewable fuels standard.

By Leyla Sadigh and Brandon Kelly, Arup December 28, 2017

Learning objectives:

  • Discuss the renewable energy options available to engineers when designing power systems.
  • Review various alternative power sources, such as combined heat and power (CHP).
  • Learn about resilient power options.

Failure of power generation systems serving hospitals, airports and transportation systems, water- and waste-treatment plants, police stations, and public safety food distribution could result in supply shortages, considerable disturbance to public order, and a significant economic impact both regionally and nationally. The need for reliable power at every building is essential, but in recent years, several blackouts in the U.S. have highlighted the need for resilient power systems at critical facilities.

Because maintaining these facilities is crucial to societies, it is imperative to improve the resilience of critical infrastructure to failures and attacks. With increasing urgency, we must ask ourselves whether renewable energy options can serve as suitable backup options. It is widely understood that the renewable energy options currently available cannot be stand-alone, reliable power sources for these facilities. However, renewable energy sources can become part of an effective solution when integrated with conventional energy options (see Figure 1).

The frequency and causes of power outages, as well as the availability of renewably energy, vary with geographic location. Figure 2 shows the main causes of power outages that occurred in 2016. Note that extreme weather has the largest impact. These outages not only create regional issues, but also compound and can become national catastrophes if not mitigated effectively. Figure 3 shows power outages by region throughout the country for 2016.

There are two main types of resilience: engineering and ecological. Engineering resilience makes the ecological systems close to a stable steady state and time, which is required to return to the same situation. There are so many definitions for resilience, but the important factors are robustness, redundancy, resourcefulness, and rapidity.

  • Robustness is the ability to withstand a shock without significant degradation or loss of performance.
  • Redundancy is the diversity and capability of satisfying functional requirements if significant degradation or loss of functionality occurs.
  • Resourcefulness is the ability to mobilize when threatened as well as to prioritize problems to initiate solutions.
  • Rapidity is the ability to contain losses and recover in a timely manner without disruptions.

Defining dispatchable and non-dispatchable technologies

Owners of critical infrastructures need to reconsider their power and backup power systems to be more resilient with the constant updates in technology. Rather than relying on more diesel generators or stand-alone nondispatchable options, which in most cases are very expensive, integrating nondispatchable designs with dispatchable systems is a good practice. Part of this is understanding the definitions of both dispatchable and nondispatchable technologies. A dispatchable source of electricity is an electrical power system, such as a power plant, that can be turned on or off and can adjust its power-output supply based on demand. Most conventional power sources, such as coal or natural gas power plants, are dispatchable systems. In contrast, many renewable energy sources are nondispatchable. Renewable sources, such as wind and solar power, generate electricity based on variable sources, which affects the flow of output energy.

One technology that combines dispatchable and nondispatchable systems can be seen by combined heat and power (CHP) plants, which use biomass and fuel cells as a nondispatchable energy source. Combining such systems can provide ongoing benefits, such as continuous power, energy-cost savings, and emergency power coverage of critical loads when the utility grid is down. This type of integration can be designed and evaluated as a resilient power system for a specific single facility, or designed for larger-scale systems. These technologies even can be used in smaller scales for schools or universities, where the buildings are normally used as shelters in the event of power outages due to natural disasters, terrorist attacks, or any number of events. Bio-fueled CHP can be a solution for resilient energy generation for a single facility. This system effectively uses the waste streams as raw materials. For example, a proprietary gasifier system converts woodchips into a wood gas suitable for fueling the CHP’s spark ignition engine (see Figures 4 and 5).

When designing to have resilient power for critical facilities using nondispatchable sources, it is important to understand the available sources, tools, and calculations that are open to the public. While many factors must be considered when designing a combined resilient system with a nondispatchable source, the geographical location of the facilities determine one or two nondispatchable energy sources that are more efficient and cost-effective than others. Therefore, it is important to note that one of the key factors for the relationship between the annual production (kWh) of the system and the annual cost is the geographical location. The annual cost can be defined as the sum of the present-value initial cost of construction, annual operating-cost expenses, the cost of the fuel source, the discount rate (driven by government tax credits and incentives), and the capacity factor of the system. The capacity factor of a system, such as a power plant, is the ratio of its actual output over a period of time to its potential output if it were possible for it to operate at full nameplate capacity continuously over the same period of time.

Experience curves that describe how unit costs decline with cumulative production have always challenged technology-related decisions. Although stand-alone nondispatchable technologies have a higher initial capital cost, increasing effectiveness of the present technologies is allowing for further acceptance of these solutions. Therefore, the ability to incorporate nondispatchable technologies with current dispatchable facilities is becoming more prevalent. The importance when comparing the system relevance is geographical region and initial cost.

Data is available to compare the economic considerations of various generation systems. The National Renewable Energy Laboratory incorporates the following variables into a simple calculation called “levelized cost of energy” (LCOE).


It = Investment expenditures in year t (including financing).

Mt = Operations and maintenance expenditures in year t.

Ft = Fuel expenditures in year t.

Et = Electricity generation in year t.

r = Discount rate.

n = Life of the system.

Source: U.S. Department of Energy, 2015

LCOE calculates the dollar value per kilowatt hour produced by a system over the course of the assumed financial life, thus permitting the designer to choose the most appropriate system for the region in consideration. In other words, a lower LCOE indicates higher return potential. However, LCOEs ignore the potential for system interaction and only compare single instances of generation. In addition to LCOEs, it is important to understand the levelized avoided cost of electricity (LACE), which takes into account the availability of electrical power currently installed and the effective cost of adding to the existing utility infrastructure.

When analyzing the validity of installing a dispatchable or nondispatchable system, it is important to look at the combination of this data (see Table 1).

Table 1: LCOE and LACE comparison

Solely focusing on the third column of Table 1, the average net difference shows the effectiveness of installing the specific technology in a certain region. A negative value demonstrates that the cost of any of these technologies exceeds the effective value of the current electrical infrastructure, while a positive number shows that the technology is effective in displacing current generation cost. The maximum- and minimum-range columns show the upper and lower bounds of the average net difference and are largely based on effective incentives in the region. For example, advanced combined cycle (CC) with carbon capture and storage (CCS) technology shows a negative net difference while wind-onshore technology shows a positive difference. This difference effectively demonstrates the potential effectiveness of wind-onshore technology over the other technology.

Note that Table 1 is meant as a basic understanding when comparing the effectiveness of installing additional electrical generation technologies. A more comprehensive walkthrough of these tables can be found on the U.S. Energy Information Administration (EIA) website. In summary, a positive average difference shows the potential for disrupting current generation techniques in a given region (see Figure 6).

To address resiliency in power infrastructure, it is important to analyze the effects of both LACE and LCOE while creating a payback period that takes into account various utility charges, inclusion and discontinuation of incentives, and increased energy output based on various design resources. This practice gives the designer the ability to effectively communicate various payback periods based on present and future availabilities of integrated systems.

Incentives are necessary to engage private and government sectors for investment in new technologies. The investment in nondispatchable technologies by federal, state, and local government started in the late 1970s. The main goal was to encourage clean technologies and drive costs down. The first significant policy to spur renewable investment was the Public Utilities Regulatory Act in 1978. This policy mainly was for utilities to buy wholesale power from qualifying facilities. In the late 1990s, policies were established to support growth in the renewable industry. These policies depended on project location, technology type, and utility-rate class along with several other variables. One source that incorporates interactive maps with tables demonstrating project availability and capacity is the Database of State Incentives for Renewables and Efficiency (DSIRE). The most responsible policies for technological growth in utility-scale and distributed renewable energy can be summarized as:

  • State renewable portfolio standards (utility-scale).
  • Federal tax credits (utility-scale and distributed).
  • State or local net metering tariffs (distributed).
  • State and/or local cash rebates (distributed).

The federal tax credit became available in 1999 for the first time. The Production Tax Credit (PTC) has been recognized for wind, geothermal, and biomass technologies. Based on this incentive, plants will receive a $23/MWh ($12/MWh for technologies other than wind, geothermal, and closed-loop biomass) tax credit over the plant’s first 10 years of service. After 2016, wind continues to be eligible for the PTC, as a dollar/kWh rate that declines by 20% in 2017, 40% in 2018, 60% in 2019, and finally expires in 2020. Wind plants giving service in 2019 will receive full credit, and in 2022 will receive $14/MWh as inflation-adjusted tax credit.

Solar photovoltaic, solar thermal, solar thermal electrical, and fuel cell plants have been considered under the investment tax credit (ITC). The plants will receive a 30% tax credit on capital expenditures if the plants are under construction before the end of 2019. After that, the credits will be 26% in 2020 and 22% in 2021. ITC will decline to 10% for business and utility-scale systems in that year thereafter. EIA assumes that all utility-scale solar plants entering service in 2019 will receive the full 30% tax credit. ITC has been amended a number of times (see Table 2).

The credit for fuel cells is covered at $1,500/0.5 kW of capacity. CHP credit is equal to 10% of expenditures, with no maximum limit stated. Eligible CHP property generally includes systems up to 50 MW in capacity that exceed 60% energy efficiency, subject to certain limitations and reductions for large systems. The limitation will not be applied when CHP is used with biomass for at least 90% of the system’s energy source, but the credit may be reduced for less efficient systems. When the electrical capacity is 15 MW or less and mechanical-energy capacity is 20,000 hp or less, the CHP can receive the full credit.

Financial incentives for new technologies and renewable energy options, as well as power purchase agreements, create good competition in the marketplace to make technologies viable in every state. Policy tools, such as renewable portfolio standards’ thermal renewable energy credits, production and investment tax credits, community grant programs, and biomass supply programs, can grow the market and overcome initial adoption costs. ICF International, Center for Climate and Energy Solutions, via DSIRE Database provided the CHP technical potential map (see Figure 7).

This potential allows for resilient infrastructure. In addition, when incorporating a nondispatchable technology, it allows for expandability and redundancy for electrical infrastructure.

Guidelines for renewable energy system installation and integration in facilities have been updated in NFPA 70-2017: National Electrical Code (NEC) in several articles, such as installation of photovoltaic (Article 690), fuel cells (Article 692), and wind electric systems (Article 694). Additionally, new articles have been incorporated to adapt to changing infrastructure. One such example is Article 691 for large-scale photovoltaic electrical power-production facilities, which has been added to NEC 2017. Large-scale is defined as generating power capacity of no less than 5,000 kW and not under exclusive utility control. Article 705 supports the installation of one or more electrical power-production sources operating in parallel with a primary source. There are other NEC articles that need to be considered when designing a resilient power system as described above. Examples can be found in:

  • Article 700 for alternate sources for emergency systems.
  • Article 706 (a new article added to NEC 2017) for energy-storage systems, which supports the permanent installation of all systems operating at higher than 50 V ac or 60 V dc. This article talks about single stand-alone systems as well as interconnected systems with other electric power-production sources.
  • Article 710 (new article in NEC 2017) for stand-alone systems, which covers equipment for electrical power production to be listed and labeled for intended use.
  • Article 750 for energy-management systems in critical facilities in terms of load-shedding controls, disconnecting power, device communication, power production, and storage sources.

Overall, a resilient power design requires in-depth understanding of the tools, policies, incentives, and codes to ensure the project is designed to best serve the intended region.

Leyla Sadigh is a senior electrical engineer at ArupBrandon Kelly is an electrical engineer at Arup