Making way for Micro power

 



Mr Seth Dunn
Research Associate
Worldwatch Institute,Washington, DC
  


About the Author

Mr.Seth Dunn is Research Associate at the Worldwatch Institute, an environmental think tank in Washington, DC. He specializes in energy and climate issues
 

Abstract

Recent surges in the stock value of 'micropower' technology companies are symptomatic of systemic change in the electricThis solar dish/Stirling system can run on natural gas, landfill gas or hydrogen, as well as solar, generating about 22kW. It was built by Science Application International Corporation of Golden, Colorado, and was installed at the Pentagon in Washington, DC in June 1998. After several months' operation it was transferred to a test site in Arizona (Sandia National Laboratoriesity business, writes Seth Dunn of the Worldwatch Institute. Here he looks at the near-and longer-term growth potential of distributed generation in developed and developing countries, and at how it will be affected by electric industry restructuring, nuclear power plant decommissioning, and new environmental regulations, as well as by policy issues.


Utility stocks have long been thought stable, unexciting, and suitable for 'widows and orphans.' But a handful of power industry newcomers have behaved rather out of character since the new millennium's beginning. Share prices in solar cell manufacturers Astropower and Energy Conversion Devices have roughly tripled. Fuel cell firms Plug Power and Ballard Power Systems have seen their stocks double and triple, respectively. And the microturbine company Capstone Turbine, which went public in late June, has watched its share prices nearly quadruple.

At Denver International Airport, Colorado, three 2585 Hp natural gas engines provide part of the power, plus chilled and hot water (Waukesha)
Far from a temporary day-trading trend, these recent stock surges in 'micropower' technology companies are symptomatic of systemic change in the electricity business. A triple power shock of technological, economic, and environmental trends is reviving Thomas Alva Edison's original vision of small-scale, localized electric generation, as new technologies as small as one-millionth the size of a large nuclear plant begin to enter the market. Now as then, entrepreneurialism and investment capital are feeding off each other, bringing a long-dormant dynamism to the power sector.

The resurgence of smaller, more localized power has spawned a diverse nomenclature: distributed generation, on-site generation, personal power, small-scale generation, self-generation. But the underlying premise is simple: the growing economic value, and viability, of using decentralized, modular power that is closer to the site and scale of actual use. Parallels are being drawn with the
shift from mainframe to personal computers - the term 'distributed generation' is derived from distributed computing, which denotes the rise of PCs during the 1980s - and the move from stationary to mobile, cellular phones.

Table 1. Typical power plant scales, United States, 1980-2000
Plant type Average scale(kW)
Nuclear plant, 1980
 1,100,000
Coal plant, 1985 600,000
Gas turbine, combined-cycle plant, 1990-2000 250,000
Industrial cogeneration plant, 2000 50,000
Wind turbine,2000 1,000
Microturbine,2000 50
Residential fuel cell,2000 7
Household solar panel,2000 3
 
Cleaner, quieter, and more efficient than their ancestors of a century ago, the new micropower technologies are scaled to the electrical needs of today's world (see Table 1). Power use in residential and commercial buildings significantly outweighs industrial power use in most countries. And while conventional power plants generate approximately one million kilowatts, actual scales of use are far smaller: US residential consumers use power at an average rate of no more than 1.5 kW, and commercial consumers 10 W. Providing electrical services at these sizes, and nearer the user, avoids a whole range of economic and environmental costs associated with generating power from large, centralized thermal plants and delivering it over long distances (see Table 2).

In particular, rapid deployment of small-scale power would foreshorten the central model's long legacy of environmental damage by facilitating the broader energy transition to a clean, efficient renewable-hydrogen economy. And for the 2 billion people who remain without access to electricity, micropower may represent the last best hope of joining the electrified world. As societies move toward more open, competitive electricity systems, these advantages of small-scale power will become increasingly apparent.
Clean-burn options
 
Caterpillar engine, used for cogeneration at Concord Lafayette Hotel, Paris
(Caterpillar Electric Power)
The leading edge of the commercial micropower industry - defined here as systems of 10 MW and below - is the small diesel 'genset,' or reciprocating internal combustion (IC) engine, that is closely related to those found in trucks and buses and has for decades provided power for off-grid applications. Even as these traditional markets expand, a growing number of these systems are now being installed as backup generators for many commercial and even residential buildings. In the last decade, a new generation  of  'packaged'  diesel   power
plants burning natural gas have emerged on the market for use in commercial buildings.
 
Since these engines are already mass-produced (for transportation) by manufacturers around the world, they are relatively low-cost, as low as US$600 per kilowatt, and have a well developed sales and maintenance infrastructure in some countries. At least 20 companies already produce these systems, most based in Europe and North America, including well-known firms such as Caterpillar, Detroit Diesel, and MAN. The global market for these engines has more than doubled since 1990.

With such systems, efficiencies in producing electricity range from 20-45%, depending largely on the size of the plants, which range from 5-10,000 kW. In most of these packaged engine generator sets, attached heat exchangers capture the waste heat from the engines, which can be used for water or space heating, or for industrial process heat, increasing the efficiency of the total system to 80% or more. Waukesha and Caterpillar, for example, offer 25 kW packages that are suitable for small commercial applications such as fast-food restaurants. Some manufacturers have assembled gensets that include vapour-compression chillers, which produce chilled water, with additional cooling capacity provided by another chiller powered by the engine's excess heat.
Table 2. Eight hidden benefits of micropower
Benefit Explanation
Modularity
 By adding or removing units, micropower system size can be adjusted to match demand
Short lead time

Small-scale power can be planned, sited, and built more quickly than larger ones, reducing the risks
Fuel diversity and reduced price volatility
Micropower's more diverse, renewables-based mix of energy sources lessens exposure to fossil fuel price fluctuations.
Load -growth insurance' and
Some types of small-scale power, such as load-matching cogeneration and end-use efficiency, expand with growing loads;the flow of other resources, like solar and wind, can correlate closely with electricity demand.
Reliability and resilience
Small plants are unlikely to all fall simultaneously, they have shorter outages, are easier to repair, and are more geographically dispersed.
Avoided plant and grid construction and losses
Small-scale power can displace construction of new plants, reduce grid losses, and delay or avoid adding new grid capacity or connections
Local and community choice and control Micropower provides local choice and control and the option of relying on local fuels and spurring community economic development.
Avoided emissions and environmental impacts Small-scale power generally emits lower amounts of particulates,sulphur dioxide and nitrogen oxides, and carbon dioxide, and has a lower cumulative environmental impact and land and water supply and quality.
 

This solar dish/Stirling system can run on natural gas, landfill gas or hydrogen, as well as solar, generating about 22kW. It was built by Science Application International Corporation of Golden, Colorado, and was installed at the Pentagon in Washington, DC in June 1998. After several months' operation it was transferred to a test site in Arizona (Sandia National Laboratories
 
The genset's immediate small-scale challenger is the microturbine - a tiny jet engine that uses heat released by combustion to spin at high speed a single shaft that in turn spins a high-speed generator. Microturbines are derived from the development of commercial jet engines and the gas turbines now dominating the power market. They are also distinctly smaller than the mid-sized turbines now widely available in the 10-50 MW scale. Proponents believe microturbines could revolutionize the power industry, as the microprocessor did the computer industry.

Ranging in size from 15-300 kW, microturbines are expected to be slightly more efficient than IC engines at comparable scales, and considerably more if waste heat is reused. Their chief advantage is their low cost: with just two moving parts, they are in principle easy to manufacture. They are also long-lived (with perhaps 40,000 hours of operation), and unlike IC engines require neither liquid lubricants nor coolants, thus simplifying operations and maintenance. They also produce less nitrogen oxide pollution than IC engines, and have similar, manageable noise control problems. And they are adaptable to a wider array of fuels than conventional engines: in addition to natural gas, diesel fuel, kerosene, propane, and biogas also work well in microturbines, making them viable in developing countries.

Though the commercial market is mostly untested, Capstone Turbine has shipped several hundred of its 28 kW units and has begun offering a 75 kW version - after testing at restaurants, factories, bakeries, and banks. Microturbines are especially well suited for small businesses, which use anywhere between 25 and 300 kW of power. Capstone President Ake Almgren, who predicts a $1 billion microturbine industry in five years, estimates that at a volume of 100,000 units per year, 30 kW turbines could cost $400 per kilowatt. One hundred 100-kW turbines would cost just over $200 per kilowatt - less than half the cost of the most economical power plants being built today.

Another 'newcomer' to the small power market is Scottish engineer Robert Stirling's engine - invented in 1816, unable to find a commercial market in the 20th century, but renewed by modern advances in piston efficiency. These pistons are driven by a gas that is heated by 'external combustion' - a cycle that allows the engine to be made at very small scales and to be used by most combustible materials, including agricultural and forestry residues, as well as solar concentrators. Current versions have relatively high efficiencies at smaller scales - 10-30% - are simple and highly durable, and require minimal maintenance, with operating lifetimes projected at 30,000-60,000 hours.

Quieter than internal combustion engines, Stirling engines will have potentially low emissions if using natural gas. Their initial commercialization will likely be at sizes of 30 W and below, useful for portable off-grid applications. A number of these engines have been installed in remote regions, and several companies are beginning to market packaged systems suitable for home use, with competitive prices of $1000-$1500 projected. Residential cogeneration presents another opportunity. The United Kingdom's

BG Technology is testing a 1-kW CHP system that runs on natural gas - and is small enough to fit into a kitchen cabinet.

Cool power

The most revolutionary new micropower devices require no combustion or moving parts. The fuel cell, invented by the British physicist William R. Grove in 1839, is an electrochemical device that splits hydrogen into ions that either run along an electrode or combine with oxygen, producing electricity and water. Though deployed extensively in the US space program, fuel cells have generally been considered far too expensive for terrestrial power use.

Most of today's cells are hand-built by electrochemists, and require expensive, high-tech membranes, and significant quantities of platinum to catalyze the reactions. But advances over the last 10-15 years have yielded designs with the potential for far lower costs at a wider range of efficiencies, scales, and applications. Those attracting the most attention are phosphoric acid fuel cells (PAFCs), already available commercially, and proton exchange membrane (PEM) fuel cells, which several companies plan to market in the next few years.

Fuel cells hold several advantages over micro-combustion generators. They are virtually soundless, making them ideal for use in buildings where noise is a problem - libraries, office buildings, hospitals. Where they use hydrogen fuel, the only byproduct is water. Most commercial fuel cells will initially derive their hydrogen from natural gas using a fuel processor, which produces some nitrogen oxides but at lower quantities than most micropower technologies. Some fuel cells can be built at sufficiently small sizes to power electronics such as laptop computers or cell phones. With no moving parts, they are more reliable than conventional power plants and require little maintenance.

The central challenge with fuel cells is to lower their high cost. The 200-kW PAFCs on the market today, in use in several hundred commercial buildings and utility applications in the United States and Europe, are mainly for demonstration purposes. At $3000 per kilowatt, they can be justified economically only on the basis of a need for ultra-reliable power. Companies around the world are striving to reduce the cost of fuel cells by developing lower-cost materials and designs, and by figuring out ways to mass-produce the electrochemical devices. According to one estimate, some 85 organizations are now doing research on PEM fuel cells, focusing on making durable, low-cost membranes and improving the cell's efficiency.

The interest of automobile companies has greatly improved the commercial prospects of fuel cells. Most of the world's large automakers, from Toyota to Ford to Volkswagen, have proclaimed fuel cells as the probable successor to the internal-combustion engine; at least four plan to have fuel cell cars in showrooms by 2004. Several are developing hydrogen fuel cell buses, which are being test-driven in Chicago and other cities. Most automotive research on fuel cell-related technologies is being directed toward the PEM fuel cell, led by the small Vancouver Company Ballard. DaimlerChrysler, for example, has a $500 million joint venture with Ballard to develop fuel cell engine systems near its factories in Stuttgart.

Although stationary fuel cells will have to be more durable, and will require a fuel processor to derive hydrogen from natural gas, costs of $1000 per kilowatt or below appear achievable within the next several years. Major power companies are actively pursuing the fuel cell power market, some in partnership with small firms like Ballard and Plug Power, including General Electric in the United States, Alstom in France, Ebara of Japan, and Siemens of Germany. Their current focus is the 100-300 kW commercial market - particularly facilities that need electricity and either heating or cooling during a large part of the day. Larger facilities may simply use several of these modular units wired together in a utility room. The residential market for fuel cells is likely to emerge in small niches at first, and will open wider once prices fall below $500 per kilowatt. The first residential fuel cell application occurred in 1998 - a dishwasher-like installation outside a suburban New York home - and several hundred more tests are planned over the next year.

To the list of fuel-using micropower technologies can be added several running on renewable energy. While technical improvements over the past two decades have lowered their costs beyond expectations, equally sharp declines in fossil fuel power prices have 'raised the bar' for their market entry. Nevertheless, they have established valuable footholds in the 1990s. Two of them, wind and solar power, have become the world's fastest-growing energy sources, with average annual growth rates during the 1990s of 24% and 17%, respectively.
Wind Turbines installed at Lindbjerg, Denmark (NEG Micon)
Wind turbines, a technology that emerged in modern form in the 1980s, generally consist of two or three-bladed mechanical devices that point into the wind. Although the early commercial market for wind power started at less than 50 kW, the scale of the machines has steadily increased, even as the rest of the power industry has downsized. The most popular commercial models are now 600-700 kW, and several 1-2 MW models are on or nearing the market.
Many grid-connected wind projects consist of large collections of machines, called 'wind farms,' but in Germany and Denmark, the first and third largest users of wind power, most of the turbines are sited individually or in small clusters, connected to local distribution systems similar to those of other micropower technologies. The cost of such installations is generally under $1000 per kilowatt, making them competitive with traditional power plants in areas where winds are strong. Unlike generators discussed above, distributed wind turbines are generally located on farmland, near farm and residential buildings, and often owned by a farmer or group of farmers. Some local areas generate enough power for export to other areas connected to the grid.

Although regions in Denmark, Germany, and Spain get 10-25% of their electricity from the wind, the global potential has barely begun to be tapped. Inland regions like the US Midwest and China's Inner Mongolia have wind potentials well in excess of electricity demand, and decentralized wind systems promise an important power source and revenue generator for poor rural areas. Local limits will be determined by the capacity of the local distribution system, and the availability of other generators to provide backup power when the wind is not blowing.

The cost gap between wind and conventional power continues to close. According to the U.S. Department of Energy, wind power is now directly competitive with new gas-fired plants in some regions. Several European nations and companies are moving aggressively to tap the offshore wind resource; Royal Dutch Shell is planning projects in the North and Baltic Seas. A recent report by Germanischer Lloyd and Garrad Hassan estimates that along the coastal regions of these two seas, out to a depth of 30 meters, enough wind potential exists to meet the continent's entire electricity needs.

Another study, from the Forum on Energy and Development, estimates that wind power could supply 10 percent of global electricity by 2020 if recent growth rates are sustained. However, this would require that annual investments reach $78 billion in 2020, or 40% of annual investments in all electric generating capacity in the 1990s.

Another large-potential, small-scale power option on the market is the solar cell, made of photovoltaic (PV) semiconductor chips that convert sunlight into electricity. Surpassing the fuel cell in modularity, solar cells have for nearly two decades been used in satellites, utility demonstration facilities, watches, and pocket calculators. Because of their high cost, their use was at first limited to off-grid applications such as ocean buoys, telecommunications facilities, and remote villages where they were already cost-effective. But PVs have now entered the grid-connected micropower market, in the form of residential and commercial rooftop installations. Marketed by firms like BP Solar, Astropower, and Kyocera, these are typically 2-5 kW systems, enough to provide half or more of the annual power of a residential building, with the rest coming from the grid.

To drive down high upfront costs, several governments, including Germany, Japan, and the United States, have recently mounted ambitious rooftop solar power programs, providing financial and technical support for interested individuals and businesses. The most successful program so far is in Japan, where roughly 50 MW of rooftop systems have been installed on some 30,000 homes. Through a generous government subsidy, Japanese solar system owners sell power back to the utility at the same high price they pay for it. Innovative efforts to promote PV use are also materializing in the developing world, often supported by governments and international agencies. Solar home systems now serve more than half a million households in China, India, Kenya, Mexico, South Africa, and other developing nations.

Government subsidies, market growth, and technological gains promise to deliver sharp solar cell cost reductions in coming years: according to one study, a tripling of annual production would bring PV prices to the level of conventional power. The vibrant solar home system market may motivate such production, as improved solar shingles and tiles allow PVs to compete with expensive building materials. Other promising PV applications continue to emerge, such as placing PV systems on previously contaminated urban areas - turning 'brownfields' into 'brightfields' and lighting parks, municipal buildings, and transit stations. The 'green power' market also looks strong for solar: in May 2000 BP Amoco and other investors announced a $100 milion stake in a leading green power marketer, GreenMountain.com, giving them exclusive rates to offer its products to industrial consumers.

Small-scale applications of other renewable energy technologies are also likely to increase, particularly in remote rural regions where they can displace diesel generators. Some 50 small geothermal power projects, sized at 5 MW and below, are operating in North America, Asia, and Latin America. Microhydro systems at scales down to 50 W are becoming prominent in places like Nepal, Peru, Bhutan, and parts of Europe. China alone has about 60,000 small hydropower stations, totaling roughly 17,000 MW or one fifth of overall rural electricity use. Small wave and tidal systems are expected to become commercial over the next decade. Biomass gasifiers as small as 100 kW, combined with diesel and gas generators, are in use in India and China.

Remaking market rules

Even with improving efficiencies, mass production, and multiplying niche uses for micropower, public policies are necessary to support the broader development of a distributed electricity system. Many of today's power markets still carry the legacy of the state-granted monopoly invented in the early twentieth century by the speculator Samuel Insull, who convinced lawmakers that consolidation was essential for the rapid spread of electricity to the public. Insull's sprawling empire of Chicago-based utility holdings - and his personal wealth that derived from it - collapsed under the Great Depression, but a slew of regulations reinforcing large, central-station power remain (see Table 3). As Walt Patterson, of the Royal Institute for International Affairs, puts it, 'All too often such inherently decentralized technologies find themselves 'playing away,' on the home terrain of the centralized system and according to its rules.' Reorienting these rules to incorporate small-scale systems is a prerequisite to their widespread use.
Table 3. Eight barriers to micropower
  • Higher initial capital costs

  • Ownership rules

  • Customers not rewarded for relieving peak load

  • Impacts on local reliability ignored

  • Unfair standby charges, exit fees, transition costs

  • Burdensome interconnection requirements

  • Discriminatory permitting, fire, building, and other codes

  • Inequitable emissions policies
 
One critical step is for electricity policymakers to factor in the benefits of micropower when making economic comparisons of electricity sources. A 1998 European Commission study, analyzing parts of the United Kingdom, Greece, and Italy, estimates the value of distributed generation at 5.3-10.2 cents per kilowatt-hour. Another important reform is to reward generators for the cost and pollution savings they create by adding micropower to the grid. Variations of this pricing policy exist in the generous electricity 'feed-in' tariffs in Germany and Spain, Japan's PV support program, and 'net metering' policies in 29 US states that allow PV system owners to sell excess power back to the grid.

Developing nation decisionmakers have an especially ripe opportunity to include distributed power's benefits in their infrastructure accounting. A June 1999 report prepared by RAND Corporation for the Pew Center on Global Climate Change recommends that developing countries considering their electric power options eschew the traditional utility analysis method of focusing on the 'least cost' means of generating electricity. This approach is costly, ignoring substantial non-generation infrastructure costs (such as pipelines and transmission and distribution equipment) associated with delivering electricity to consumers. It suggests, instead, that decisionmakers include the costs of electricity delivery - and not just generation - when considering new investments, which would result in more efficient planning and investment decisions, make distributed renewable energy more viable, and reduce carbon dioxide emissions by up to 2.5%.
 
This grid connected 1 MW photovoltaics installation on the roof of the Munich Trade Fair Centre in Germany has been in operation for two years (Siemens Solar)
A related route for empowering micropower markets in the developing world is for governments to require that all competitive bids for new power generation include an assessment of the costs of fuel delivery infrastructure, the costs of adding to and expanding the transmission and distribution system, and the plant's impact on system reserve and reliability. Other suggested measures include accelerating private sector participation; considering the use of low -emissions technologies; participating in international mechanisms and markets
- such as emissions trading or the Kyoto Protocol's Clean Development Mechanism - to attract financing for such technologies; and creating incentives to increase the efficiency of the electricity system.
 
In industrial nations, a key regulatory reform will be to standardize requirements for safely interconnecting micropower systems with the grid. In many regions, utilities fearing the loss of customers have raised concerns about the effect of systems on power safety, reliability, and quality. Creating a melange of complicated requirements, they typically add thousands of dollars to the costs of small-scale projects and make it difficult for companies to produce for a broad market. Efforts to streamline such requirements are underway: in the United States, the Underwriters Laboratory and Institute of Electrical and Electronics Engineers have developed standards for safely connecting PV systems to the electric grid.

Additional policies are required to prevent utilities from unfairly blocking micropower development. Utilities should be required to offer straightforward 'power purchase' contracts to people installing micropower systems, rather than discourage them with unnecessarily dense legal documents. Additional fees need to be minimized so as to keep utilities from adding onerous 'exit', permitting, and other fees. The state of Massachusetts, for example, has reduced 'stranded cost' charges, which fund the retirement of uneconomic plants, in for customers who use on-site systems.

Other obstacles to micropower relate to permitting, siting, and environmental regulation. Small-scale electricity is generally not accounted for in national building, electrical, and safety codes in industrial nations, nor do local code and zoning officials tend to be familiar with the technology. US homeowner associations concerned about lower property values often retain restrictions on modifications - such as solar roofing - well after developments have been finished. Land use planning and zoning laws favour the right to build over the 'solar access' of neighbouring property owners. Environmental regulations in many nations need to be revamped to credit the pollution reduction gains of efficient small-scale systems.

Discrimination against small-scale cogeneration merits special attention: Tom Casten, president of a leading US cogen firm, has identified a plethora of laws, regulations, policies, and practices that assume plants are large and that they separate heat and power, penalizing small plants that combine the two. The tax depreciation life of a cogenerating gas turbine, for example, is 15-20 years even though a small, on-site plant lasts only 5-7 years. Casten recommends that such rules be removed or reformed, and supplemented with per-megawatt pollution and efficiency standards.

Monopoly distribution utilities need motivation to encourage distributed power. Current rules assign electricity rates based on the amount of capital equipment bought and installed or the amount of electricity delivered, giving these utilities a financial interest in blocking self-generation. Thomas Starrs and Howard Wenger recommend in a Renewable Energy Policy Project report that regulators create performance-based regulations that remove these disincentives, and offer distribution utilities an incentive to encourage distributed generation.

Finally, those with an interest in promoting micropower need to politically 'centralize' to press for the overhaul of discriminatory, and creation of supportive, policies. The large, vertically-integrated utility, sprung from the monopoly structure now withering, is not likely to be an ideal business model for capturing the many values of micropower in a competitive market, and will be reluctant to promote the necessary institutional and regulatory reforms. Mirroring the characteristics of the new technologies, a more diverse, numerous spread of smaller, nimbler, horizontal manufacturing, gas, hydrogen, energy service, and distribution companies is leading the push for a distributed energy system.

But a broader constituency - businesses, utilities, public interest and environmental groups, and policymakers - is required to address problems related to bringing micropower into use. Potential models are emerging in the United States, where the California Alliance for Distributed Energy Resources and Distributed Power Coalition of America offer testimony and advocate a range of reforms to address distributed generation in state and national regulations. These groups seek to create better conditions for micropower in a manner opposite that of Insull - not one individual fighting for consolidation and monopoly, but a political network pushing for decentralization and fair competition.

How far, how fast?

While micropower moves from research and development to factory and market at an accelerating rate, many analysts remain skeptical that mass-produced, small-scale distributed electricity can provide a realistic and significant alternative to large, central power plants. Similar antipathies were observed among railroad owners confronted with the early automobiles, and among mainframe computer manufacturers facing the first personal computers. It remains to be seen whether utilities, companies, and policymakers will learn from these lessons of economic history.

One argument levelled against small-scale power is that it cannot make a major contribution toward meeting the electricity requirements of a modernizing economy. Yet the United States already has more than 200 million reliable, self-generating electric power plants - in its car and truck fleet. If the power rating of average American car is taken to be roughly 124 kW, then the US auto industry, in its annual production of 6 million new cars, provides nearly the equivalent of the nation's entire installed electrical capacity through small-scale power units.

If the power rating of average American car is taken to be roughly 124 kW, then the US auto industry, in its annual production of 6 million new cars, provides nearly the equivalent of the nation's entire installed electrical capacity through small-scale power units.

Recent market assessments suggest that a substantial amount of small-scale power is coming. The current annual global market for generators below 10 MW, estimated at 17 to 35 GW, is expected to soar in coming years. A July 1999 study from the Business Communications Company (BCC) concludes that small-scale power will account for 'a significant portion' of the 200 GW of new capacity added by 2003 worldwide. Estimating 1998 revenues from power between 1 kW and 5 MW at $4.2 billion in the United States, it projects the market to grow to at annual rates of 32% in the next several years, surpassing $16 billion in 2003. The fuel cell market would grow from $305 million in 1998 to $1.1 billion in 2003, with the microturbine market exploding from virtually zero in 1998 to $8.5 billion in 2003 - almost one half the US small-scale power sector.

Looking further ahead, projections of micropower's share of new US generation in 2010 range from 5-40%; one study predicts renewables-powered fuel cells will have become a $10 billion market by then. But like the first Polaroid market survey, these may greatly underestimate the true potential. Cogeneration already accounts for 10% of European power, a figure that could triple over the next decade if discriminatory regulations are removed; in Denmark, the share is 40%. It is not inconceivable that, in the long run, most of society's power would come from small-scale local systems, with the rest coming from large wind farms and solar plants - making centralized thermal plants no longer necessary.

It is not inconceivable that, in the long run, most of society's power would come from small-scale local systems, with the rest coming from large wind farms and solar plants - making centralized thermal plants no longer necessary.

The near-term growth of distributed generation will be largely determined by the rate and direction of electric industry restructuring, the decommissioning of nuclear power plants, and new environmental regulations. Some rules in the US and Europe are starting to be rewritten with small systems in mind, but Joseph Iannucci of Distributed Utility Associates - who has logged nearly 300 small-scale power applications in the United States since 1990 - identifies ten 'market accelerators' for micropower (see Table 4). He concludes that if utilities do not take the lead in promoting distributed power, then customers - supported by aggressive energy companies - will.
Table 4. Ten Micropower 'market accelerators'
  • Simplified interconnection standards

  • Modest or upredictable growth in electricity demand

  • Aggressive gas, energy service, and micropower vendors

  • More efficient electricity pricing schemes

  • Saturation of electric transmission and distribution systems

  • Siting difficulties for new central generation plants and transmission and distribution lines

  • Streamlined, standardized permitting procedures

  • Electricity customer dissatisfaction with central power

  • Technological improvement

  • Demand for green energy
 
Public understanding of the costs of conventional power - and of micropower's benefits - will be critical factors in the latter's long-run evolution. List-serves, web pages, and conferences related to small-scale power continue to grow. The US National Renewable Energy Laboratory has an extensive database of past projects and on-line discussion group, and co-sponsors Village Power conferences with the World Bank. Also growing is willingness among consumers in Australia, Europe, and the United States to pay small 'green power' premiums to support clean energy investments or installations. In California, the Sacramento Municipal Utility District - an early promoter of distributed resources - has mounted more than 450 solar panels on the roofs of 'PV Pioneers' financed by modest increases in their monthly electricity bills.