[BETA] Fortnightly

An industry booster looks at the forecasts for price and technology and sees some big "ifs" for modular, on-site and distributed applications.

I'm a believer from way back in using natural gas for modular, on-site and distributed generation. But I worry that we might be overselling it.

Certainly, the idea of a natural gas fuel cell in every home basement needs careful examination. Add to that the notion that we can replace much of our commercial power demand with gas-fired systems such as fuel cells and microturbines.

I've followed closely the industry projections for gas supply and demand, including the much-vaunted 30-Tcf market. These projections take account of steadily advancing technology and signs that the electric and gas markets are converging. One cannot deny the shifting economies of scale and rising environmental concerns that tend to appear to favor natural gas. Yet the industry projections for gas and electricity prices - and their effect on U.S. natural gas supply and demand - remain open to question. The situation is very elastic. It is difficult to predict how environmental pressures might impact coal-fired and nuclear capacity, or what a substantial reduction in existing coal or nuclear capacity would do to natural gas and power prices.

What's more, there are major implications for the very future of the local distribution companies (LDCs). How long can residential and commercial markets for direct gas use hold out against electric competition? Many factors could limit the development of self-generation or microturbines.

My view is hopeful, but tempered. This large-scale conversion to gas-fired applications may eventually take place, but very likely over a much longer timeframe than what is envisioned in some of the more optimistic projections.

Early Work: A New Vision for Gas

The applications I'm talking about are gas-fired generation applications requiring capacities ranging from 5 kilowatts to 50 megawatts, and the associated applications involving combined heat and power, or cogeneration.[Fn.1]

Because it is much cheaper to transport energy in the form of natural gas than as electricity (even after allowing for typical conversion efficiencies of 30 percent to 60 percent on an LHV basis, defined as lower heating value), and because natural gas can be stored at moderate cost (unlike electricity), there are obvious economies that can be found by the overlapping electric and natural gas grids. Beginning in the 1950s at the Institute of Gas Technology (IGT), and continuing at the Gas Research Institute (GRI), I advocated R&D to create technology for using such economies. The goal was to minimize the cost of energy services for all classes of consumers at the highest possible efficiency and lowest environmental impact.[Fn.2] As now is widely recognized, such benefits can be achieved not only by on-site distributed generation (DG), but also by gas-fueled modular generation. Gas-fueled modular generation often is more cost-effective in increasing the capacity of the electric grid than transmission and distribution investments.

At IGT, I started the molten carbonate fuel cell program in the United States, and rallied industry support for IGT's TARGET program (Team to Advance Research in Gas Energy Technologies). TARGET led