Market and regulatory forces have proved to be formidable obstacles at University Research Park.
In 1995 the University of California at Irvine and the Irvine Company started planning University Research Park, which would integrate the infrastructure needed for distributed generation (DG) into its 40 buildings as they were constructed. The 185-acre park was designed to attract high-tech e-commerce, biochemical and biomechanical businesses, and energy technologies.
According to Scott Samuelsen, director of UCI's National Fuel Cell Research Center, the "Power Park" was to serve as a living laboratory and test bed for the various technologies of DG—microturbines, fuel cells, microturbine/fuel cell hybrids, cogeneration, and photovoltaics—in a real-world evaluation.
By 2000, the park was half-built and the developers assumed it would be completed in two or three years. However, today, just seven more buildings have been added. The Irvine Company says it will construct new buildings as the market dictates.
Clustered in gently rolling landscape at the southern end of the Orange County campus, the 28 two-story, rectangular buildings built to date are based on one "flex-tech" design, each 30,000 to 70,000 square feet, created by the design firm LPA Inc. of Irvine.
Designed for Flexibility
Architect Jim Kelly says the buildings are constructed as shells to allow tenants to design their own interiors. The infrastructure was designed for flexibility to allow different configurations of DG to be tested, once systems are installed, with alternative distribution options and multipoint monitoring of power quality.
Underground electrical conduits link the buildings across the park. Two buildings are connected through conduits, giving a tenant the opportunity to occupy both and to link telecommunications and electronic systems. The underground conduits then connect the building clusters to other clusters across the park.
Electrical rooms in each building serve as the connection points for the conduits. The rooms are built larger than is typical to accommodate switchgear and other electrical equipment required for future microturbine or fuel cell installations, Kelly says.
The research park is within service territory of Southern California Edison (SCE). The utility took a big interest in the design of the buildings and served as technical consultant, meeting with representatives of the design team every month for six months, says Stephanie Hamilton, manager of SCE's distributed energy resources department. "We shared with them our expertise to make sure equipment would be compatible" with SCE's system interconnections and distribution lines, she says. Its recommendations included installing additional conduits and cables, and it provided equipment to measure power quality.
Kelly, the architect, explained that natural gas distribution was a simpler proposition. Southern California Gas Co. installed 4-inch main lines and 2-inch service lines to guarantee each building has the capability for up to 500 kW of natural gas–powered electric generation. These installations were larger than normal to accommodate anticipated loads. In normal circumstances, a 3-inch main and 1-inch service line would have sufficed, according to the company.
Additional design elements were included to benefit DG installation. Electrical conduits run through the roof of each building to allow future tenants to install photovoltaics. Kelly says LPA assumed the photovoltaic panels would lie flat on the roofs, as they do at the Toyota headquarters in Torrance, which the company also designed. Furthermore, zones were identified around each building, 40 feet by 80 feet, to accommodate microturbine or fuel cell generation equipment.
Where's the DG?
Despite the good design and intentions, no tenants have installed DG systems beyond a few backup generators. In 2000, Samuelsen expected a 30- to 75-kW microturbine generator or a 200-kW fuel cell to be installed within the next six months. But those installations did not happen. Now, he says, two new prospective tenants, a computer engineering company associated with information technology and an architecture and green building design firm, are both considering DG installations, but they have not yet made any commitments and it is too early to identify them. So what happened?
Samuelsen blames California's recalcitrant economy, the end of the energy crisis—which had fueled interest in DG—and lack of enabling policy to encourage and facilitate distributed generation as the reasons behind DG's lack of growth in the research park.
Eric Ring, manager of energy engineering at CTG Energetics Inc. in Irvine, has a different take on the issue. Speaking in general, not specifically about the research park, Ring says DG is typically found in owner-occupied buildings, not in buildings where the occupant is leasing floor space. In the latter case, tenants have little incentive to install equipment they cannot take should they move. Nor does the property owner have any incentive to install DG, since he or she has to recoup costs in rent. And there is a disconnect between capital and operating costs, says Rink. Often, the owner will negotiate a tenant allowance but is unwilling to go beyond that allowance to pay DG costs.
And why are tenants not motivated to pay the additional costs for DG? Ring argues the office tenant is not used to seeing energy expenses or to paying attention to them. There may be a tremendous opportunity to reduce costs, but they're not on the tenant's radar screen. Moreover, the tenant may benefit from generating his own power, but often he has little or no need for use of the waste heat from the microturbine, which is often the difference between a small and large payback.
Ring points out an additional disincentive: Utilities may discourage DG because of fears the power may be low-grade and disrupt distribution in the local utility line through the connection with the distribution line linked to the building. Conceptually, this can be worked out, Ring says, but interconnection agreements can be difficult to negotiate.
Kelly agrees that tenants lack the same incentives owners have to make the buildings they occupy as efficient as possible. He says tenants could take DG equipment with them when they moved, but the investment in installation could not be recouped. And the Irvine Company, the owner of the research park, has not made any capital investment in DG, he says.
Interviews with managers at two tenant companies in the research park reinforced Ring and Kelly's perspectives. Dan Matyja, IT operations manager for Quantum Corp., says the company was going to install microturbines in September 2001, but budgets didn't allow it. The company, which sells computer data storage products, needed backup generators to protect the company's data center, especially during the period in 2001 when there were four-hour power outages.
"Microturbines had many benefits but for the amount of power we needed, they were quite expensive," Matyja says. With microturbines, the company could have sold power back to the utility, but company executives were not willing to do the cost/benefit analysis, he notes. It was more important, they decided, to get backup generators installed quickly. Matyja agreed that not owning the building was a factor. "If we had owned the building, we could have seen a payback," he says.
Jake Lappin, technical services manager at Monitoring Automation Systems (MAS), a software company, says MAS has been a tenant in the research park for six years. It never looked at DG, but wanted to have backup power. So it installed a diesel generator without exploring other technologies. When the company moved to a new location in the research park, it left the backup generator behind. Lappin says a short-term battery backup is serving the company well and provides two to three hours' service in case of a power outage.
Overcoming the Hurdles
Samuelsen's dream that the research park could serve as a real-world testing pad for different DG applications will become a reality only when those disincentives and other hurdles are overcome. Jim Meacham, a graduate engineering student working in the National Fuel Cell Research Center at UCI under Samuelsen, adds to the list of hurdles lack of familiarity with DG technologies and a true lack of a service sector for them. "We're just learning what systems will work in a commercial building where the electrical loads and thermal demands are highly dynamic," he says. For starters, Meacham has installed interval meters at many of the buildings and reports monitoring power usage has already provided some information.
On the regulatory side, Samuelsen points to "a lack of policy to underwrite DG's evolution." On the one hand, utilities fear the potential of DG to disrupt power distribution and leave assets stranded. On the other hand, the California Public Utilities Commission believes DG is an effective way of reducing peak demand and deferring distribution system upgrades. It has offered rebates for self-generation projects for several years. Although the rebates reduce installation costs, they do nothing to remove barriers.
Regulatory Solutions
In February 2003, the California Public Utilities Commission established policies for ownership and operation of DG and its integration into utility planning and operation of the distribution grid. It said the utilities (SCE, Southern California Gas, Pacific Gas & Electric, and San Diego Gas and Electric Co.) as well as third parties could own DG.
Given that utilities are concerned about the impact DG will have on the reliability and safety of their distribution systems, the decision focused on that area and told the utilities how they should evaluate DG alternatives with regard to their system planning processes.
The decision directed utilities to develop model contracts that would allow DG systems to defer distribution system upgrades, to track their costs, and to allow compensation to third-party owners of DG systems that deferred distribution system upgrades. It also directed the utilities to design DG education programs.
Perhaps this compensation is the carrot that owners of leasing space need to install DG systems in their buildings. First, however, utilities must decide which parts of their distribution system would benefit from DG, and how much they are willing to compensate owners to build these systems. Is it possible SCE could decide its Orange County distribution system would operate with less congestion if the Irvine Company installs microturbines and photovoltaics on the majority of the park's buildings and be compensated for it? Would this postpone or avoid expensive distribution system upgrades? Could SCE afford to decide that paying for DG systems would be less expensive?
It likely will take years for SCE or any of the utilities to reach this decision-making stage, given the slowness of the regulatory process. Meanwhile, educating tenant companies about the advantages of DG seems to make the most sense in the short term.