C I R E D 20 th International Conference on Electricity Distribution Prague, 8-11 June 2009 Paper 0490 CIRED2009 Session 6 Paper No 0490 INTEGRATION OF DISTRIBUTION AND GENERATION: A LEVER TO IMPROVE THE SYSTEM EFFICIENCY WITH A PROPOSAL OF REGULATORY CHANGES Angel ARCOS VARGAS Antonio GOMEZ-EXPOSITO Jesus RIQUELME SANTOS Alfonso BACHILLER SOLER ENDESA – Spain University of Sevilla – Spain University of Sevilla – Spain University of Sevilla – Spain aarcos@endesa.es age@us.es jsantos@us.es abslhm@us.es ABSTRACT In this paper the economic viability of medium-size open cycle gas plants is analyzed in the context of the Spanish electricity market, as well as their potential to solve distribution reliability problems and to increase the maximum level of wind power installed. The conclusions are that, with the current technology, cost and prices, the medium-size open cycle gas plants are not viable for a private investor, in spite of their total contribution to the global welfare being high. For this reason, it makes sense to design a system of subsidies or public helps to assure the correct development of this kind of power plants. INTRODUCTION The regulators of a majority of countries have given a lot of incentives to the distributed generator. This has been justified for the saving of electrical losses and deferring the needs for network development. These effects have been further enhanced as a consequence of recent technological improvements, which have reduced the economies of scale associated to the size in the generation units. The development of the smart grids, with an active performance of the network, will give satisfaction to achieve a sustainable and efficient energy system, but it will take some years for a massive application. Currently in ENDESA, as in the rest of utilities, we can find some critical points in the network, where the failure of one element, provokes the loss of 50 MW (in these points, the N-1 criterion is not verified). In our planning we have the network solution, but these solutions are, in some cases, difficult to develop due to the opposition of the neighbours, municipalities and other administrative bodies. We are investigating the possibility of connecting distributed generation in those critical points, going back to the original spirit of this kind of technology (close to the demand, and avoiding network development). The conditions that we impose to the distributed generation units are: 1. Respect of the environment. 2. Low level of noise. 3. Quick start capability. 4. Availability throughout all hours of the year. 5. Easy way to fuel feed. 6. Sufficient profitability. The improvement in the technology of the 50 MW gas turbine of open cycle has made it a suitable solution for the distribution problems, due to: 1. Possible evacuation to the 66 kV network. 2. Small footprint. 3. Relatively high net plant efficiency (46 %). 4. Low level of emissions. 5. Commercial solution, with a big number of manufacturers (Siemens, GE, Pratt & Whitney, Wartsila, etc…). On the other hand, the Spanish Industry Ministry, in its planning document for 2007-2016, foresees the need for 3.000 MW of peak plants (gas turbines,… etc.), to substitute, in principle, existing fuel oil plants. Figure 1. Official Planning: Power Capacity. Source: MITYC. But there are, at least, two problems to develop this integrated solution: 1. Those power plants should be operated by the Distribution Companies (DisCos), and due to the obligation to separate activities, the DisCos cannot develop activities of generation. The TSO is too far from the market problems, and lacks enough information to evaluate the market risk.