PEAKING POWER IN THE USA

Growing electricity demand across the USA is raising interest in distributed generation, particularly for peak capacity requirements. Wrtsils new PeakingPlus solution for the US market addresses the current operational and commercial needs of power generators and power marketers. Across many regions of the USA, high electricity demand along with insufficient generation and transmission capacity has resulted in brownouts, blackouts, equipment failures, product losses and very high electricity prices at peak periods in the past several years. These occurrences were recently covered by the international press for outages in San Diego, Chicago and New York, but many other metropolitan and rural areas were also affected as power was redistributed to meet needs. In fact, the summer peak demand for electricity usage has grown substantially. Additions of new generating capacity have not kept pace with demand, leading last summer to pricing abnormalities. This was reflected in the high prices of wholesale power bought and sold in the spot market. Prices normally in the range of $25/MWh skyrocketed to as much as $7,500/MWh during a period of high heat and storms that damaged power lines and generating stations. The situation is not likely to improve in the immediate future. Most projections indicate an annual increase of about 2% in the 700,000+ MW electrical demand in the USA during the next 15 years. The Northwest and Southwest regions have much higher levels of load growth. Annual capacity would increase between 16,000 and 22,000 MW if the retirement of older generating plants is considered.

Generation and transmission under strain

New capacity can generally be placed in three categories of use: Peaking, Intermediate and Base Load. 1. Peaking generation accounts for approximately 20% of the installed capacity, and approximately 3% of the energy consumed. The demand for peak power to cover load growth currently exceeds the estimated 4,000 MW/year in new generation. Typically, this capacity is dispatched less than 1,500 hours per year. 2. Intermediate generation is required to meet daytime increases in demand. This generation represents approximately 30% of installed capacity and 17% of consumed energy. This capacity is utilized between 1,500 and 4,000 hours per year. 3. Base load generation is constantly required to satisfy customer needs. It represents nearly 50% of installed capacity and 80% of consumed energy. Most base load generation comes from coal, nuclear and hydro plants. Most of the projected base load generation is planned with combined cycle gas turbines.

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Typical Midwest region power pricing curve during recent years. The shortfall of reliable power when and where it is needed is the result of several factors. For example, the strain on the transmission and distribution network is growing and service interruptions from growth in electricity demand are increasing. There is a growing need for improved power quality and reliability to meet the requirements of advanced energy-using systems that are energizing the new economy. And increased land use restrictions make it difficult to obtain right-of-ways for transmission lines and to locate new generating capacity. Add to the above the uncertainties surrounding utility restructuring. Some believe that utilities will not invest in generation during the 5-6 years that it will take to restructure electricity across the USA. This will result in declining reserve margins, while prices will remain where they are or even escalate. Open access and industry restructuring, both at the wholesale and retail levels, have caused demand for transmission capacity to soar. The nations transmission grid is struggling to keep pace with the industrys rapid growth. The existing system was not designed for mass transportation of electricity. We can already see the effects of this phenomenon in California, where stagnant capacity additions and an overloaded grid have left many parts of the State experiencing brownouts and blackouts in recent months.

Soaring demand for distributed generation

All of theses factors have greatly increased interest in and installation of distributed generation, particularly for peak capacity requirements in the Mid-West, West Coast, and several East Coast metropolitan areas. Municipal utilities are beginning to take charge of their capacity requirements by balancing wholesale capacity with self-generation. Power marketers are entering into energy conversion agreements, typically in blocks of 50 and 100 MW with merchant generators to establish a market hedge for the potentially lucrative peak consumption periods. At any rate, the construction of large combined cycle merchant plant will accelerate the retirement of older, less efficient steam generating units, as well as ultimately drive down the cost of generation during on-peak hours. It will also change the mix of generating units from what exists today. Merchant generators planning to install these
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500+ MW combined cycle gas turbine plants are facing long development times, limited site opportunities and opposition from the NIMBY (not in my backyard) constituency. As such capacity is installed, however, the actual dispatch and operation of the generating units will be primarily based on competitive bidding in the marketplace (tied to marginal or variable costs).

A solution from Wrtsil

Wrtsil is addressing the growing need for environmentally responsible distributed onpeak power with a new solution being introduced in the US market PeakingPlus. PeakingPlus is a value-engineered and value-priced energy solution intended to address the operational and commercial needs of power generators and power marketers. The PeakingPlus solution offers the following advantages: - Natural gas is the fuel of choice with diesel and dual fuel capability options available. - Compact plant sizes from 3 MW to 100 MW. - Commercial operation within 3 to 10 months from contract award, depending on scope. - Low noise and stack emission levels classified as BACT with minor source permitting. - The highest simple cycle electrical efficiency guaranteed as low as 8,123 MBtu per kWh. - High efficiency over part and full load profiles through multiple power unit design. - High availability and reliability thruough an integrated system design. - Full ISO load rating up to 95 F and 4,500 feet elevation. - Low variable operating and maintenance costs, typically $4 to $5/MWh. - Multiple start and stop capability without the penalty of shortened service intervals. - Remote dispatch and unmanned operation capability. - No water needed radiator cooling. - Low natural gas pressure needs 65 psig. - Quick starts synchronize in less than one minute, full load in less than 10 minutes. - Full black start capability at no additional cost. Over the past year Wrtsil has undertaken an intensive localization program, using a modular design approach for all power plant sub-systems that ensures compliance with US building and safety standards. Complete all-in costs typically range between $450 and $550 per kW installed. The combination of high electrical efficiency and availability coupled with low operating, maintenance and initial capital costs makes these PeakingPlus plants the most competitive producer of peak power in the marketplace for power blocks below 100 MW in size. Wrtil offers single source responsibility for design, installation and operation. An example of a PeakingPlus installation can be found in Iola, Kansas. The City of Iolas municipal utility installed 5.75 MW for the summer of 2000. Due to the modular design of these plants, further additions can be made economically as the citys needs grow. During October 2000, the City of Paragould, Arkansas and the City of Kennet, Missouri ordered their PeakingPlus plants rated 18.9 MW and 12.6 MW respectively. These

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plants will be in commercial operation by mid-May 2001, just in time for the summer peak demand period.

T. M. Carbone, President - Wrtsil North America Inc.

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