Distributed Generation Dispatch Optimization under Various Electricity Tariffs

The on-site generation of electricity can offer building owners and occupiers financial benefits as well as social benefits such as reduced grid congestion, improved energy efficiency, and reduced greenhouse gas emissions. Combined heat and power (CHP), or cogeneration, systems make use of the waste heat from the generator for site heating needs. Real-time optimal dispatch of CHP systems is difficult to determine because of complicated electricity tariffs and uncertainty in CHP equipment availability, energy prices, and system loads. Typically, CHP systems use simple heuristic control strategies. This paper describes a method of determining optimal control in real-time and applies it to a light industrial site in San Diego, California, to examine: 1) the added benefit of optimal over heuristic controls, 2) the price elasticity of the system, and 3) the site-attributable greenhouse gas emissions, all under three different tariff structures. Results suggest that heuristic controls are adequate under the current tariff structure and relatively high electricity prices, capturing 97% of the value of the distributed generation system. Even more value could be captured by simply not running the CHP system during times of unusually high natural gas prices. Under hypothetical real-time pricing of electricity, heuristic controls would capture only 70% of the value of distributed generation.