valuation of energy from coal, fuel-oil, natural...

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VALUATION OF ENERGY FROM COAL, FUEL-OIL, NATURAL GAS AND BIOGAS BASED ON

BENEFIT/COST ANALYSIS AND NON-MONETARY CONSIDERATIONS

Serap Kara (1), Mustafa Kara (2), Tuncay Dögeroglu (1)

(1) Environmental Engineering Department (2) Chemical Engineering Department

Faculty of Engineering and Architecture

Anadolu University 26470 Eskisehir Turkey

Abstract

In this investigation, only the fossil-fuel options and biogas alternative are considered for a specific amount of energy needed. Options are tested based on MCA for their costs, environmental impacts, risks, reliabilities, and promise for the near- and far-future applications. Results indicate that, if sufficient technology adaptation, renovations and innovations can be realized, an optimized fuel-mix option appears to be justified and this may attract the developing and underdeveloped nations, from cost-effectiveness, sustainability and environmental management viewpoints. Keywords: Energy; Power; Fossil fuels; Biogas; EIA; Cost; MCA; Sustainable development; Globalization; Environmental Management. INTRODUCTION Today, there is a growing interest in finding more effective ways of achieving an increased quality of life for all people living on the Earth. Equitable and sustainable allocation of the two primary resources, energy and minerals, is of main concern in this respect towards improvement of our life style at any scale, whether local, national, regional, or global, regardless of the boundaries.

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It is increasingly recognized that, a high economic growth rate or utilization of higher amounts of input factors or natural resources is not always the indicator of the most rational way of achieving sustainable development at the global level. Although the economic growth and the demand for inputs are closely linked, an effective management scheme requires efficient integration of environmental concerns to the development programs by weighing the environmental disturbance against the social value and cost of the goods produced or the services provided, as well as the interests of local communities against more remote beneficiaries. Since the nature provides us with the raw material for energy and material inputs to various economic activities, and serves with its waste receptor services, life support functions, and amenity services, ecocentric perspectives must be successfully associated with the traditional anthropocentric approaches in planning proposals for new projects. The themes of intragenerational and intergenerational equity, moral, legal, and ethical rights to a habitable environment, environmental responsibility, and public participation in environmental dispute resolution are, all, as important as, at least, the concepts of productive-efficiency in a monetary sense, technology development, generating new multicriteria modelling, forecasting and evaluation techniques, and designing and implementing environmental regulations, in planning and decision-making processes. Regarding, in particular, the energy issue, one may start with some information about human metabolic power rating. The food energy requirements of human beings are usually expressed as about 2000-4000 kcal per day (or 100-200 W, or about 150 W on average), depending on activity. (This value may be compared with the metabolic needs of horses -the standardised horse-power, 746 W, is somewhat greater than those of humans). Blunden and Reddish (1991) multiplied this rate by the world population of 5 billion in 1990 to reach a primary global human metabolic requirement of 750 GW, and expected to double, on 1990 projections, by the end of 21th century. They also noted that, the power rating of the world energy supply system (fossil fuel, hydropower and nuclear, with some fuelwood) had risen from about 1 TW (or 1000 GW) in 1900 to 10 TW in 1990.

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Dividing the total world energy use, at a rate of 10 TW, by the population of 5 billion in 1990, one may find an average of 2 kW per person throughout the world. This figure and the values given in the right-most column of Table.... for the year 1998 (SOE, 2001) ranging from about 10 kW each in the US, through 4-5 kW in Europe and Japan to less than 1 kW in many less developed countries, indicates the unequal distribution of the per-capita power rating. If the growing world population (6.3 billion in 2003) follows the development path of industrialized countries, the pressure on existing energy resources will be overwhelming. Energy use on the high scale by the projected 10 billion population in the end of 21st century would imply a power rating of 100 TW for the world energy system in the future. Table 1 Energy Use and Electricity Production per capita in 2003

Energy use (kW/capita)

Electricity production

(kWh/capita)

US (high-income countries)

10.00 9750

Europe 4 -5 - World 2.00 2300 Turkey 1.73 1877 Less developed countries

<1 <500

Therefore, the particular focus of this work has been on the investigation of techno-economical aspects of a series of energy conversion processes. Three of the selected four energy projects of this work are of fossil origin, and the one which is of renewable type is based on biomass utilization. Such a selection was driven by the fact that until clean energy forms become more efficient, versatile, and practical to use, any stringent program of carbon reduction still seems to cause suffering, particularly, in developing nations, where fossil-fuel use must increase for some more years to raise living standards. This may also provide us with an opportunity to enhance the previous

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researches on synfuel and syngas processes. The systems are being evaluated here in close relation to their impacts on global warming and carbon balance, besides to some other relevant factors, based on the application of a series of multicriteria analysis (MCA) techniques. Reader may refer to Van Beeck(1999), Ortolano(1997), Sullivan, et al. (2003), Blank and Tarquin (2002) and Kara (2004) for the classification and applications of MCA models to various general cases, most of which being not necessarily specific to the concerned energy issues. Most existing models on energy planning assess only technical aspects and financial and economic consequences of energy sytems. More and more models now also include an environmental impact assessment, but only those that can be expressed in quantitative terms. Many qualitative (social) impacts are ignored as well because impacts that cannot be quantified are excluded from the analysis. However, these impacts may play a crucial role in the viability of an energy system, and the use of impact models which have a multicriteria approach allows for the inclusion of both quantitative (physical, tangible, monetary) as well as qualitative, intangible, non-monetary data. This way it is ensured that the energy systems’ impacts can be assessed according to all possible preferences or criteria of the energy planners. Generally, a modular package is preferred for this purpose (Borbely and Kreider,2001). The selected projects for this study (electricity generation systems) are treated as mutually exclusive alternatives, as well as independent projects with budget limitation from the perspective of Turkey. Alternatives will, first, be compared based on incremental benefit/cost ratio analysis, and then the following six attributes (selected and ranked) will be used to conduct multi-attributed analysis: (1) economical worths of the projects; (2) safety aspects including the contribution to global warming; (3) reliability aspect not excluding the load factors and useful lives; (4) resource existence, extensiveness, and achievability; (5) a lumped factor combining the influences of social preferences/demand for the technology and resource; (6) the time needed for effective utilization of any option or a combination of the options.

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WORLD ENERGY POTENTIAL AND ELECTRICITY GENERATION CAPACITY Global energy production (consumption) had increased from 241.4 EJ (218.9 EJ) in 1973 to 338 (326) EJ in 1993. The composition of world energy did not changed substantially from what was observed in 1999 and the past decade. Earth procures 90 % of necessary energy from fossil fuels like petroleum, coal and natural gas. According to predictions by taking considerations of population projections, energy usage scenarios and technological developments into account, 1500 billion toe (tons of oil equivalent), or 17.5 million TWh, energy will be spent in 21st century. All reserves of fossil fuels are predicted as 900 billion toe (10.5 million TWh). According to scientists these reserves will be exhausted in the end of century. Although this situation marks up the importance of the fuel-free renewable energy forms, it is still more logical to use fossil fuels to warm up in yield of 90%, due to much lower (for example 57 % for wind electricity) yield of thermal electricity plants. Coal constitutes more than 30 % (1996 figure) of the world’s energy consumption. It comes behind the oil in the energy balance of the Earth according to forecasts made for the forthcoming decade. Coal is expected to take the first position in the world energy balance because it has satisfactory reserves for human needs for the next 200-250 years. However, there are technological, economical and ecological reasons which prevent wider use of coal as a universal energy source. The sum of environmental damages under the usage of coal is $9.82 for each GJ of energy produced and the quantity of wastes during this production, using coal, reach 3 tons (Mine symp,1996). Coal consumption of the world increased from 3754 million tons in 1960 to 5245 million tons in 1990 (KICDR, 1999). World oil market, in 2003, produced and consumed an annual amount of oil equivalent to 170 EJ (76 million barrels per day). As compared to coal and oil, importance of natural gas showed much faster upward trend, in recent decades due to its cleanliness and other advantages as an energy source.

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Electricity production has always played a vital role in the consumption of primary energy sources and hence of the fossil fuel resources. According to Table.., in 1995, of the thermal electricity produced in the world 55.2 % came from coal, 32.7 from natural gas, 11.4% from liquid fuels, and 0.7 % from other thermal sources. Contribution of hydroelectric power plants to electricity production decreased from 48.8 % in 1980 to 41.2 % in 1995, and hydroelectricity provided 58.8 % of the total electricity production in 1995. The share of hydroelectricity reduced down to 30 % in 1986 when natural gas powered electricity generating plants came into picture (KIÇDR, 1999, s,239).. While the contribution of fuel-oil powered electricity generating plants were the highest during 1970s, this trend had changed in favor of coal-based electricity power plants since 1980. During 1970s, when low-calorific-valued coals as the fuel for thermal power plants gained importance, 5.78 million tons of annual lignite production in 1970 reached 52.8 million tons in 1995 with an increase at an annual growth rate of 9.4% (KIÇDR, 1999, s,239). Table...World electricity production- in units of 0.01 GWh/year- from various primary energy sources (KIÇDR,1999)

Years

Hard Coal

Lignite

Fuel-oil

Diesel

(Motorin)

Natural

Gas

Geo-

thermal

Thermal Energy

Total 1970 1382.3 1442.2 2336.5 263.5 - - 5590.2 1975 1427.4 2685.9 4700.0 685.9 - - 9719.2 1980 911.7 5048.6 5222.8 608.4 - - 11927.2 1985 710.3 14317.5 7028.6 53.4 58.2 6.0 22174.0 1986 772.8 18664.5 6941.3 59.3 1340.7 43.6 27822.2 1990 620.8 19560.5 3920.9 20.8 10192.3 80.1 34395.4 1991 998.4 20563.1 3291.0 2.2 12588.6 81.3 37563.0 1992 1814.6 22756.2 5271.3 1.7 10813.7 69.6 40774.2 1993 1796.1 21963.8 5171.4 3.1 10788.2 77.6 39856.6 1994 1977.6 26257.1 5546.8 2.0 13822.3 79.1 47735.8 1995 2232.1 25814.8 5498.2 273.8 16579.3 86.0 50706.5

Nuclear power plants produce 17% of the world’s electricity. Worldwide, consumption of electricity generated from nuclear power was 2521 billion kilowatthours in 2001 and was expected to increase to 2737 billion kilowatthours in 2025.

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Table...Contribution of thermal- and hydro-electricity to the total world energy production Year

Thermal electricity 0.01GWh (%)

Hydro electricity 0.01GWh

(%)

TOTAL 0.01GWh

1970 5590,2 64,83 3032,8 35,17 8623 1975 9719,2 62,21 5903,6 37,79 15622,8 1980 11927,2 51,24 11348,2 48,76 23275,4 1985 22174 64,80 12044,9 35,20 34218,9 1986 27822,2 70,09 11872,6 29,91 39694,8 1990 34395,4 59,77 23147,6 40,23 57543 1991 37563 62,35 22683,3 37,65 60246,3 1992 40774,2 60,55 26568 39,45 67342,2 1993 39856,6 54,00 33950,9 46,00 73807,5 1994 47735,8 60,95 30585,9 39,05 78321,7 1995 50706,5 58,79 35540,9 41,21 86247,4

Figure...World energy consumption (0.01 GWh) by years and fuel types. Nuclear power production supplied 11 % (251 billion kWh) of the US total of 2 286 billion kWh in 1980, while oil-fired plants contributed 10.8 % (246 billion kWh) (dropped from 255 billion kWh, and 304 billion kWh, respectively, in 1979). Coal in the US at that time was still in the lead in electric generating field, producing 50% (1 162 billion kWh) of the 1980 US total, up from 47.8% in the previous

010000

20000 30000

40000 50000

60000

1970

1980

1990

1991

1993 1995

Geo-thermal Natural gas Diesel Fuel-oil Lignite Hard coal Year

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year. Other sources of electric power in the US in 1980 were natural gas, 15.1 % (346 billion kWh); hydro power, 12.1 % (276 billion kWh); and geothermal, wood and waste heat power, 0.2 % (6 billion kWh).

Coal52%

Nuclear20%

Natural gas16%

Hydro7% Oil

3%

Wind and others

2% Coal

Nuclear

Natural gas

Hydro

Oil

Wind and others

Figure ....Current fuel use for electricity generated in the USA (Source: USA Today, 2003).

Figure........Electricity production in the World, US and Turkey,

TurkeyUS

World

1980

1998

1113803,7

14223,4

23,32427,3

8176,6

02000400060008000

10000120001400016000

Ele

ctri

city

pro

duct

ion

(10^

9kW

h)

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Table .... Energy Sources Used for Electricity Production (%) in 1998

Sources

World

US

Turkey Hydropower 17.8 7.7 38.0 Coal 38.4 52.7 32.1 Oil 8.9 3.9 7.1 N.G. 16.2 14.7 22.1 Nuclear Power 17.2 18.8 - Other (Geothermal, Solar, wind...)

1.5 2.2 0.4

Total 100.0 100.0 100.0 To provide 20 % of America’s electricity, 560 000 million kWhs per year, only 0.6% of the land of the lower 48 sates would have to be developed with wind power. Hyroelectric power is the largest source of renewable electricity in the world. Hydropower provides one-fifth of the world’electricity, second only to fossil fuels. Worldwide capacity is 650 000 MWs, with 14% of this is in the US. Hydro capacity has more than doubled since 1970. ELECTRICITY GENERATION CAPACITY OF TURKEY Coal consumption values for Turkey changed from 7,5 million tons in 1960 to 50,3 million tons in 1990 (KICDR, sayfa 5, 1999),

Table 1: Installed Electricity Generation Capacity in Turkey, 1990-2001 (in thousands of MWe) n/a: not applicable Source: DOE/EIA (2004)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Hydroelectric 6.60 6.76 7.11 8.38 9.68 9.87 9.86 9.94 10.10 10.31 10.54 11.18

Nuclear n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Geothermal/Solar/ Wind/Biomass 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.03 0.04

Conventional Thermal 9.19 9.54 10.08 10.32 10.64 10.98 11.07 11.30 11.77 13.02 15.56 16.05

Total Capacity 15.81 16.32 17.21 18.71 20.34 20.86 20.95 21.25 21.89 23.35 26.12 27.26

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Table 2: Electricity Generation and Consumption in Turkey, 1990-2001 (in TWh) DOE/EIA(2004)

1990 1991 1992 1993 1994 1995

Net Generation hydroelectric nuclear geo/solar/wind/biomass conventional thermal

55.2 22.9 n/a 0.1 32.3

57.8 22.5 n/a 0.1 35.2

64.7 26.3 n/a 0.1 38.2

71.1 33.6 n/a 0.1 37.3

75.2 30.3 n/a 0.1 44.7

82.9 35.2 n/a 0.3 47.4

Net Consumption 50.6 54.0 60.0 65.7 69.4 76.4

Imports 0.2 0.8 0.2 0.2 0.0 0.0

Exports 0.9 0.5 0.3 0.6 0.6 0.7

1996 1997 1998 1999 2000 2001

Net Generation hydroelectric nuclear geo/solar/wind/biomass conventional thermal

91.2 40.1 n/a 0.2 50.9

99.1 39.4 n/a 0.4 59.3

106.5 41.8 n/a 0.3 64.3

111.2 34.3 n/a 0.3 76.6

119.0 30.6 n/a 0.3 88.1

116.6 23.8 n/a 0.4 92.4

Net Consumption 84.7 94.4 102.0 105.5 114.0 112.6

Imports 0.3 2.5 3.3 2.3 3.8 4.6

Exports 0.4 0.3 0.3 0.3 0.4 0.4

Table 3: Electric Power Capacity Development in Turkey (MENR 2004)

2010 2020 Fuel Type

Installed Capacity (MWe)

Generation (GWh)

Installed Capacity (MWe)

Generation (GWh)

Coal 16,106 104,035 26,906 174,235

Natural Gas 18,856 125,548 34,256 225,648

Fuel Oil & Diesel 3,125 17,993 8,025 49,842

Nuclear 2,000 14,000 10,000 70,000

Hydro & Renewables 24,982 85,719 30,031 104,043

Total 65,069 347,294 109,218 623,768

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Table 7: Turkey's Autoproduction by Fuel Type (as of March 2000) TEAS Platts UDI 2004

Fuel Capacity (MWe)

Share %

1999 Generation (GWh)

Share %

Natural Gas 1,335 64.2 7,264 67.0

Fuel Oil 455 21.9 1,895 17.5

Renewables 93 4.5 838 7.7

Liquified Petroleum Gas (LPG) 63 3.0 343 3.2

Naphtha 63 3.0 237 2.2

Hard Coal 35 1.7 182 1.7

Hydroelectric Power 19 0.9 20 0.2

Diesel Fuel 10 0.5 64 0.6

Lignite 6 0.3 5 0.0

Total 2,079 100.0 10,848 100.0

Sources:

The electricity production capacity of Turkey reached to 20857,3 MW at the end of 1994 and 29,8 % of this capacity was supplied by the coal-fired power plants. Coal plays a key role in Turkey’s electricity production (Mining symposium,1996). The total hardcoal and lignite productions of Turkey in 1994 were 2.8 and 53 billion tonnes, respectively. The 42.6 billion tonnes of production was made by TKI and 36.3 billion tonnes (85% of total production) was sent to the coal fired power plants. Installed capacity of thermal power plants in Turkey reached ~11220 MW (1997 figure) the main fuel of which being lignite. 1997 yili itibariyle ülkemizde kömüre dayali olarak çalisan termik santrallerin toplam ünite sayisi 36 (2’si taskömürü, 34’ü linyit bazli) olup (Table 2

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in KÇDR,1999, p.240), bunlarin toplam kurulu gücü 6213 MW, toplam yillik proje üretimi 40395 GWh, yillik ortalama uretim 22871 GWh, ortalama kapasite kullanimi ise 22871/40395 = %56.6’dir. Kömür disinda ham enerji kaynagi kullanan 24 termik santralden 2’si fuel oil, 14’ü motorin, 4’ü dogal gaz, 1’i jeotermal, 3’ü de atik isi girdisi kullanarak elektrik üretmektedir. BIOGAS BASED ELECTRICITY GENERATION All forms of biologically degradable vegetable and animal matter and their residues can be converted to biogas by digestion in the absence of air, that is, by anaerobic decay. This includes crop wastes, human and animal wastes, wastes from agriculture-based industries, forest litter, and aquatic growth. Digestion of suitable wastes is the simplest and most practical method known for treating human and animal wastes to minimize the public health hazard associated with their handling and disposal. The residue left after removal of the gas is a valuable fertilizer and soil conditioner that contains all the essential nutrients present in the raw materials. As Harder (1982) reports, 5 ft(3) methane can be generated per pound of organic waste, and a digester size of 50 ft(3) is required per cow for an average cow weighting 1000 lb (77 lb wet dung or 6.1 lb volatile solids is produced per 1000 lb cow per day to produce 35 ft(3) /day biogas as output). The biogas is about 60% methane (may range within 50-70%), and 40% carbon dioxide (30 to 50%), with a little hydrogen (0-4%) and a small amount of other gases such as hydrogen sulfur. Its higher heating value (HHV) is over 500 Btu/ft(3) (HHV of 0.6 methane+0.4 inert=978x0.6=587 Btu/ft(3)). Thus, a 10 cow digester of 500 ft(3) would supply 350 ft(3)/day output. Considering that 75 ft(3) of this output is needed for cooking for a family of five, and a little for lighting (totaling 100 ft(3)), remaining 250 ft(3)/day biogas at 587 Btu/ft(3) or 147000Btu/day, or 43 kWh/day would be enough to run a 1800 W small (gas) heater continuously. Conclusions about the economic feasibility and desirability of the biogas technology can not yet be drawn from the figures existing in the literature. The electric power potential depends on whether a

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standard heat engine or a micro turbine is choosen for generation. The heat engine carries an electrical efficiency of between 21% and 25%, while the microturbine has an efficiency of approximately 28%. Microturbines are useful for their heat capture capability. An estimated 37% of the total heat potential of the gas may be collected when using a microturbine. Hence, the efficiency of heat capture is immensely variable in practice. European generators produce 0.15 kW electrical power per cow on a continuous basis while as for American generators ( using micro-turbines with an efficiency in electricity generation of 28%) the value is 0.2 kW (4.8 kWh/day), probably due to differences in animal size and food. Thus, an upper limit for electrical power potential (EPP) of biogas may be calculated as 0.71 kW or 17.14 kWh/day. Additionally, there is an uncertainty in gas production levels. Assuming a gas yield of 54 ft(3) per cow per day and a heat value of 600 Btu/ft(3), continuous power potential becomes 32400 Btu/cow.day or 0.4 kW/cow or 9.49 kWh/cow.day (Mehta (2002)). Using a standard heat engine and generator with an efficiency of 21 % we are left with 0.083 kW/cow continuous or 2.66 kWh/cow.day. However, if we use a micro-turbine, this would amount to 0.112 kW continuous or 2.66 kWh/cow.day. Gas yields of 65 ft(3) and 139 ft(3) has also been reported. With 139 ft(3), the average electricity generation rate was reported as 5.5 kWh/cow.day, using a standard heat engine. World installed capacity for electricity generation from biogas produced by anaerobic digestors (AD) using agricultural waste is 5300-6300 MWe, while the corresponding installed capacity in the EU countries is 150 MWe (Lusk,1998; Roos, 2000). With a typical unit size being 1 MWe, economic lifetime 20 years, load factor (which is essentially the % of the time plant generates at rated power) 27 %, and availability factor 90 %, reported investment costs varied between 7260-8470 ECU/kW, fixed operating and maintenance costs ranged between 600-726 ECU/kW, and thus generation costs for the energy amounted to 120-160 ECU/MWh for these systems ($1=0.88 ECU at the beginning of 2001).

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Lusk(1998) and Roos (2000), presented a cost breakdown for an anaerobic digester with energy recovery in Colorado (Table...), and made an estimation of the benefits of generating electricity or heat using biogas from an AD system. Table....Anaerobic digester (AD) system costs

Unit

Installed cost ($)

O&M costs

($/year)

Energy cost based on installed system cost ($/kW) ($/sow)

Low Digester only (5 units) Digester+generator (7 unitsx 25 kW/unit)

15 300 96 000

500 5 000

-

3 840

-

331

High Digester only (5 units) Digester+generator (7 units x 120 kW/unit)

32 200

384 202

2 500 10 000

-

3 074

-

77

At 70% capacity (30% load factor), the induction engine produced an estimated 43435 kWh per month. Operating at this capacity, the facility is expected to save an estimated $3292 per month in electrical costs, assuming industrial electricity costs of $0.08 per kWh. Based on the assumption that the load for the farm increases to boost generator output to 90% of capacity, monthly savings were estimated $4233. Sufficient methane was generated to produce 104 kWh of electricity per sow each year, assuming a generator heat rate of 14000 Btu/kWh and a 70 % capacity factor. At an electricity price of $0.08/kWh, this amounted to $7.90 worth of electricity that could be produced per sow in the first year of system operation. Currently, average capacity cost of building commercial first generation systems for electricity production from biogas, based on anaerobic manure digestion, ranges between $660 per cow and for a 1800 cow dairy farm $1000 per cow (Mehta,2002). Additionally, variability of electricity selling prices and purchasing costs from one farm or region to another, unability to value bedding/fertilizer, heat, water, odor reduction and environmental benefits complicates the decisions on the feasibility of biogas systems for generating electricity. The cost of manure collection and potential difficulties in utilizing waste heat may negate the advantages of the system.

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According to Mehta (2002), one of the reasons that policy makers purport to prefer policies that favor small farms, is their perceived environmental impact. If, however, digester technology turns out to display significant economies of scale, it could be the case that larger farms are capable of being greener-more capable of recycling their own waste- than smaller farms. Mehta (2002) also considered various price-cost regimes for his analyses. Selling price, ps, $/kwh

Buying price, pb, $/kwh

Selling price, ps, $/kwh

Buying price, pb, $/kwh

0.09 0.035 0.02 0.0725 0.0725 0.0725 0.06 0.067 0.067 0.067 0.02 0.0725 0.06 0.067 ECONOMICAL CONSIDERATIONS Costs of electric power from stationary plants and central stations are of current concern, here. Besides costs, power generation technologies are typically categorized by performance (efficiency, heat rate), physical description, application, emissions and operating issues. The development of the energy and power generation techniques will be dependent on costs, or perhaps better, on perceptions of costs, since these are so dependent on how they are calculated. The generation cost of energy, basically, is determined by the factors listed in Table…. Table…. Main factors determining the energy generation costs • Total investment cost,

which consists of production, transportation and erection cost of the necessary equipment and permits

• Cost of

the infrastructure • Cost of land • Project preparation costs • O&M cost • Amortization period

• Real interest rate • Site properties and

its suitability for the project

• Availability • Technical life time

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The economies of grid connected power can be evaluated from two different perspectives. The first is that of public authorities or energy planners who make assessments of different energy sources. Here the focus is on levelized cost which exclude factors determined by society or governments, such as inflation and tax. The second perspective is that of the private or utility investor, for whom inflation, interest rates, taxes, amortization periods and similar, are most relevant. Here the focus is on cash flow in each project, payback time and present value of the investments. Consequently, the economics of energy differ from country to country. Table ….. Electricity generating cost projections* for different

countries for the years 2005-2010 (OECD/IEA NEA,1998) Country

Coal

Gas

Country

Coal

Gas

France 4.64 4.74 Spain 4.22 4.79 Russia 4.63 3.54 USA 2.48 2.33-2.71 Japan 5.58 7.91 Canada 2.92 3.00 Korea 3.44 4.25 China 3.18 - * in 1997 cents/kWh with a discount rate of 5% for coal for a 30-year lifetime and 75% load factor The economic effects of direct supply and demand fluctuations for fossil fuels are already considerable, but environmental effects are not included. The exclusion of the environmental problems of fossil fuels from the basic cost comparison imposes separate reasons for encouraging alternatives, even while the initial cost advantages are not clear. Comparison of energy projects based on benefit-cost ratio analysis can solve this issue only partially. New techniques should have falling costs with experience; existing techniques may become more expensive with higher environmental protection and/or fuel costs. The comparison of the economics of various energy production technologies is generally associated with the oil prices. OPEC (the Organization of Petroleum Exporting Countries) oil price has been above $22 per barrel (one barrel is 159 liters) since 2002. Oil prices (which were $26 per barrel in 1990) with a rise by $6 each decade in

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real terms to reach $50 in 2030, may be assumed to remain unchanged thereafter. Table……Electricity generation costs for fossil fuels and biogas Technical parameters and cost items (a)

Coal (b)

Fuel oil (c)

Natural gas (d)

Biogas

Average unit size (Mwe)

600 600 225 1

Availability factor (%)

90 95 80 90

Load factor (%)

85 85 80 27

Construction time (years)

4 3 2.5 1

Economic lifetime (years)

35 40 30 20

Investment cost average (ECU/kW) 950 900 550 7260-8470 Fixed O&M cost (ECU/kW/yr) 48 27 33 600-726 Fuel cost (ECU cents/kWh)

1.53 2.02 1.65 -

Unit generation cost (ECU /MWh)

37 39 30 120-160

EU installed capacity (Mwe)

315000 150

World installed capacity (Mwe)

5300-6300

(a) All above costs are updated up to 1997-1998 and they have been assumed as constant for all the period of analysis; a discount rate of i=10% per year has been applied to calculate the annuity for the unit generation cost. (b) Coal plant: does not include flue gas scrubbing; Average efficiency: 43 %; O&M expenses: 5% of the investment cost ; Coal cost:$45/ton (5700 kcal/kg) (c) Fuel-oil plant:does not include flue gas scrubbing;Average efficiency...40 %; O&M expenses: 3 % of the investment cost;; Oil cost: $13/bbl (5700 kcal/kg) (d) Natural gas plant: Average efficiency: 48 %; O&M expenses: 6 % of the investment cost; Gas cost: $80/ th m3 (5700 kcal/kg). Conversion from thermal energy to mechanical and electromagnetic forms as work is subject to thermodynamic constraints. Present types of power stations only convert 30-40% of the thermal energy available from the burning of fuel into electricity, and the rest is rejected as heat. This can either be wasted (lost to the atmosphere via cooling towers, etc.) or used in a CHP (combined heat-and-power) system, pumped as hot water round buildings in the surrounding area for district heating.

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Table … Electricity generating cost, in units of cents per kWh, in OECD (1990) Fuel type Investment Operating Fuel Total High cost coal

1.308 0.539 2.077 3.923

Low cost coal

1.385 0.615 1.308 3.308

High cost oil 0.923 0.462 6.077 7.462 Low cost oil 0.923 0.462 3.462 4.846 High cost gas 0.615 0.462 4.308 5.385 Low cost gas 0.615 0.462 2.154 3.231 Table…Average power production expenses during 1995-1999 for

investor-owned electric utilities (in units of cents per kWh)

Operation Maintenance Fuel Total Fossil (coal) fueled steam

0.26

0.26

1.56

2.08

Small scale gas turbine

0.44

0.44

2.52

3.40

Caution must be exercised in comparing costs associated with generation of electricity by a large, integrated, and pooled system with those from a single generating unit or a single isolated power plant (Baumeister, 1967). The reliability of service, accuracy of frequency control, and adherence to a preset voltage level are generally substantially different in the case of the single plant than in that of a pooled system. In some industries such as the electrothermal, electrochemical, and metallurgical industries the product cost is significantly influenced by the cost of electricity. However, in some manufacturing and industrial sectors the price of electricity may be less important than the availability of an abundant supply at accurately controlled frequency and voltage and with a high index of service reliability.

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An industrial power plant designed to meet the requirements of an isolated load involves radically different design considerations with respect to reserve capability, spinning reserve, range of voltage regulation, and frequency control from those of a central station within a system of other generating stations, which in turn are pooled with adjacent systems. A central station of a utility system is, designed to meet not only the existing and prospective loads of the system in which it is to function but also the pooling and integration obligations to adjacent systems. Design will, therefore, be required to take into account factors such as scheduled maintenance, reserve capability, type of prime mover, fuel, water supplies, geographic conditions, fuel-transportation requirements, transmission limitations, labor costs, and taxes. Of the prime movers, internal-combustion plants are generally relatively small in size, and plant capacity is built up by increasing the number of engine-generator sets. The forms of internal-combustion prime movers are many and include gas engines, Diesel engines, and semi-Diesel engines, as well as kerosene and gasoline engines. For central-station service, the Diesel engine is the more widely used type of internal-combustion prime mover; this is especially true for remote area protection and for peak-shaving use. Gas-turbine prime movers have gone through rapid technological improvement. Unit sizes are available up to 30000 kW, either in modular groups of prime movers driving a single generator or in complete, self-contained turbo-generator sets. There is some waste heat exhausted to the atmosphere, and this has suggested the use of specially designed waste-heat recovery boilers in special cases. Whether the prime mover is a steam turbine, a diesel (internal-combustion) engine, or a gas turbine, certain common design considerations, which affect cost, prevail. In the case of fossil-burning thermal plants, the question of location near fuel source weighed against proximity to load centers will influence cost of transportation of fuel on the one hand and the transmission of electricity on the other. Internal-combustion-engine plants are sensitive to loss of capacity as elevations increase above sea level.

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Technological improvements permit steam-electric units to be built at capacities as big as 1GW or more with modern high-pressure, high temperature designs such as 2400 psi and 1000 oF superheat and reheat. In a rural area, with relatively easy transportation problems, low land costs, and easy material-storage conditions, oil-fired steam-electric stations may at present cost less than $110 per kW for the first unit, with costs of additional units low enough to bring overall station costs down another $2 per kW (Baumeister, 1967). Coal-fired stations with additional handling facilities for fuel and ash may cost $4 to $5 per kW more than the oil-fired equivalent regardless of unit size. Extremely crowded urban conditions may add $6 to $9 per kW to the cost of an equivalent rural station. Full-outdoor and semi-outdoor stations may save $5 to $10 per kW. If natural gas is burned instead of oil or coal in outdoor and semi-outdoor plants costs may decrease by another $3 to $5 per kW. Special cost problems of extremely high-pressure, supercritical stations must be treated separately (Baumeister, 1967). Higher-pressure and double-reheat plants cost more than conventional plants but effect reduction in heat rates. Reduction in fuel costs in specific cases must be balanced against the increased cost of equipment. An additional plant cost of $5 per kW may be expected with pressure increase to 3500 psi. The complete package Diesel-electric unit in standard sizes for immediate full-outdoor installation has brought station costs down to levels of about $100 per kW, although much higher costs were observed in special situations. The cost of gas-turbine power plants ranges from $60 per kW to $80 per kW without waste-heat-recovery equipment. Fuel, operating and investment costs for a variety of electricity generation options may also be found in a series of publications such as, OECD (1990) and GDS (2001). Electricity busbar cost depends upon plant capital cost, plant capacity factor, fixed annual charge rate, and operating and maintenance costs. Electricity generation costs are very dependent on, particularly, the assumed discount rate (commercial 10% or more, public sector around 5%) (Blunden and Reddish 1991; OECD/IEA NEA 1998).

21

Effects of the transmission/distribution of electricity and inflation/escalation must also be considered in costing (Kara at al.,1982). For instance, in coal-fired power systems, onshore construction of the transmission cable was estimated to be roughly 12% of the total construction cost when a low capital cost was 866/kW (1982 figures, when coal plant construction prices were expected to rise 5 % annually under a base case scenario) for a 400 MW coal-powered electricity generating plant. In 1882, prices of fuel (coal) was expected to escalate at 2.5 % above the general rate of inflation (or a steady 1 % annual escalation in real fuel prices, or a rise of 3 % per year in fuel (coal) prices). ENVIRONMENTAL CONSIDERATIONS On average we each breathe in a day 14 to 18 kg of air while we consume only 1.5 to 2.0 kg of water in one form or another and no more than 0.7 kg of dry solid matter as food (Parker,1978; Perkins, 1978). A human body (68.5 kg man) requires something like 50 lb of air a day to sustain its reqirements for oxygen. That amount multiplied by the world population of about 4 billion in 1974 (Perkins, 1974) means that about 200 billion lb of air are breathed every day by mankind. We can estimate the quantity of food a man consumes per day at about 1.5 kg. Thus man takes in about 15 to 20 times the amount of air as food. This explains why we require pollutant concentrations in air to be an order of magnitude or more lower than concentrations we allow in food. Air pollution and weather can reduce the productivity of the power plants. There are technological, economical and ecological reasons which prevent wider use of fossil fuels, in general, as a universal energy source. For example, the sum of environmental damages under the usage of coal is 9.82 USD for each GJ of energy produced and the quantity of wastes during the energy production using coal reached 3 tons in 1996 (Mine symp,1996).

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Benefits from emissions avoided in a particular region by the year 2020 were estimated in 1998 dollars as $13/ton (12 million tons, $120 million), $2.03/lb (32 thousand tons, $85 million), and $0.82/lb (38 thousand tons, $40 million) for the global warming CO2 emissions, acid rain SOx, and smog NOx, respectively (GDS...., KÇDR,1999.....). Table.. Emissions per unit of power generated

kg CO2/MWh

kg SO2/MWh

kg NOx/MWh

Noise Level*

Coal 960 6.08 (a) 0.82 High/Moderate Oil 708 5.10 (a) 0.82

(b) 1.36-14.98 (c) 0.14-1.82

High/Moderate

Natural gas 468 0.0032 (a) 0.82 (c) 0.14-1.82 (d) 1.00-12.71

High/Moderate

Biomass/Biogas (a) 0.82 (c) 0.14-1.82 (d) 1.00-12.71

High/Moderate

(a) If steam turbine is used (b) If diesel engine is used (c) If combustion turbine is used (d) If natural

gas engine is used. *Noise level is high if diesel engine is used for oil, natural gas engine is used for natural gas and biogas, and steam turbine is used for all kinds. When combustion turbine is used for all the natural gas, biogas, fuel-oil and coal to generate electricity, noise level is moderate (CECA, 2004).

If 25 million kWh electricity is generated in a coal electricity plant there would be about 25000 tons of CO2 produced as by-product. A 20 billion kWh energy produced from fossil fuels on the average causes 15 million tons of CO2 emissions. Under the conditions of today’s discrepancies between countries wealths, technological levels, and the costs of existing alternatives and renewable energy options, it can be said that no clear preventive/reductive solution to expected/experienced results of the global warming issue has yet been suggested. As concerns about global warming have mounted, nearly all the attention has centered on carbon dioxide which is known as the most extensive one among the greenhouse gases within the atmospheric sink. Molecules of methane, as another warming agent, are about 30 times stronger but less in amount than carbon dioxide.

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Table 8: Anthropogenic Air Emissions in Turkey, 1990-2010 (in thousands of metric tons)

Component 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2010

SO2 765 841 821 768 992 1,016 1,172 1,234 1,361 1,347 995

NOx 628 633 651 731 715 777 847 852 834 911 2,044

CO 3,130 3,110 3,225 3,460 3,363 3,552 3,684 3,722 3,644 3,607 10,986

NMVOCs 462 457 479 527 516 581 613 620 615 613 1,925

Projections for 2010 from Gothenburg Protocol Source: EMEP (Cooperative Program for the Monitoring and Evaluation of Long-Range Transmission of Air Pollutants in Europe) - Oslo, Norway Table 9: Fossil Fuel-related Carbon Dioxide Emissions in Turkey, 1990-2001 (in millions of metric tons of carbon) Component 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

CO2 from coal 16.08 18.47 17.16 16.19 15.59 15.97 18.48 22.05 22.84 20.85 20.08 19.44

CO2 from natural gas 1.82 2.22 2.43 2.71 2.88 3.71 4.47 5.34 5.66 6.71 7.95 8.49

CO2 from petroleum 17.35 16.94 17.94 20.27 19.40 21.51 22.82 21.99 21.13 21.36 22.15 22.14

Total CO2 from all fossil fuels

35.26 37.63 37.53 39.17 37.87 41.19 45.76 49.38 49.63 48.91 50.18 50.07

note: components may not add to total due to rounding Source: DOE/EIA MATERIALS AND METHOD The aim of this presentation has been to expose the quantitative results of a research on the selection from among four different electric-power generation projects, based on financial criteria as well as the non-monetary considerations. The alternatives, involving the utilization of coal, fuel oil and natural gas resources and biogas, are compared in regard to the six selected and ranked attributes including the monetary factor, cost.

24

Table…denotes the background statistics of this work resulting from a survey, conducted during a 7-year-long period and based on responds to questionnaires distributed to a total of 428 respondents. Table…..Background data for selecting and ranking the attributes of this work Year Cost Safety Reliability Availability Demand Future

1998 21 14 7 10 6 6

1999 13 14 5 3 5 3

2000 14 15 2 3 4 2

2001 18 12 4 3 3 1

2002 18 15 10 6 7 4

2003 26 26 9 9 11 4

2004 35 37 10 5 5 3

Total 145 133 47 39 41 23 428

The respondents included groups from academicians, lawyers, administrative people, housewives, power plant managers and workers, and senior students from chemical, environmental, electric-electronic, mechanical, and industrial engineering departments. Feedback to the survey questions were received through a variety of means including communications in written forms, face to face dialogs, electronic mailing, and telephone conversations. As can be deduced from Table 1, the most important attribute for the selection from among alternative projects is the cost, while the attribute demand appears to be the least important. A series of calculated electricity generation costs, corresponding to the range of a set of variables selected for each alternative of this study were used as the monetory attribute. Parameters relevant to the calculations of electricity generating costs for 8760 MWh/year net electricity output producing units are listed in Table…

25

Table…Independent parameters used for cost calculations of this work Parameter Unit of the

parameter Range tested in this study

NEO Net annual electricity output needed

MWh/year

8760

Capacity utilization factor

% 70 ;75 ;80; 85 ;90

CE Conversion efficiency

%

20; 30; 35; 40; 50

Calorific values of fuels: Coal Fuel-oil Natural gas Biogas

Unit costs of the selected fuels: Coal Fuel-oil Natural gas Biogas

$/ton $/bbl $/GJ; $/(1000m3)

45 26 2.50 80

Cost indices for complete power plants

I=315 in 1982 I=400 in 2004

Cost-capacity power for field-erected bare modules: Coal-fired PP Oil- or gas-fired PP

(1MW-1000MW) 0.85 0.84

Interest rates %/year 5; 6; 7; 8; 9;10 Useful lives years 20; 25; 30;35 Percentages of capital costs for O&M expenses

%/year

3; 4; 5; 6

Relevant data and information about the remaining attributes for each option were deduced from the statements given in the previous and following sections of this manuscript and from the literature cited. Environmental considerations, including global warming effects, and existing statistics on previously experienced risks are combined in the safety parameter. Relevant emission data presented in the previous section of this manuscript has been used to quantify this parameter. Gray (1999) reported some individual cancer risk data of EPA on HAPs in emissions from power plants. All power plants had maximum individual risks below 1x10-4, and more than 97% had risks below 1x10-6. In virtually every case, a risk estimate less than one in a million, 1x10-6, is considered negligible by regulatory agencies. Natural gas power plants were kept exempt from cancer risk

26

assessment due to the cleanliness of their emissions. Of the individual cancer risk estimates for coal-fired power plants, only 2 of the 426 plants (0.46 %) investigated exhibited highest risk in the range 1x10-6-1x10-5. For the case of oil-fired power plants, 6.57 % (9 plants out of 137) were ranging between 1x10-6 and 1x10-5 and 1.46% were within the range of 1x10-5 -1x10-4. In our study, biogas is intutively located between natural gas and coal in respect to the risk issue due to the lack of sufficient literature data and experience on this aspect. Reliability parameter reflects mainly the capacity factors of the production units throughout the options’ useful lives. Availability here stands for various aggregated, diffuse, and concentrated forms of the resources regarding their existence, extensiveness, and achievability criteria. Public viewpoints and preferences on each option is included in the attribute, demand, as a lumped factor. Sufficiency of the existing resources and expectation of the technological improvements during the forthcoming decades are lumped in the factor, future, which actually measures the time needed for the options’ effective utilization, in association with the well-known learning curve slope. The Delphi process was applied for the decision-making process in defining and grading the attributes from different perspectives. All the dominance, satisficing, disjunctive resolution and lexicography methods, as the non-compensatory models, and the non-dimensional scaling, Hurwicz, and additive weighing techniques, as the compensatory models, were used for evaluating the mutually-exclusive projects. Determination of the best set of combination ( among 2^4=16 mutually exclusive alternatives) of the four independent projects within the portfolio limits was accomplished by considering the amount and cost of the electricity imported by Turkey. Additionally, benefits from elimination of emissions were also taken into consideration. RESULTS AND DISCUSSIONS Cost, as the most important monetary attribute of this study, was computed for an actual electricity demand of 8760 MWh/year. Within the ranges of the independent cost-determining parameters assigned

27

for our study, this net output, before transmission losses, corresponds to a range of power generating capacities between 1MW and 1.43 MW. Net electricity generation capacities of the options can be found in the literature as low as 0.05 and as high as 10000 MW for some others, depending on the technology used. Although by 1970s, immence facilities of several thousand megawatts each were common, this trend has been reversed since 1980s as new generation installations generally consist of smaller (~1 MW) advanced systems with dramatically improved efficiencies. A megawatt is typically considered to be sufficient electricity to supply 1000 homes. Annual costs of electricity generation for each combination of the relevant parameters were computed by use of related spreadsheet programs and the generation cost was noted to change between a minimum of 2.74 cents/kWh generated to a maximum of 7.07 cents/kWh for a 1.43 MW capacity. The minimum value for this particular case is associated with the conditions of full capacity utilization of a coal fired power plant, 35 years of useful life, an interest rate of 5 %, conversion efficiency of 35 %, and 3% per year of initial investment cost allocated for the operating and maintenance expenses. The maximum electricity generation cost was obtained for oil-fired power plant with a capacity utilization of 70%, 20 years long useful life, 10% interest rate, and the remaining two parameters being unchanged in values. Typical annual fuel costs for a set of variables contributing significantly to the overall electricity generation costs are presented in Table…. Table… Annual fuel costs in $ per year computed for varying capacity

utilization ratios (0.7-0.9) and conversion efficiencies (0.2-.5) for the 8760 MWh net electricity generating units of this work

Coal ($45/ton)

0,2 0,3 0,35 0,4 0,45 0,5

0,7 323000 277000 194000

0,75 452000 301000 258000 226000 201000 181000

0,8 242000

0,85 228000

0,9 251000 215000 151000

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Coal ($0.5/GJ)

0,2 0,3 0,35 0,4 0,45 0,5

0,7 75000 64300 45000

0,75 105000 70000 60000 52000 47000 42000

0,8 56000

0,85 53000

0,9 58000 50000 35000

Fuel Oil($26/bbl)

0,2 0,3 0,35 0,4 0,45 0,5

0,7 624000 535000 375000

0,75 874000 583000 499000 437000 388000 350000

0,8 468000

0,85 441000

0,9 486000 416000 291000

Natural Gas ($80/1000m3)

0,2 0,3 0,35 0,4 0,45 0,5

0,7 310000 266000 186000

0,75 434000 289000 248000 217000 193000 174000

0,8 233000

0,85 219000

0,9 241000 207000 145000

Natural Gas ($2.5/GJ))

0,2 0,3 0,35 0,4 0,45 0,5

0,7 375400 321800 225257

0,75 525600 350400 300300 263000 233600 210240

0,8 281500

0,85 265000

0,9 292000 250000 175200

Bio gas($0.05/GJ)

0,2 0,3 0,35 0,4 0,45 0,5

0,7 7500 6400 4500

0,75 10500 7000 6000 5200 4600 4200

0,8 5600

0,85 5300

0,9 5800 5000 3500

29

CONCLUSION AND SUGGESTIONS The quantitative results of this investigation indicated that, if only the fossil-fuel options and biogas alternative are considered for a specific amount of energy needed, not any single one may be considered as the most reliable and promising one for the near- and far-future applications. However, if sufficient technology adaptation, renovations and innovations can be realized, an optimized fuel-mix option appears to be justified and this may attract the developing and underdeveloped nations, from cost-effectiveness, sustainability and environmental management viewpoints. REFERENCES

Anderson, Gregor M. 1996. Thermodynamics of Natural Systems. New York, NY: John Wiley & Sons.

Anderson, Larry L. and David A. Tillman (Eds). 1977. Fuels from Waste. New York, NY: Academic Press.

ACCC. 2004. Atmospheric Change and Climate Change, http://www.geo.arizona.edu /palynology/ ges462/22climatmo.html 9 pages. Bagdadioglu, N., C.M. Waddams Price, and Thomas G. Weyman-Jones. 1996. “Efficiency and Ownership in Electricity Distribution: A Non-Parametric Model of Turkish Experience.” Energy Economics 18:1-23. Baumeister, T. and Lionel S. Marks (Eds) 1967. Standard Handbook for Mechanical Engineers. Seventh Edition. New York:McGraw Hill. Blunden, John. and Alan Reddish (Eds). 1991, Energy, Resources and Environment. London: Hodder&Stoughton.

Borbely, Anne-Marie and Jan F. Kreider 2001. “Distributed Generation: The Power Paradigm for the New Millenium.” CRC Press. http//www.deforum.org/de-overview.htm