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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs 3— Assessments of Individual Programs The OPT is home to a diverse array of renewable energy technology programs geared to R&D of commercially viable systems that meet DOE's general goal of producing clean, affordable energy. OPT's R&D mission is described in the following statement (DOE, 1999a): A key strategy in accomplishing OPT's mission is to establish and maintain a renewable energy technology base. The OPT works with industry, state and local governments, universities, and the DOE's national laboratories to support aggressive research and development in photovoltaic, concentrating solar, wind, geothermal, hydropower, and biomass power technologies and systems. Much of this research is cost-shared with industry, whose contribution is typically 30 percent-50 percent of a total project budget, particularly for system hardware development and demonstration. Industry's willingness to share the cost of R&D indicates its belief in the market potential of these technologies and its commitment to commercialize them. Thus, the goal of OPT is to develop promising renewable energy technologies to the point at which the private sector can evaluate their viability under anticipated market conditions. If warranted, industry will then assume a major responsibility for their deployment and commercialization. Because OPT's programs are at different stages in the R&D and deployment cycle, conducting quantitative, comparative evaluations is difficult. In this chapter, the committee evaluates OPT's programs based on presentations by DOE program personnel, laboratory staff, and representatives of industry and academia, as well as the experience and personal knowledge of committee members. The committee considered many factors: the current state of market acceptance and private sector interest; cost and performance profiles; technology development
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs track record (including gaps and perceived needs); prospects for continued improvement of the technology; and the likelihood of access to necessary resources. The committee considered how changing circumstances have affected and how continuing change is likely to affect the deployment of new technologies; considerations include regulatory trends, developing international markets, policy influences, and improved understanding of the environmental consequences of technology. Until now, electricity generation, transmission, and distribution in the United States favored large, central station systems to provide baseload capacity. But current conditions are creating a market favorable to smaller, modular, cleaner distributed-generation technologies. Economic criteria are becoming more stringent, and value considerations beyond the cost of power generation are beginning to influence the market. Given the broad uncertainties in the forces that will shape our shared energy future, and the growing need worldwide for reliable, affordable, clean energy adaptable to varying local and regional circumstances, we must build flexibility and adaptability into our electrical energy systems. A variety of technology options will reduce the risk of "energy" surprises. Therefore, OPT's plans should be sensitive to the likelihood of change and uncertainties. BIOPOWER PROGRAM Plans and Goals The Biopower Program is focused on advanced technologies for producing electricity from renewable biomass. DOE has also undertaken a bioenergy initiative to develop national partnerships with other federal agencies and the private sector. Integrated R&D on bioenergy will encompass existing R&D by DOE on transportation fuels, biomass power, forest products, and agricultural industry programs to encourage the development of a variety of fuels, power sources, chemicals, and other products (NRC, 1999; Reicher, 1998). Bioenergy has become a major initiative of the Clinton administration, and OPT should position itself to play an active role. The goals of the Biopower Program closely match the goals defined in the Comprehensive National Energy Strategy (CNES) (DOE, 1998a) and overlaps the missions of the DOE's Office of Industrial Technologies (OIT) and the Office of Transportation Technologies (OTT). A number of activities in OIT are focused on the agricultural and forestry sectors, and OTT has an office focused on the production of liquid transportation fuels from biomass resources. The ultimate mission of all three is to create either new competitive businesses or increase the global competitiveness of existing industries.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Program Priorities The Biopower Program has an aggressive agenda for developing and demonstrating advanced technologies to convert biomass resources to power. Currently, biomass power-generation projects are combustion-based, with gasification considered the technology of the future. By building partnerships through the Rural Development Initiative and sharing the risk of bringing new technologies to market in the major gasification projects, the research program had hoped to have an impact on the power market within the next 10 years. However, the wholesale changes in the electric utility industry have effectively created an opportunity for DOE to promote the use of biomass for electric power generation. State legislative and regulatory restructuring of the utility industry, driven by differential electricity prices and competition among states for new industries, has resulted in a new competitive market (EIA, 1999a). As of April 1999, 23 states had enacted legislation or promulgated regulations establishing retail competition programs (DOE, 1999b). The customers for the technology developed in the Biopower Program are changing, along with the criteria for success. According to the Annual Energy Outlook 1999, state renewable energy programs are expected to result in more than 630 megawatts of new capacity between now and 2011. Biomass is forecast to provide more than 130 megawatts of this new capacity (EIA, 1999b). In the transition period, substantial financial resources have become available at the state level (systems benefits charge funds) for promoting and implementing public benefit programs. Therefore, OPT has an opportunity to work with states to ensure that they are invested wisely. Public benefit programs are also focused on increasing energy efficiency, and in some states, the funds are being targeted to economic development by creating new business enterprises to meet the demand for renewable energy technology. This is an opportunity for OPT to coordinate its activities with state-level programs, helping the states to implement the results of their efforts and promote the deployment of OPT-developed technologies. The Regional Biomass Program (a component of the Biopower Program) addresses the needs and concerns of the general public. With financial support from the Regional Biomass Program, a majority of states now have a staff person devoting at least some time to biomass issues. By carefully nurturing these liaisons, the Biopower Program could learn more about state-level issues related to the development of biopower and, in the long run, create allies at the state level. The federal government can also promote advanced biopower technologies by using them to provide electricity for federal government facilities. Although state organizations will be the primary near-term partners for the deployment of renewable energy technologies, the development and commercialization of new technologies will require partnerships with research institutions and private industry. For these relationships to be productive, OPT will have to
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs overcome many barriers. Some potential partners have cited the administrative burden of doing business with DOE, which, they say, takes time and resources away from the primary R&D effort as a barrier to their participation. DOE's annual budget uncertainties also make it difficult for contractors to plan ahead and can ultimately cost the project money. Reaching the deployment targets for biopower technologies will require a concerted effort by OPT to change the perception that the combustion of wood, waste wood in particular, is not a "green" (i.e., environmentally friendly) technology. OPT will have to educate the environmental community and the public at large to the idea that the growth of energy crops and the use of waste feedstocks can have a variety of positive environmental effects. For example, an important attribute of biomass as a renewable feedstock is that it will have minimal, if any, impact on global climate change. Building support in the environmental community for the use of biopower will require focusing attention on strategies to maximize the role of biopower in mitigating global climate change without adversely affecting biodiversity because areas used for energy crops must be cleared periodically for harvesting (Beyea, 1999). Bioenergy systems can also potentially help protect watersheds. In fact, in some locations, the environmental benefits of biopower may be the driving force behind the initial establishment of bioenergy plantations. Convincing states and the public, however, will require sound research and analysis of the environmental consequences of various biopower strategies and the dissemination of the results to stakeholder groups (Peelle, 1999). Research Issues Partnerships with industry, national laboratories, and universities can provide the necessary skills to move technologies or concepts from fundamental research through the stages of development to the commercial market. Through well chosen partnerships, for example, research capabilities could be focused on meeting the needs of industry (PCAST, 1997). DOE's Bioenergy Initiative for coordinating DOE activities in this area could be extended to other federal agencies with similar interests, such as the U.S. Department of Agriculture (USDA). In addition, OPT could undertake an assessment of biomass resource end-uses from electric power generation to fuels and chemicals production and use the results to set priorities for the development of biomass resources for targeted enduses. The Biopower Program could also promote the collateral benefits of biomass crops, such as providing wildlife habitat, reducing greenhouse gases, and others. The major thrusts of the Biopower Program are focused on meeting three strategic targets: (1) increasing opportunities for rapid near-term deployment of cofiring biomass in existing boilers; (2) linking energy crop production and conversion via gasification and other advanced process technologies; and (3) establishing a role for biopower in the distributed power-generation market through the development of modular systems. Five primary technical barriers have been
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs identified: biomass resource productivity; materials handling; biomass conversion; combustion contaminant reduction; and integration with current power-generating systems. Research on modular systems is targeted to the needs of the distributed power-generation industry in the United States and international markets. Engineering design and prototype construction are planned for projects that successfully complete the feasibility stage. Because a large financial commitment will be necessary to bring multiple new technologies to the market, DOE could establish a center of excellence for bioenergy to house these projects. Based on budget presentations, the committee was unable to determine if the Biopower Program has considered the need for a long-term partnership with industry to develop the technologies selected for scale-up or the impact of such a partnership on the overall program budget. Given the dramatic changes in the power generation business and the new customers for OPT technologies, the Biopower Program should focus on developing the biomass resource base, understanding infrastructure needs, and identifying market opportunities. Commercial Prospects and Market Barriers A core responsibility of government is to strengthen America's educational system in science and technology to achieve societal goals for the twenty-first century (OSTP, 1997). The creation of a strong market for business development in biopower technology will require a substantial investment in education and training. The greater the investment in postgraduate education, the higher the rate of formation of new firms (Reynolds et al., 1999). Public awareness of the technologies and applications of biopower systems will ultimately contribute to a sustainable biopower industry. In the near future, however, the transition to a competitive market will keep the power industry in flux. The cofiring of coal and biomass would immediately reduce the amount of carbon emissions from coal-fired plants by substituting a renewable energy feedstock for some of the coal. Cofiring with biomass could potentially replace at least 8 GW of the U.S. generating capacity by 2010 (DOE, 1997). As an indigenous resource, including biomass in the power generation mix could reduce the risks associated with the fluctuating prices and supplies of fossil fuels (EPRI, 1999). However, successful commercialization will require that the initial capital cost of biopower facilities be reduced, that biopower be integrated into existing power-generation facilities, and that feedstock costs be reduced through coproduction or the use of waste streams as biomass. Every power-generation site can be viewed as a profit center, but introducing new technology into the system will require creativity and economic incentives. As the price for electric power goes down, anticipated profit margins are shrinking and new generating capacity today is dominated by cheap, abundant natural gas
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs (EIA, 1999b). Therefore, the highly competitive market has reinforced the conservative atmosphere of the power plant industry (Neuhauser, 1999). The wood pulp and paper industry is a major generator and consumer of electric power. Black liquor combustion is a special case in which a boiler is designed to recover solids for recycling as pulping chemicals. Black liquor recovery boilers (Tomlinson boilers) represent a mature but inefficient technology that has raised safety concerns (Overend, 1999). Cleaner and more efficient black liquor gasification is an area of research that the industry could benefit from and contribute to in proportion to the long-term value of the industry. R&D alone will not be sufficient for launching new technologies in the market (PCAST, 1997). A comprehensive understanding of the market will also be necessary for the successful adoption of biopower technologies, including a clear understanding of customers' needs and the ability of biopower systems to compete with existing systems in terms of price and performance. So far, the Biopower Program has not effectively promoted biopower systems as viable alternatives to traditional energy sources. Biopower can address the long-term societal needs for mitigating global climate change as well as near-term needs to protect the environment and to make use of industrial biomass wastes. The long-term societal benefits are difficult to quantify, however, and meeting them will require ongoing federal support. However, working with the private sector to capitalize on the near-term opportunities of biopower to reduce environmental effects and address economic concerns will increase the stakeholder base for the commercial use of biopower systems. "Developing and Promoting Biobased Products and Bioenergy" (Executive Order No. 13134), issued by the President on August 12, 1999, outlines the importance of developing a comprehensive national strategy for bringing biobased products and bioenergy into the national and international market (OPSWH, 1999a). Two subsequent bills in the U.S. House of Representatives, (H.R. 2819, Biomass Research and Development Act of 1999, and H.R. 2827, National Sustainable Fuels and Chemicals Act of 1999) provide funding to support the initiative and identify the potential value to the rural economy of raising biomass crops as feedstocks for electric power, liquid fuels, and chemicals. Support for the use of renewable energy by federal agencies is included in Section 204 of the Executive Order, "Greening the Government through Efficient Energy Management," which directs that each agency increase the use of renewable energy at its facilities by implementing renewable energy projects and by purchasing electricity from renewable energy sources (OPSWH, 1999b). With continued investment by government in energy technologies and crops, U.S. farmers could transform a significant portion of our fossil fuel-based economy to a biomass-based economy (Gonzales, 1999). Companies that understand how to take early advantage of a biomass-based economy by successfully selecting and implementing energy options can create a competitive advantage
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs for themselves as valuable as the advantage to the company that developed the technology (Iansiti and West, 1997). Discussion Of all the technologies the Biopower Program is investigating, cofiring is the one considered most likely to lead to the near-term integration of research results. As deregulation of the utility industries continues, generation assets in many states are being sold, and the business priorities of the new power companies are changing. A challenge for OPT is retaining the interest of the new owners of coal-fired facilities in the development of cofiring technologies. Cofiring coal with biomass energy crops promises environmental as well as financial benefits to new and old participants in the electric power-generation industry. The Biopower Program's R&D program on modular systems is targeted toward the distributed power-generation industry in the United States and abroad. Engineering design and prototype construction are planned for projects that successfully complete the feasibility stage. Bringing multiple new technologies to market will require a large financial commitment, however, and cost sharing with industry should be in proportion to the value industry would receive from the project. Based on budget presentations during this study, the committee was not convinced that the Biopower Program has considered the need for long-term partnerships with industry for scale-up, or for determining impacts of such partnerships on the overall program budget. Even though the Biopower Program already has two large demonstration projects (Vermont Gasification and Black Liquor Gasification), they represent only 16 percent of the current budget and are focused on the midterm commercialization of biomass power. Long-term partnerships with industry must be considered to ensure that life-cycle implications of biopower technology can be evaluated. The Biopower Program's Rural Development Initiative is a unique approach to integrating biomass supplies and biomass conversion for end-use technologies. The Regional Biomass Program has successfully expanded the demonstration of energy crops and provided a link to traditional forest and agricultural communities at the state level. As a parmer in the development of a new biomass supply infrastructure, OPT should focus on developing creative mechanisms to encourage businesses in this area. A common goal of all Biopower Program projects is meeting high environmental standards. Because gasification of biomass resources will be the primary technology for meeting this goal in the long term, the Vermont Gasification Project directly supports this goal. Another project, the Rural Development Initiative, has an outreach program to educate the public about the environmental costs and benefits of biopower projects. The Rural Development Initiative is, in fact, a good example of how multiple objectives can be integrated into a single program. A positive attribute of this project is that a wide range of stakeholders
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs are sharing the financial risk of the development of a unique concept from development to commercialization. A negative aspect is that, because it is such a large component of the Biopower Program and has developed a large cumbersome bureaucracy, the Rural Development Initiative as a whole cannot respond quickly to new issues and must rely on individual projects to respond to the changing environment (OPT, 1999a). OPT management should find ways to protect the fiscal resources of the Rural Development Initiative and minimize the bureaucratic burden on project teams. For the long term, the development and use of dedicated energy crops is an important element of the overall Biopower Program. Several projects in the Rural Development Initiative are working to introduce energy crops to the agricultural sector. For example, the Bioenergy Feedstock Development Program at Oak Ridge National Laboratory is focused on long-term research on the scale-up of technologies developed by other projects. Introducing new crops to the agricultural community will require a long-term commitment to crop improvement, however, and this will require close cooperation with the USDA. Findings and Recommendations Finding. In testimony supporting the passage of H.R. 2819 and H.R. 2827, the value of bioenergy systems to the rural economy and the potential of biomass crops as a feedstock for electric power, liquid fuel, and chemical production were elaborated. Recommendation. The U.S. Department of Energy (DOE) should consider establishing a center of excellence for bioenergy to bridge internal gaps in the Office of Energy Efficiency and Renewable Energy and create a strategic partnership with the U.S. Department of Agriculture for the development of crops and biobased products. DOE and the national laboratories should assist companies in evaluating, selecting, refining, and integrating bioenergy technologies and opportunities. Finding. High-quality waste biomass feedstocks offer an immediate opportunity for bringing competitive biopower to the market. Recommendation. The Biopower Program should highlight the role of waste feedstocks in the current and future biopower market and should leverage existing public benefits for the development and deployment of other renewable energy technologies. This will require an outreach program to engage new participants in the power-generation industry, regional and state program administrators, and local environmental communities.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Finding. The pulp and paper industry is a major user and generator of electric power. Recommendation. The Office of Power Technologies should consider forming partnerships with the pulp and paper industry to bring cleaner, more efficient black-liquor gasifiers to commercial use. The paper industry should be solicited to commit financial resources to the endeavor proportionate to the long-term value of the technology to the industry. Finding. The development and commercialization of new technology will require partnerships with research institutions, private industry, and state organizations. Many of these institutions say, however, that the administrative burden and cost of doing business with the U.S. Department of Energy may exceed the value of the funding support. Annual budget uncertainties also make it difficult for a contractor to plan ahead, which ultimately costs the project money. Recommendation. The U.S. Department of Energy should develop ways of selecting, contracting, and managing projects that reduce the administrative burden on contractors, which takes time and resources away from projects. Multiyear budgeting of projects is one alternative. Finding. A major economic barrier to the increased use of biomass is the relatively high capital cost of biopower plant construction. Near-term markets are dependent on incentive programs and policies that promote renewable energy. Recommendation. The U.S. Department of Energy should define the strategic path to achieving the mission of the Biopower Program, including balancing long-term financial commitments to technology and the flexibility to take advantage of opportunities that arise during the transition to a competitive electric power-generation market. As a first step, the federal government should take the lead in adopting advanced biopower technologies to promote commercial acceptance. As a major purchaser of electric power, government sites could provide a baseline market for electricity from biopower and reduce the risk of power plant construction. Finding. One of the inherent problems of the Biopower Program is its inability to describe its customer base and how biopower could meet its customers' needs. Recommendation. The Biopower Program should work with relevant components of the U.S. Department of Energy (DOE) Offices of Energy Efficiency and Renewable Energy and the DOE's Office of Science (and coordinate with the U.S. Department of Agriculture and the forest and agriculture industries) to
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs develop a road map for bioenergy research and development activities and to assess its potential value to customers and its customer base. Finding. During the restructuring process of the electric utility industry, many states have established public benefit research funds for the development and deployment of renewable energy technologies. In many cases, fund administrators have minimal experience working with the U.S. Department of Energy and may not be aware of the Biopower Program. Recommendation. The Biopower Program should develop a strategy for working with the state public benefit programs to leverage funds and assist in the development of effective initiatives. The Biopower Program could use the Regional Biomass Program more effectively to deploy technology and develop local links for the eventual commercialization of bioenergy crops. The Regional Biomass Program is unique in that it provides a direct connection to state-level initiatives focused on biomass, as well as a link to local environmental communities. Finding. During the transition to a competitive power-generation industry, many coal-fired power plants are being sold. The rules of the game axe changing as the industry evolves. Designing and implementing an effective research program requires understanding the forces driving all participants in the industry. Recommendation. The Biopower Program should form new alliances with the competitive side of the power-generation market and continue to facilitate the deployment of cofiring coal-fired power plants with biomass from energy crops. The Biopower Program should articulate the financial and environmental benefits of cofiring to the new players in the power-generation market and develop partnerships with them to continue the use of biomass-coal cofiring. Power producers should share in costs proportionally to the value they will receive from the project. Finding. Long-term opportunities for biomass include energy farming and use as feedstock for the production of a variety of chemicals and other products. New large-scale farming of biomass will affect the agricultural sector, forestry, and land-use policy and may affect biodiversity in areas where energy crops are periodically harvested. Research on genetically modified, efficient biomass crops may facilitate the use of biomass as feedstock but may also raise serious concerns among environmental groups. Recommendation. The Biopower Program and Bioenergy Initiative should engage the U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy, DOE's Office of Science, the U.S. Department of Agriculture (USDA), and the environmental community in planning sound long-term research and development programs for promoting the environmentally responsible use of
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs biomass feedstock. The Biopower Program should also take advantage of USDA's tracking of components of the resource base so that early deployment of new biocrops can be monitored to enhance their overall environmental performance. HYDROGEN RESEARCH PROGRAM Program Plan and Goals The Hydrogen Research Program is intended to develop cost-competitive technologies that will improve the quality of the environment and add hydrogen as an energy carrier and energy storage capability to the U.S. energy system. The Matsunaga Act of 1990 (P.L. 101-566) and the Hydrogen Future Act of 1996 (P.L. 104-271) mandated R&D programs that would result in the use of hydrogen for ''industrial, residential, transportation, and utility applications." DOE's Hydrogen Research Program, under OPT, has focused on the production, storage, and use of hydrogen, primarily in integrated and distributed fuel-cell systems that can coproduce power, heat, and hydrogen gas. Because DOE recognizes that the technologies and infrastructure for producing and using hydrogen on a commercial scale are probably years away, the hydrogen program has focused on transitional strategies for producing hydrogen from natural gas as a transportation fuel and improving the production of low-cost hydrogen. OPT's formal strategic plan for the Hydrogen Research Program outlines short-term, midterm, and long-term goals, including the development of a reversible hydrogen fuel cell compatible with other renewable energy systems being developed by OPT. The plan includes R&D on components and subsystems for systems that combine renewable electric power-generation technologies with hydrogen fuel cells. Program Priorities DOE has established several programs for hydrogen in response to the Matsunaga Act and Hydrogen Future Act, and some of these programs have overlapping research agendas. OPT's Hydrogen Research Program considers its mission to be the development of cost-competitive hydrogen technologies and systems that will reduce the environmental impacts of energy use and enable the penetration of renewable energy technologies into the U.S. energy mix. The Hydrogen Research Program has adopted the following strategies to achieve its mission (DOE, 1999c): Expand the use of hydrogen in the near term by working with industry, including hydrogen producers, to improve efficiency, lower emissions,
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Table 3-2— State Funding for Renewable Energy Development and Deployment State Total Funding 1998-2010 (in $ millions) California 540 Connecticut 275 Illinois 50 Massachusetts 332 Montana 10 New Jersey 258 New Mexico 40 New York 15 Pennsylvania 31 Rhode Island 10 Total 1,561 Source: Wiser et al., 1999. will largely determine whether renewable energy sources are developed primarily as an element of the competitive market or as a public policy. As the country moves toward market-based governance, competitive markets will be used to implement public policy. DOE must, therefore, consider how markets can be leveraged to achieve the goals of the CNES. States are one group of players that is taking on a more direct role in the development of a renewable energies industry. Renewable portfolio standards and/or SBCs (system benefits charges) are part of the restructuring of the electric industry in 13 states. SBC funds, which are intended to continue funding public benefits programs, generally include improvements in efficiency and renewable energy as part of the mix. Thus, the renewable energy technology community faces a new challenge. The infusion of almost $1.6 billion through 2010 into technology development and deployment (see Table 3-2) is an opportunity that will probably not be continued unless significant renewable energy facilities have been installed by that date. DOE is in a position to work aggressively with the administrators of these funds to develop program design, coordination, and evaluation. Coordinated technology development and commercialization will enhance the effects of OPT's programs and benefit U.S. companies. In fact, OPT programs will probably not reach their MW capacity goal unless they work with state programs. Changes in Technology Requirements The substitution of bulk power markets for centrally planned, regulated utility supplies in many regions of the country raises questions for research about the
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs design and operation of electricity markets, the coordination and dispatching of supplies, and increases in the carrying capacity of existing transmission corridors. The restructured institutions responsible for the supply, coordination, and governmental oversight of the new market have eliminated traditional sources of, and responsibilities for, R&D support. At the same time, the need for better analytic techniques, both to oversee market performance and to enhance systems operation, has increased substantially as a result of the creative, frequently unpredictable, and novel behavior of new competitors (DOE, 1999h). Overseeing a market for a unique commodity, conveying electricity through a complex network, and ensuring system reliability are public goods that require publicly supported R&D. The newly organized independent system operators (ISOs) across the country are responsible for ensuring open access to transmission facilities for electric power generators, and FERC is responsible for commercial oversight; but the private sector now has few incentives to support R&D on renewable energy technologies. Therefore, R&D can and should be supported by DOE. In addition to improving the reliability and efficiency of the power system, increasing the capacity and improving the operation of existing electric transmission facilities would also yield benefits for some components of OPT's R&D portfolio. For example, geothermal, CSP, wind farms, and hydroelectric power generating sources are all location specific and usually far removed from the centers of electricity demand. Thus, a robust, well functioning transmission grid will be essential for the successful implementation of these technologies. Potential opportunities for R&D include: (1) the development of new operating practices with flexible control for transmission systems (FACTS) devices; (2) the development of advanced computer simulations of operating consequences; (3) the development of high-speed, remote sensing and communication of component conditions; and (4) the development of real-time simulations of emerging conditions and preferred operating responses. Integrating these advances into simulations of new market structures, including practices in which market participants may make decisions that may not be best for the transmission system (usually referred to as suboptimal decisions), would facilitate trial and error experimentation through simulation rather than through risky, on-line ''experiments," which are likely to slow innovation. The transmission and distribution system is a network of connected systems, the transmission system delivering bulk power at high voltages to various regions of the country and the distribution system, after suitable voltage reductions, carrying the electricity to a wide variety of commercial, industrial, and residential end users. Some distributed technologies are likely to be implemented at the very end of the line (i.e., at the local level of the electric system). At this level, institutional, technological, and operating uncertainties about the interconnection of distributed technologies will have to be resolved.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Findings and Recommendations Finding. Compared to the wider understanding of the electrical operating characteristics and dynamic behavior of the bulk electricity transmission network, the understanding of the operating characteristics and behavior of the electric distribution system is minimal. Recommendation. The U.S. Department of Energy (DOE) should evaluate the effects of restructuring on the U.S. electric distribution system. Because no other single institution has adequate incentives to undertake this evaluation, DOE should support research on the system behavior, operation, and control of the electric distribution system. The successful implementation of distributed power-generating technologies (which is the essence of the Office of Power Technologies' programs) will depend on a proper evaluation and widespread understanding of the evolving electricity distribution system. Finding. Restructuring will challenge the Office of Power Technologies (OPT) to respond in a logical, coordinated way to market developments. If each OPT program is left to respond to restructuring on its own, precious resources will be wasted in duplicative efforts that will not satisfy overall market needs. Recommendation. The Office of Power Technologies must maintain its policy analysis capabilities and coordinate resources from its various technology programs to respond to changes in the energy sector. Finding. In the restructured wholesale market for electricity, electric power will be treated as a commodity. The existing electric transmission networks were not designed for such a system. Recommendation. The U.S. Department of Energy should conduct research to ensure the reliability and efficiency of the electric transmission networks in a restructured electricity market. DISTRIBUTED ENERGY RESOURCES Many of the technologies supported by DOE programs, including solar, small wind, storage, fuel cells, and advanced natural gas turbine systems will enter the market by interconnecting to the distribution system. Technologies supported by DOE programs in the last decade, which are now entering commercial markets, are encountering a host of technical and commercial barriers. In the developing market, the value of distributed resources goes beyond the price of electricity and includes reliability, power quality, combined heat and power, environmental quality, and other factors.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Barriers to new technologies include a wide range of difficulties posed by market shifts to smaller economies of scale. Interconnection is a larger percentage of project costs for smaller emerging technologies than for independent power projects with larger, more established technologies. In some cases, the same transmission-scale requirements for interconnecting large sources are required for new smaller technologies. The reordering of the grid, as well as a need for new rate-making practices to accommodate new distributed-generation technologies, will create significant regulatory and business challenges. Like the introduction of customer-owned telephone equipment in the 1970s, the transition to a distributed power system will require both technical engineering protocols for interconnection and new regulatory and commercial practices to open the market to new technologies. The grid of the future should be able to accommodate the entry of innovative distributed energy technologies. Research in support of long-term, reliable grid operation, including the effect of interconnecting distributed energy sources to the transmission and distribution system, should be included in DOE's responsibilities. Distributed power technologies now entering the market face significant barriers to interconnection at any commercial scale. DOE is already addressing the following issues: impact of large market penetration by distributed power systems on the power distribution system the absence of standards for interconnection the absence of national building and safety codes institutional and regulatory barriers changes in power distribution system technology and operations to enable the benefits of distributed power to be realized In FY99, OPT undertook the following activities related to interconnection: strategic research; initial five-year strategic planning; development of a distributed power road map; estimates of environmental and economic benefits of distributed power R&D on system integration; development of national interconnection standards through the Institute of Electrical and Electronics Engineers (IEEE) Standards Coordinating Committee 21 (SCC21) P1547 Distributed Resources and Electric Power Systems Interconnection Working Group study of interconnection barriers; a plan for participating in state regulatory processes; convening of a workshop OPT is considering the following future activities: two or three concept studies for operating the distribution system with
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs distributed power; development of a technology R&D road map for distributed power R&D on system integration; continued development of national interconnection standards through IEEE SCC21 P1547; hardware tests to verify performance of interconnection standards; modeling and analysis for distributed power system integration tests to identify safety, power quality, interconnection, and environmental issues related to the widespread deployment of distributed generation and storage; investigation of practicality and value of modular power system interface units to provide compatibility and interconnection for distributed power (referred to as "plug-and-play" compatibility) support for the development of model ordinances and national building and safety codes for distributed power; analysis of the impact of policies and regulations on the growth of the competitive market for distributed power; development of methodologies and tools to facilitate stakeholder decisions on distributed power; providing technical assistance to states and other government agencies In response to changes in the electricity industry, OPT is reorganizing its own structure and has established the Distributed Energy Resources Task Group, under the Power Delivery Program, to focus on distributed power issues. Discussion One of DOE's most important activities related to distributed power is working with industry to develop uniform interconnection standards. Working through a collaborative industry organization coordinated by DOE through the National Renewable Energy Laboratory, the IEEE established a Standards Coordinating Committee to develop consensus standards for the interconnection of distributed technologies, including energy storage technologies. Ordinarily, developing standards takes at least five years. Under DOE's leadership, this industry-supported group is working with a two-year time frame. DOE is expected to provide resources, leadership, and technical support. The same kind of process will be necessary to establish national standards for the next tier of institutional issues, which range from the prohibition of interconnecting distributed technologies under state and local codes to a patchwork of permitting, tariff, and contract practices that are impeding the emergence of new smaller-scale technologies, despite the growing market demand for them. Other institutional issues are effective, reliable operation of the power grid with distributed power technologies, as well as protocols for grid operations and public access to information. National standards and coordinated approaches to these institutional issues will be necessary to ensure that the competitive market will be open to new distributed power technologies.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Institutional issues related to distributed power cover a range of technologies, from improvements in energy efficiency to renewable energy sources to fossil fuels and combined heat and power generation. The effects of the industry trend towards distributed power on renewable energy technologies and on overall energy policy are not clear. For instance, if expanded distributed power markets advance efficient and renewable technologies, the result will be a cleaner energy system. If cleaner technologies lose ground to diesel-powered or other fossil-fuel competitors, the environmental effects will be very different. Local building codes and environmental permitting can determine the market outcome. However, current policy debates on these issues are not informed by systematic analyses of the impact of market penetration by each technology. DOE has a vested interest in the outcome of these debates as they relate to DOE technologies. The national interest, however, spans DOE programs, other government and private programs, FERC regulations, and Environmental Protection Agency regulations. Findings and Recommendations Finding. Successful commercialization of many of the technologies under development in the Office of Power Technologies will require that national markets operate under national standards for grid interconnection and reliability that can accommodate these new technologies. However, the U.S. Department of Energy has not yet addressed initial technical questions about optimal grid configuration and engineering for multiple supply sources. Recommendation. The U.S. Department of Energy should undertake research and development to determine standards for uniform operating protocols, permitting standards, and regulatory requirements that will be conducive to the development of national markets for renewable energy technologies. Finding. The technologies under development in the Office of Power Technologies face competition in the marketplace from diesel and other fossil-fuel powered technologies for backup energy or specific energy supplies in distributed resource applications. Neither the environmental impacts of these scenarios nor standards for estimating the impact of market penetration of various technologies has been analyzed. Recommendation. The Office of Power Technologies, in cooperation with the Environmental Protection Agency, should analyze the impact of diesel and other fossil-fuel powered technologies for backup or specific energy supplies and the impact of renewable-energy distributed resources. Finding. The Office of Power Technologies has no strategic direction or plan for distributed resources.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Recommendation. The Office of Power Technologies (OPT) should develop a technology road map for distributed technologies to define the role of, and program goals for, distributed power systems in restructured electricity markets. OPT could then define the potential benefits of expanded markets for distributed power technologies and an analysis for policy decisions on distributed power markets. Finding. The requirements for, and impacts of, the widespread adoption of distributed resources on distribution system networks have not been established. Recommendation. The Office of Power Technologies (OPT) should continue to support the development, testing, certification, and adoption of interconnection standards and interfaces to support the safe, reliable, economic grid connection of distributed power technologies that can be used in all markets in the United States. OPT's current efforts to develop uniform technical interconnection standards should be expanded to include the modeling, verification, and implementation phases of the technical interconnection programs. Recommendation. The U.S. Department of Energy should support the development of operating parameters, monitoring, and information systems necessary to operate a distribution system with distributed power generation interconnected at multiple locations. The Office of Power Technologies should work with industry to develop monitoring and information systems for reliable operation of the national distribution grid with distributed power technologies. Findings. Traditionally, standards for the interconnection of distributed generation resources with distribution grids were established by electric utility companies based on locally defined requirements and regulations. Recommendation. The U.S. Department of Energy (DOE) should facilitate the development of commercial, institutional, and regulatory standards for the purpose of opening national markets to distributed power technologies. Local variations in standards, ranging from building codes and environmental permits to utility practices and tariffs, require national coordination for national markets. DOE should expand its efforts to develop technical interconnection standards and national energy strategies that address institutional and operating barriers to new technologies. Finding. Many programs in the Department of Energy besides the Office of Power Technologies (as well as other government programs, the Environmental Protection Agency, and the Federal Energy Regulatory Commission) have an interest in distributed resources for electric power generation.
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs Recommendation. The U.S. Department of Energy (DOE) should coordinate its assessment of the market for distributed power with all relevant DOE programs, other government programs, the Federal Energy Regulatory Commission, and the Environmental Protection Agency. INTERNATIONAL ISSUES One reason emerging technologies produced by U.S. businesses have not been widely adopted internationally is the lack of public/private strategies to assist them, including interagency partnerships with business to facilitate entry into international markets, establish interpersonal public/private networks in other countries, and demonstrate the long-term commitment of U.S. business interests. Although deployment is one of DOE's goals, it is not a funded mandate. The international market will offer a substantial opportunity for renewable energy technologies in the next few decades, especially in countries with higher electricity prices than the United States and regions that do not have transmission grids. Most foreign competitors have established large public/private teams to encourage international business, and the lack of these prolonged cooperative efforts has created enormous difficulties for U.S. business abroad, particularly in the area of energy supply technologies, which are considered quasi-public activities by most developing countries, even in restructured economic environments. Competing foreign industrial interests routinely send teams to secure business in developing countries that include private sector manufacturers, architect-engineer designers, consultants and bankers, as well as representatives of that nation's export-import bank, government officials who may offer grants-in-aid to develop supporting infrastructure, and government R&D experts to provide education and training for the successful operation of the technology. By comparison, U.S. businessmen are frequently solo agents. American entrepreneurs are also often hampered by a domestic political mythology that divides all activities into public and private categories, whereas, in the international arena, public/private partnerships are the rule for competing effectively in the energy supply arena. U.S. public/private teams must be consistently staffed with capable decision-makers who can establish long-term relationships with public officials and private customers. Those relationships are essential to ensuring that the target nation consistently adheres to established codes and regulatory standards and sets nondiscriminatory prices and practices for U.S. vendors. Equally important, the committee believes OPT could play an important role in providing the technical backup and training for the cost-effective operation and maintenance of U.S. technologies abroad. The availability of technological support would not only demonstrate the long-term commitment of the United States and its businesses, but would also establish the interpersonal networks and trust to facilitate the continued penetration of U.S. businesses. These ongoing relationships would
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Renewable Power Pathways: A Review of the U.S. Department of Energy's Renewable Energy Programs ease the formation of future relationships and would encourage more U.S. business activity in emerging markets. Participation of the OPT research community in international technology teams would offer researchers the satisfaction of witnessing the successful outcome of the R&D process (the use of emerging technologies) and would sensitize team members to the goals and needs of developing regions. As a result, research priorities might be modified to increase the probability of U.S. technologies being used in emerging markets worldwide. These systems management strategies, which would greatly enhance U.S. international business penetration, would also be helpful to OPT for the systematic development of coherent R&D strategies and for identifying and developing technologies for future domestic and international markets. However, it must also be recognized that the development of international markets for renewable energy technologies will require a stronger domestic market base. Foreign companies have made inroads into international markets based largely on the strength of their own national markets. Thus, deployment and potential gains for the domestic industry should be coordinated with a strategy for meeting international needs. If renewable energy technologies truly merit a place in the domestic energy future, then the development of a strong domestic market must be a priority. REFERENCES Beyea, J. 1999. Biopower and the Environment. Presentation by J. Beyea, consultant and chief scientist (retired), National Audubon Society, to the Committee for the Programmatic Review of DOE Office of Power Technologies, National Academy of Sciences, Washington, D.C., May 10, 1999. Birkmire, R. 1999. Thin-Film Photovoltaics: Potential and Critical Issues. Presentation by R. Berkmire, University of Delaware, to the Committee on Programmatic Review of the DOE's Office of Power Technologies, National Renewable Energy Laboratory, Golden, Colorado, June 9, 1999. Brookshier, P., and J. Flynn. 1999. Hydropower Program Briefing. Presentation by P. Brookshier and J. Flynn, U.S. Department of Energy, to the Committee on Programmatic Review of the DOE's Office of Power Technologies, National Research Council, Washington, D.C., July 22, 1999. DOE (U.S. Department of Energy). 1997. Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond. Washington, D.C.: U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. DOE. 1998a. Comprehensive National Energy Strategy: National Energy Policy Plan. DOE/S-0124. Washington, D.C.: U.S. Department of Energy. DOE. 1998b. Strategic Plan for the DOE Hydrogen Program. January 1998. Washington, D.C.: U.S. Department of Energy. DOE. 1999a. The Office of Power Technologies: About OPT. Available on line at http://www.eren.doe.gov/power/about.html#mission DOE. 1999b. Supporting Analysis for the Comprehensive Electricity Competition Act. May 1999. DOE COE/PO-0059. Washington, D.C.: U.S. Department of Energy. DOE. 1999c. Office of Power Technologies Hydrogen Research Program. Available on line at http://www.eren.doe.gov/power/hydrogen.html
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