Microturbines-an economic and reliability evaluation for commercial, residential, and remote load applications

Most distributed self-generation operates base loaded and in parallel with the electric utility system: (1) to minimize peak loads; (2) to improve reliability; (3) to eliminate the need for reserve margin (standby); and (4) may or may not sell back excess generation. This paper examines the economics of distributed microturbine generation operating isolated from the electric utility system and having enough reserve margin to either match or improve the existing reliability of service provided by central station generation and the T&D system. This analysis shows the isolated operation of microturbines with a reserve margin can provide the same or a higher level of reliability as the electric utility, yet the costs can be lower. Sensitivity analysis for different investment costs, O&M costs, fuel costs, reliability, load shapes (load factors) and alternative fuels were performed and the economic comparisons are made in terms of c/kWh. This analysis shows a strong economic preference in applying microturbines to high load factor commercial loads. The cost of standby (from the utility) was found to be from .52 to 1.09 c/kWh greater than if the microturbine generation provided its own standby through a built in reserve margin.