Fund opens to assist small scale renewable electricity generation

Smaller-scale renewable electricity generation received a boost today with the announcement that the Distributed Generation Fund, run by the Energy Efficiency and Conservation Authority (EECA), has opened and is receiving applications.

The fund helps potential developers of distributed generation projects, such as community-owned wind farms, small-scale hydro, geothermal, solar, or other renewable energy technologies, complete detailed feasibility studies to assess whether the project is viable.

 "There have been lots of exciting developments recently in the area of distributed generation.

Thanks to a pilot fund we ran last year, we know that there is a lot of potential out there, but one of the barriers faced is being able to tell whether the project really stacks up," said EECA's chief executive Mike Underhill.

"The DG Fund can help demonstrate that there is cost-effective potential for smaller-scale generation in New Zealand, and help developers overcome a major hurdle."

Distributed generation can be used to generate electricity for homes, farms, businesses, and industries, and connects into the local electricity network, allowing electricity to be sold into the 'grid'.  It can also help new independent generators develop a stake in the electricity industry.

"By developing smaller-scale generation closer to demand, we can increase the use of renewable energy, reduce transmission and distribution losses, make our electricity supply more diverse and dispersed, and in some situations make local networks more reliable and resilient", says Mike.

Interested parties are encouraged to respond to the Request for Proposals which has been posted on the Government Electronic Tendering Service Website, and on EECA's website at: http://www.eeca.govt.nz/distributed-generation-fund

The closing date for applications is Thursday October 8^th 2009.

FAQ's

Q: What are the objectives of the Distributed Generation Fund?

The Distributed Generation Fund aims to identify and support DG projects that are close to being financially viable but have failed to attract investment as a result of undue barriers.  One common barrier to the deployment of cost-effective DG projects is the difficulty that potential developers have in identifying and verifying the financial viability of the project in question.

In addition, the fund will help test the DG market to identify potential cost-effective niches

and build up a body of real-world evidence and knowledge about barriers to the uptake of cost-effective DG.

Q: How much is the grant?

Under the fund, EECA will contribute up to 75% of the cost of an approved feasibility study, with a maximum grant of $20,000 per application.  

Q: What were the results of last year's pilot fund?

Last year EECA funded 17 distributed generation feasibility studies as part of a pilot fund. They included wind, hydro, geothermal, biogas projects, and heat recovery engines. All were proposed by 'non-traditional' electricity market participants such as new independent electricity generators, local councils, lines companies, Trusts, and community boards.

The first round of the fund demonstrated that cost-effective DG opportunities exist in the New Zealand market.  The original target milestone was to identify at least 0.1 PJ per annum of cost-effective.  This was surpassed with a final total of approximately 25MW of electrical capacity and 1.7PJ p.a. of renewable energy potential being identified.

Q: What was learnt from last year's fund?

The results of last year's fund provided further evidence of some of the exciting developments in the distributed generation area. For example, it is often thought that smaller-scale electricity generation projects suffer from an inability to utilise economies of scale compared to large-scale developments. This can make the project economics untenable.

However, it has been shown that developers are finding niche and innovative ways of overcoming this problem. The use of smaller second-hand wind turbines (typically in the 100kW-1MW range) can be financially viable at sites not appropriate for larger developments. Lower capital costs mean that positive project viability can be maintained at sites with lower wind speeds, and further away from a suitable network connection.

Similarly, a number of projects looked at the feasibility of re-commissioning abandoned small hydro plant, where existing infrastructure (earthworks, tailrace, dams or weirs etc) may be able to be reused. In these situations the capital costs of the project can be minimised, improving the overall project economics.