Chile

Chile was the first nation in the world to break up vertically integrated monopolies into separate markets for generation and wires. Strong policy is still lacking to directly promote DE, which partly explains the lack of investment in the area. Recent gas shortages in Chile have been creating somewhat of an energy crisis that should encourage gas conservation (and thus efficient gas cogeneration), but will likely reduce interest in gas-fired cogeneration in the near future. Other DE sources, such as

DE in general

Large-scale cogeneration

Domestic cogeneration

Wind

Hydro

DE in general

Large-scale cogeneration

Domestic cogeneration Onsite PV

Onsite wind

Small hydro DE in general

Technical

The Federal government in Canada has control over interprovincial gas pipelines and transmission lines crossing international borders. Because the Canadian constitution enshrines energy as a provincial jurisdiction in all other cases; each utility tends to have its own interconnection policy. Interconnection policies tend not to be technology specific. The government funds the "micropower connect" initiative, which aims to harmonize interconnection rules in the provinces" Interconnection rules vary by province Interconnection rules vary by province Interconnection rules vary by province Interconnection rules vary by province Interconnection rules vary by province Financial

There is no Federal law, which guarantees retail electricity prices. In most cases, onsite generators feeding excess power to the grid obtain wholesale electricity price or less and in some cases, retail price is earned. In only one case (a paper mill in Quebec using cogeneration), does onsite generation obtain a premium price to reflect the additional value it offers. Various funding schemes exist to promote energy innovation including: the technology Early Action Measure program, the Climate Change Technology and Innovation Program, the Federation of Canadian Municipalities Green Fund, and a program to promote onsite generation at government facilities.13 In many cases, the utility companies of a province have much influence over provincial electricity policy so that policy is often determined by the private sector Biomass or landfill gas may qualify for Renewable Power Production

Incentive: CANt1/kWh final program details and eligibility criteria will be announced by April 1, 2006 Cogeneration equipment is listed as Class 43.1 assets meaning they are eligible for accelerated depreciation rates for capital costs (30%). Systems with efficiency of more than 72% and all systems using biomass will be eligible for 50% capital cost allowance. Start-up expenses, such as feasibility studies and regulatory approval expenses, etc., are tax deductible under the Canadian Renewable and Conservation Expenses rule. In Quebec, Hydro Quebec will now permit independent power producers to sign long-term power supply contracts at avoided cost Cogeneration equipment is listed as Class 43.1 assets meaning they are eligible for accelerated depreciation rates for capital costs (30%) May qualify for renewable power production incentive: CANt1/kWh final program details and eligibility criteria will be announced by April 1, 2006. Eligible for 50% capital cost allowance Wind power production incentive (WPPI) will be increased by CAN$200 million over 5 years and CAN$920 million over 15. CANi1/kWh will be paid for all eligible wind projects.0 Eligible for 50% capital cost allowance. Siting studies and test turbines are tax deductible under the Canadian Renewable and Conservation Expenses rule May qualify for renewable power production incentive: CANi1/kWh final program details and eligibility criteria will be announced by April 1, 2006. Eligible for 50% capital cost allowance Other

The Canadian Government has a goal of supplying 20% of its electricity from renewable sources by 2010.d Various provinces also have similar goals including Price Edward Island, which has announced plans to become 100% renewable by 2012, Quebec, which aims to have 1000 MW wind by 2010, and Ontario which plans to install smart meters in every house by 2010

TABLE 2.8 (Continued)

Canada is bound by the Kyoto protocol and aims at reducing its carbon emissions by 5.8% below 1990 levels by 2012

Large-scale cogeneration

Domestic cogeneration

Wind

Hydro a http://www.micropowerconnect.org

http://www.oja-services.nl/iea-pvps/countries/canada/index.htm c Energy Law Bulletin. March 2005. McMillan Binch, LLP.

d Government of Canada. 2002. Climate change: achieving our commitments together. Climate Change Plan for Canada. En56-183/2002E, p. 33.

TABLE 2.9 Mexican Distributed Generation Policy by Technology and Type

DE in general

Large-scale cogeneration

Domestic cogeneration

Wind

Hydro

DE in general

Large-scale cogeneration

Technical

In 1992, a law was established which permitted nonutility generation and onsite generation for the first time. The "Ley del Servicio Publico de Energía Electrica" (LSPEE) forbids bilateral trading of electricity between individuals, but allows companies to generate for their own demand and cogeneration with a permit from the Comision Regulatorio de Energía (CRE) The Mexican government defined cogeneration in the 1992 law permitting private sector involvement in the electricity sector," but stated that the power must be used onsite. Interconnection, wheeling, and backup services are allowed but require permits from the CRE and the energy secretariat (SENER). Interconnection standards for cogeneration plants are based on the US IEEE 1547

Financial

Private generators can sell to either of the two utilities on the following conditions" Cogeneration plants can sell their total surplus production

Self-supply plants can sell up to 20 MWe of supply provided the plant is no bigger than 40 MWe

For self-supply plants bigger than 40 MWe, up to 50% of the capacity can be sold Sale agreements cover dispatch arrangements, pricing, capacity payments, and energy payments. Prices are very low that sales rarely happen in practice. New rules to improve the situation may be passed by the Senate in early 2005 In 2001, the Mexican Energy Regulatory commission established a framework for the interconnection of intermittent sources of generation, such as solar, wind, and microhydro. The framework created incentives to feed power generated from such sources into the grid and created tariff regimes based on actual generation transmitted as opposed to nameplate capacity. In effect the arrangement works like a net metering arrangement, allowing small generators to feed power into the grid in times of surplus generation, and draw power from the grid when power generation is insufficient to meet onsite demand A proposal to base surplus sales of electricity to Comision Federal de Electricidad (CFE)/Luz y Fuerza del Centro (LFC) on utility sales prices, rather than the current (early 2005) rates ofUS$2-3 ct/kWh may be approved by the senate in early 2005. New plant depreciation rules may also be introduced in 2005." The government has revised electricity tariffs in a way that has made peak shaving attractive to independent owners of diesel fired power plants, reciprocating natural gas engines, 30-75 kW microturbines in commercial applications and 5-250 MW gas turbine plants for up to 4 h/dayc

TABLE 2.9 (Continued)

Domestic cogeneration Onsite PV Onsite wind Small hydro

Other

DE in general Investors have to secure a wide array of permits, which can be very costly. In some cases, more than 100 permits are required, including local/municipal planning permission, environmental permitting, gas supply and connection permits, power generation authorization and network interconnection permits, etc. The 2001-2006 National Energy Sector Plan states a goal of 1000 MWof new renewable energy capacity (including hydro) Large-scale cogeneration CONAE provides technical assistance, including prefeasibility and online economic analysis as well as limited financial support for projects, workshops, educational programs, and conferences. A proposal to simplify permitting and authorization procedures for private cogeneration plants may be approved by the senate in early 2005. Other incentives that are being considered include:

The provision of assured long-term pricing of gas and oil from Pemex together with incentive fuel pricing for cogeneration projects that meet certain criteria The introduction of improved dispatch arrangements, simplified interconnection/wheeling arrangements, and reduced backup charges from CFE The provision of incentives for cogeneration plants based on their energy savings, reduced network losses, and carbon emission reductions Specific recognition of cogeneration/DE in new electricity market reform laws At Bonn Mexico committed to a "Renewable Energy Initiative"d but the details of the plan remain uncertain

Domestic cogeneration

Wind

Hydro a WADE Market Analysis 2005.

b Renewable Energies in Mexico 2004. www.energia.gob.mx/work/resources/LocalContent/1835/1/e_renovables_mexico. pdf c Jorge Hernandez Soulayrac, Tecnoelectric Power Consulting.

Renewables 2004. International Conference for Renewable Energies, 1-4 June 2004, Bonn. Conference Report: Outcomes and Documentation—Political Declaration/International Action Programme/Policy Recommendations for Renewable Energies.

TABLE 2.10 USA Distributed Generation Policy by Technology and Type

Technical

DE in general Section 1254 of the Energy Policy Act of 2005 requires that electric utilities offer grid interconnection based on a nationwide standard. Currently to connect DE units must be IEEE P1547 compliant, which requires "automatic and rapid disconnection in the event of a fault"

Large-scale cogeneration

Domestic cogeneration

Wind

Hydro

Energy Policy TABLE 2.10 (Continued)

DE in general

Large-scale cogeneration

Domestic cogeneration Onsite PV

Onsite wind Small hydro

DE in general

Large-scale cogeneration

Financial

At a State level, the United States has many promising policies in support of renewables and DG. Grant programs, financing, R&D funds, net metering, feed-in tariffs, and tax breaks are some of the financial measures that have proven successful for promoting DE technologies at a state level." A tool that has proven especially successful is the "system benefits charge" are being employed in at least 16 US states." The Energy Act of 2005 grants tax credits for developers who build energy efficient buildings that could have ramifications for DE especially micro-cogeneration. It also extends the existing tax credit for production of electricity from renewable resources, such as wind, biomass, and landfill gas, and creates for the first time a tax credit for residential solar energy systems (section 1301) As specific scheme exists to provide grants for rural and remote communities' electricity development projects (section 209) In 2004, about 100 million dollars were spent in the USA on R&D related to renewables0 The new Federal US Energy bill contains a 10% tax incentive for microturbine generators and also offers a per kilowatt-hour incentive for generation from microturbines paid directly from the Department of Energy. Biogas fired turbines will receive an additional incentive of 1.5 ct/kWh (section 1336) The new Energy bill provides a rebate of up to $150 for installation of a highly efficient furnace or boiler; presumably, micro-cogeneration systems would also be eligible for thisb

Under the recently passed energy bill consumers can receive a credit of up to 30% of the cost (to a maximum of $2,000), for installing solar-powered hot-water systems except for purposes other than heating swimming pools and hot tubs.b The law also applies to solar PV

Other

PURPA of 1978 provided the foundation for competition in the electricity sector allowing DE investors to participate in the market for the first time. The Energy Act of 2005 makes several amendments to PURPA including the retraction of the mandate that utilities must buy power form "qualifying facilities" (which included many cogeneration facilities). Section 1253 states that as long as the utility can prove that the facility has fair access to the grid, there is no longer may obligation to buy power (nondiscriminatory access to the grid is guaranteed in section 1231). The Bill also requires all utilities to offer net metering to small onsite generators (section 1251) and offer time-differentiated rate schedules upon request so that customers can take advantage of technologies such as "smart metering" which also must be supplied by the utility (section 1252). And, without proving any clear guidance, the utilities are disallowed from relying on a single fuel, i.e., there is a Federal mandate to diversify energy portfolios At least 28 states in the U.S. have now enacted a Renewable Portfolio Standards (RPS), including" various states that include cogeneration in the mandate, and at least one (Pennsylvania) that includes conservation (DSM) in its mandate. Several initiatives arose from the Bonn 2004 Renewable energy conference, including a renewable energy production incentive, wind power and solar PV, and geothermal energy cost targets.d According to section 202 of the Energy Act of 2005, the Federal government must ensure no less than 3% of its total energy consumption is derived from renewables rising by 2.5% every 3 years to 2013 There is a Federal mandate to study the potential from renewable energy (section 201). There is a goal to develop at least 10,000 MW of nonhydro renewables on public lands by 2015

The USDOE and the EPA have set ambitious targets for cogeneration. The USDOE aims to double current cogeneration capacity to 92 GW by 2010.e Clean standards as well as tax credits are being considered by the legislature. Some states (Nevada, the Dakotas, and Pennsylvania) include cogeneration in their RPS. The EPA has recently proposed output-based standards for air permits for new cogeneration applications that would spur cogeneration investment via reduced compliance costs

TABLE 2.10 (Continued)

Section 1817 of the Act calls for a federal study into the benefits of "distributed generation" to be undertaken and the results presented to the senate no later than 2007b

Domestic cogeneration

PV The much-publicized million solar roof initiative remains in force and is designed to build a network of local organizations and partners to develop solar energy demonstration projects throughout the country.5 Most US states have some form of incentive at a state level to promote the use of PV. The Federal government has a goal of 20,000 solar roofs by 2010 (section 204)

Wind Hydro a Database of State Incentives for Renewable Energy 2005.

b Energy Policy Act of 2005. http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname= 109_cong_bills&docid = f:h6enr.txt.pdf c Renewables 2005. Global Status Report, p. 21.

d Renewables 2004. International Conference for Renewable Energies, 1-4 June 2004, Bonn. Conference Report: Outcomes and Documentation—Political Declaration/International Action Programme/Policy Recommendations for Renewable Energies.

e USA cogeneration Roadmap. http://www.millionsolarroofs.com/

TABLE 2.11 Argentinean Distributed Generation Policy by Technology and Typea

DE in general

Large-scale cogeneration

Technical

Ley 24065 guarantees access to the grid for generators including investors in DE. All generators must meet the same technical standards to participate in the power pool, including reactive power, frequency control, etc., and must bear the cost of real time metering equipment13 Rules have been established to allow larger DE investors to take advantage of seasonal, weekly, and daily electricity markets (including spot markets) with the argentine power pool, the Mercado Electrico Mayorista MEM, required to take and provide fair compensation for power fed into the grid

Domestic cogeneration

Wind

Hydro

DE in general Large-scale cogeneration

Financial

The electricity pool price is a fixed price reset every 6 months by CAMMESA and approved by the Energy Secretary to supply, demand, available capacity, and other factors. The seasonal price is maintained for at least 90 days. Generators are paid for dispatched energy and also for the capacity made available and approved by CAMMESA. Locational pricing rewards generators in areas of high congestion." CHP investors are charged a fixed rate based on capacity to participate in the power pool, but can opt out of the charge if they do not intend to sell excess power. The proposed Salvatori's law (article 9) grants income tax exemption for the total capital cost of "renewable energy projects" as well as value-added tax exemption and import duty exemption.0 Also accelerated amortization is established for renewable energy investments and investors are guaranteed a stable investment climate for a minimum of 20 years (article 10)

TABLE 2.11 (Continued)

Domestic cogeneration Onsite PV

Onsite wind Small hydro

DE in general

Large-scale cogeneration

Domestic cogeneration

Wind

Hydro

The PERMER project, cofinanced by World Bank, GEF, and local governments (national and provinces) promote investment in solar panels for rural households and small public buildings'1

Other

The Energy Act (Law No. 24065) of January 1992 provided the legal foundation for separating the electricity industry into three sectors: generation, transmission, and distribution. Transmission companies may charge a transmission tariff, but cannot own generation of distribution assets." Generation is fully competitive with each company paying a tariff for T&D. Distribution companies operate as geographic monopolies and are regulated. They may buy the energy needed to meet supply contracts from either the wholesale markets or bilateral contracts with generators. The wholesale spot market is managed by Wholesale Electricity Market Operator Company (CAMMESA)." DE owners of more than 1 MW capacity can apply to participate in the power pool marketb The Energy Secretariat (SE) has established a fund to support emergency expansion of the transmission system to relieve transmission constraints, it is unclear if the fund would be made available also to support strategic investment in DE to reduce constraints" There is currently a law that has been approved by the Senate and is awaiting approval from the Lower Chamber called the Law of Promotion of Renewable Energy Sources (Salvatori's Law). It declares that "the generation of electricity from renewable sources is the national interest" and once it is approved, it will require 8% of the overall national demand of electricity in 2013 to be met using renewable sources.0 It aims also to encourage national manufacturing capacity and use renewables as an economic driver for the country. Increasing human resources in the renewable energy field is an explicit goal of the legislation. Approvals for renewable energy projects from the National Executive Authority (PDE) are waived. Argentina has used feed-in tariffs and renewable portfolio standards6

There are three types of large users as defined by the 1992 law: major, minor, and private large users" all are guaranteed grid access a The New Electricity Supply Industry in Argentina and Chile, Mario Vignolo Facultad de Ingeniería—IIE MontevideoUruguay.

b Annex 12 Autogeneradores y cogeneradores version 06/0ct/1999, CAMMESA. c Bill no. S-1221/03.

d Personal communication with Jorge Bauer.

e http://www.renewables2004.de/pdf/policy_recommendations_final.pdf

biomass and onsite renewables will likely gain added attention and perhaps policy support as a result (Table 2.13).

Getting Started With Solar

Getting Started With Solar

Do we really want the one thing that gives us its resources unconditionally to suffer even more than it is suffering now? Nature, is a part of our being from the earliest human days. We respect Nature and it gives us its bounty, but in the recent past greedy money hungry corporations have made us all so destructive, so wasteful.

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