Growth rate of onsite power set to explode

Today's global economy is demanding reliable energy generation that the present constrained transmission and distribution network cannot accommodate. One answer: Distributed power generation and onsite power sources. Some say the distributed generation (DG) market could double between 2000 and 2010. Hardly a day passes without a utility making an onsite power-related announcement.
The growth rate of DG as a utility offering is set to explode, according to research conducted by Atlanta-based Chartwell. While data from Chartwell energy company surveys conducted in both 2001 and 2002 saw the same percentage of utilities offering onsite power to commercial and industrial (C&I) customers (38 %), the future has expansion in store. In 2001, 6 % of respondents were planning this product/service offering and 12 % were considering it, for a total of 18 % of companies. In 2002, however, that number jumped to 34 % to 36 % in the planning stages and another 18 % considering offering onsite power.

Utilities' attitudes toward distributed generation run the range. Some view it as a competitive threat; others want a piece of the action. Given the supply-side scenario and the spectre of deregulation, it's certainly an opportunity for customers and providers. The key for utilities is gaining knowledge of the technology and partnering with customers to site and operate the equipment. More than 100 energy companies already have relationships with fuel cell, micro turbine and genset developers, manufacturers and distributors.
Municipal utilities are only slightly more likely than cooperatives or IOUs to offer onsite power to C&I customers. In fact, 59 % of munis are offering or in the planning stages of offering onsite power, while only 57 % of cooperatives and 48 % of IOUs are.

However, company size has more bearing. Of those utilities with more than 1 mm customers, 78 % are offering onsite power. At the same time, only 22 % of those with 500,000 to 1 mm customers offer onsite power; 32 % of those with 100,000 to 499,999 customers; and 30 % of those with fewer than 100,000 customers are offering onsite power.
A Fall 2001 survey of energy companies revealed that 22 % were using DG in their demand management efforts; 4 % were in the planning stages of doing so, and 61 % were considering adding DG to their product mix in order to manage load more effectively. For regulated electric utilities, DG will be most economically attractive in cases where the utility is faced with system constraints, particularly in transmission and distribution. DG at customer sites can provide benefits such as T&D deferral, reduced T&D losses and voltage support. Gas utilities can profit from onsite power sources that run on natural gas.

Distributed generation concepts are being supported from all sides. The DOE, for example, sunk more than $ 274 mm in fiscal 2000 into pursuing advances in micro turbines, advanced reciprocating engines, fuel cells, photovoltaics, wind power and solar systems, as well as system architecture and grid advancements to accommodate interconnection of DG.
At the same time, a variety of vendors are developing and perfecting interconnection technologies, real-time load management tools and networking devices -- essential elements to DG. Environmental groups laud the newer technologies' greenness. Utilities, developers and research facilities are testing new DG technologies.

The primary reasons energy companies and others are installing onsite power are:
-- Improvements in the technologies have made them easier to install and use.
-- Our nation's steeply rising demand for electricity is straining central plant and T&D assets in some areas.
-- Customers and utilities can save money by switching to self- generated power during peak times, flattening the demand curve.
-- Onsite power can satisfy the demand for very high quality power and high reliability.
-- Clean DG technologies can be used to meet environmental goals.
-- Gas utilities are developing strategies for offering customers micro turbines or fuel cells that run on natural gas, not only to provide customers more choices but also to sell more gas.

While distributed resources won't be taking over for central station power -- central station provides economies of scale -- DG serves as an effective supplement to solve local problems and give more local control where bigger plants are not cutting it all the time.