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Electricity Sector Seeks Incentives for DG

13 July 2006

Electricity Sector Seeks Incentives for DG

An energy industry forum on Distributed Generation (DG) has highlighted the need for regulatory incentives to encourage small and medium-scale decentralised electricity production.

Recognised internationally as an alternative to centralised power generation and distribution, DG is continuing to gather support in New Zealand as a key strategy for maintaining the existing distribution system and improving reliability. However the enthusiasm for DG has yet to be translated into results “on the ground” as the electricty industry grapples with regulatory and competitive pressures.

DG has been championed in New Zealand by CAE (Centre for Advanced Engineering), which has hosted an annual DG Workshop for the electricity industry for the past five years. CAE executive director George Hooper says the latest event has underlined the difficulty of aligning industry objectives.

“The experience of the industry in the United Kingdom is that there must be some form of regulatory incentive to encourage network companies to invest in DG,” says Dr Hooper.

“Government support for renewable energy is giving some impetus for investment, but progress is incremental at best. Any forecasts of DG as a mainstream energy strategy in the near term would have to be regarded as optimistic.

“However, there are some exciting opportunities emerging, such as the trialing and development of micro grids. These secondary networks are made up of a number of interconnected users sharing a distributed energy system, with perhaps a single connection to the main network.

“There is an active micro-grid research programme in New Zealand, but the work is currently rather fragmented. There is too much focus on individual technology components and not enough on the system as a whole. It’s clear that a more coherent strategy for micro-gen research is needed.”

Dr Hooper says the message from DG advocates is that the industry needs to go beyond technology development and do more to standardise its approaches to DG integration.

“We have learned from the work of CIGRE that new information technologies are creating a new paradigm for the configuration of the distribution system, and are likely to be a key enabling technology for DG uptake.”



The workshop identified the need for further work on the standardisation of approaches to metering, voltage/current monitoring and control, and the potential for deployment of automated systems utilising SCADA technology.

“With improvement in power equipment we are seeing better control of intermittent generation sources and thus greater integration of fluctuating power into the electricity system.

“CAE’s view is that the New Zealand electricity industry is ready to move to the next stage of the process in developing a strategy for DG. We will continue to guide the Industry towards full engagement with the engineering fraternity and investment opportunities.”

CAE is currently participating in a project led by CIGRE, the Paris-based International Council on Large Electricity Systems, and is supporting calls for a New Zealand national DG committee, to link with rapid developments internationally.

About Energy21

Energy 21 is an industry-led initiative delivered by CAE to promote systems-level modernisation of New Zealand’s electricity energy system and introduction of Distributed Generation as an alternative to large-scale central generating stations. Energy21 aims to encourage cost-effective solutions, through strategies such as the “mainstreaming” of Distribution, Generation, as well as Demand Response and System Optimisation initiatives.

About CAE

CAE is an independent think-tank hosted by the University of Canterbury in Christchurch New Zealand and funded by grants and sponsorships. CAE’s mission is to advance New Zealand’s development and well-being through new engineering perspectives, analysis and a broader understanding of emerging issues in engineering and related technologies.


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