Value of distribution-level reactive power for combined heat and power systems

Abstract

As the U.S. electric grid continues to experience an increase in the penetration of distributed energy resources (DER), electric utilities are evaluating new approaches for utilizing DER to help cost-effectively maintain grid resilience and reliability. One such approach is to create a transactive market for DER to provide grid services, which are services required to support reliable grid operation. Though work has been done to understand some of the technical mechanisms of this type of market, gaps still exist in understanding the value and market opportunity of ancillary services at the distribution level. One type of ancillary service - reactive power - is of particular interest because of the theoretic ability to source from existing assets on the distribution network. This paper aims to build understanding of the value of procuring reactive power from one of these assets: Combined Heat and Power (CHP) systems. The value of procuring reactive power from a CHP system will be quantified by 1) characterizing CHP systems' capacity to produce and absorb reactive power, 2) assessing the annual cost of procuring reactive power from CHP systems, and 3) comparing the CHP system technical capability and cost to the utility's conventional solution: capacitor banks. This study finds that, while there are promising scenarios in which CHP systems can technically and economically provide reactive power in a comparable or slightly advantaged manner to capacitor banks, the overall statistics for the 29 CHP systems analyzed in the New York fleet do not conclusively demonstrate an advantage that supports outright replacement of capacitor banks. Further assessment of CHP systems as a complementary source of reactive power and site-specific case studies are recommended to inform the next step in the decision making process for determining whether this path should be pursued as a source of reactive power.