Utilities should embrace distributed solar generation, offering O&M, aggregation, or marketing services, rather than lament a lost business model.
Distributed Generation: Competitive Threat or Opportunity?
available in sizes from 1 to 100 Mw, and can be deployed in 12 months. They carry lower operating costs than even a central station plant with a gas-fired boiler. Advanced designs available before the decade is out will offer simple-cycle thermal efficiencies of 45 percent, and projected installed capital costs below $500 per kilowatt (Kw).
Smaller combustion turbines designed as packaged, trailer-mounted power plants can be moved from site to site as peaking-power or grid-support requirements dictate. The local value and benefits of the power as delivered compensate for the typically higher capital cost per kilowatt (relative to conventional central station plants).
Fuel cells. In these hydrogen/ oxygen "batteries," reactants are replenished continually. There is no "charging" cycle, only the production ("discharging") of electricity. Fuel cells offer high efficiency and low emissions.
s Phosphoric acid fuel cells are commercially available at a 200-Kw size and have proven highly reliable in over 70 field applications. Several such units recently passed one year of continuous operation without a forced shutdown. Current prices run about $3,000/Kw (twice what their market value would
support), but higher-volume production could trim prices to $1,500/Kw in three to five years.
s Molten carbonate fuel cells run at a higher thermal efficiency and carry a smaller installed "footprint" for a given capacity. A
2-Mw demonstration plant recently began operation in California. The next-generation commercial plant (3 Mw, year 2000) could fit on the area covered by two tennis courts.
s Solid electrolyte or solid oxide fuel cells are still under development. By 2002, cells in the range of 15 Kw to 3 Mw could serve as small cogenerators in commercial buildings, multi-residential buildings, and megawatt-class, all-electric distributed power systems with efficiencies in the 60- to
Microturbines. These small combustion turbines (25 to 100 Kw), mass-produced at a low cost, combine the reliability of commercial aircraft auxiliary power systems (onboard electric generation) with some of the design and manufacturing techniques used in automotive turbochargers (e.g., air-supported bearings). In three to five years they could provide reliable, low-maintenance power to meet onsite electric demands in the commercial sector for under $300/Kw. Since they have lower efficiencies (28 to 32 percent), their application could prove vulnerable to significant natural gas price increases.
The market potential for distributed generation for industrial applications appears significant. It poses a near-term issue for utilities: How vulnerable is the industrial and commercial customer base to third-party investment in distributed generation?
A 1995 Gas Research Institute study estimated that 24 gigawatts (Gw) of industrial cogeneration will enter service by 2010. Much
of this new capacity will come from combustion turbine and combined-cycle facilities fired by natural gas. Growing requirements by industrial users for electricity and process steam will drive the market, along with their own customers' needs for lower end-product prices, and environmental compliance. The advent of retail wheeling would enhance this market by offering outlets for excess cogenerated electric power from the cogenerator to neighboring retail customers.
The market potential for distributed generation in the industrial sector creates the opportunity for utilities and/or