How Feed-In Tariffs Inhibit the Efficiency of Distributed Generation
Part of our vision at Nextek Power Systems has been that the way to get the most out of power generated on site is to use that power on-site; where, when, and how it is generated. For us this has meant establishing direct current (DC) power networks that are open to accept any dc power that is generated on-site. An important benefit to our customers is that these systems are also directly compatible with electricity storage systems like batteries making un-interruptible power cheaper and easier to deliver to critical building loads. We use these networks to support electronic loads in the building, of which lighting, computers and motor controllers are the largest. The unique feature of our power systems is that each has a point of connectivity where the grid, any DG, and any stored power come together to work in-concert to support the loads. Our stock-in-trade has been to compare this system and method to the alternating current (AC) based paradigm. When the integrated efficiency of an AC-paradigm system is compared to our Direct Coupling paradigm, we show an improvement in the utilization of the DG (often solar PV) of 10% to 50%. This advantage is made-up of 2 savings: avoiding the inverter, which amounts to a 4% to 10% gain, plus avoiding the rectification at the load which accounts for another 8% to 40% gain depending on the quality of the product. Nextek's Direct Coupling power systems use the DG at 98% efficiency because they only have to minimally regulate the power produced for the stability of the network.
Improving the efficiency of DG inputs has been enough for us to bring customers and manufacturers to our systems and make them partners in our business where everyone benefits. There is, however, a trend in regulatory policy that could inhibit this technical innovation and the improved efficiency it brings to the entire system (the grid and its customers).
In the same way Nextek has promoted the analysis of integrated efficiencies of sources and loads, the foot-hold that feed-in tariffs have recently gotten in our hemisphere (Ontario, Canada) has led me to reflect on a more comprehensive understanding of the system benefits of handling the integration of DG through dc power networks. When we deliver precious power that we generate on-site to the grid we doom those kilowatts to 2 more losses: those embedded in the transmission and distribution of power to our neighbors, plus the almost inevitable rectification that takes place at the point of use. The Department of Energy tells us the transmission and distribution (T&D) portion of the equation will lose between 7% and 11% ; we know that the majority of power supplies manufactured today range between 60% and 85% efficiency, but that the best conventional lighting products (a very small niche) do achieve a 90% efficiency rating.
Therefore the feed-in tariff imposes a haircut of 11% to 21% on the power that any customer delivers to it versus keeping the power generated in the currency of direct current (4% to 10% at the inverter + 7% to 11% at the load). When we combine this potential loss with the losses racked-up in the dc to ac to dc excursion we are faced with an ugly reality: choosing a feed-in tariff that excludes dc kilowatt hours generated to be used on-site, or favoring net-metering over Direct Coupling may waste up from 19% to 59% of the clean energy customers have spent so much to produce. Further analysis appears on our website: www.nextekpower.com