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Generation: Big or Small?

Fortnightly Magazine - September 15 1996

chiller off peak to provide savings."

That type of business is threefold: It allows the power marketer to establish a relationship, get more business, and boost demand for Caterpillar products.

But it's too early for distributed power to serve as a firm-power source, Swanson admits. "On our product, the driver for it being firm power is how many hours you can operate a year, based on your site emission constraints."

Caterpillar's diesel generator sets cost from $350 to $450/Kw installed, and cost about 8¢/Kwh to operate, based on a $1/gallon fuel cost. The company's natural gas engines can generate power at about 4.5¢/Kwh.

As you can imagine, Westinghouse Electric Corp.'s perspective on generation's future is very different, although it too has its finger on distributed power, such as fuel-cell technology. John Reker, market analysis manager of the company's power generation business unit, says the deciding factor when it comes to the future of unit sizes is the bottom line.

The latest Westinghouse combustion-turbine model, the G series, can produce electricity at 3.5¢/Kwh, depending on siting and gas costs.

"I think you'll still see a lot of central power, because the name of the game is cost of electricity," Reker says. "It's where you get the economies of scale."

For peaking, distributed power will still be used. "That still isn't to say there aren't going to be some small units, 50 Mw and below [used for firm power], but I don't think, certainly in any timeframe soon, that we'll see a major change in that area."

Westinghouse sells

25-, 50-, 100-, 160-, and 230-Mw combustion-turbine units. In the United States, about 85 to 90 percent of the megawatts being purchased are combustion-turbine based, Reker says. A subset involves cogeneration. "In the last several years, a high percentage of combustion-turbine applications involve cogen," he says. "Below the 50-Mw size, I'm sure three-quarters or more also involve cogen."

Whether the future demands large- or

small-scale generation, it's clear that economics will always play a role. That's why two observers raise the nuclear option.

Is it a serious one?

Thompson, of Black & Veatch, says we could see a return to nuclear power because we may have pushed the limits of natural gas, or run out of other options like coal, with developers wary of investing in a single technology.

"There could be some big nuclear units built. ... I'm dead serious," he says. "It's going to happen in China. And it will happen in the United States, too, because when there's gas and you can't get it to where you want to use it, we just start shutting the lights off."

Swanson says Caterpillar is working with Westinghouse on engineering next-generation nuclear plants (600 and 900 Mw) that use generating sets for standby power. For now, opportunities lie in the Pacific Rim, where environmental and political pressures appear less daunting than in the United States.

Of the U.S. nuclear industry, Swanson says, "Hey, who knows, it could come back around." t

Joseph F. Schuler, Jr. is associate editor of PUBLIC UTILITIES FORTNIGHTLY.

E-mail: schuler@pur.com

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