Gas Industry Awaits Gains from Distributed Power
Natural gas and distributed electric power should be close
allies over the next 30 to 40 years as the world transitions to
less dependence on a fossil fuel-based energy economy, according to
proponents of different microturbines who outlined the
"opportunities and challenges" of decentralized electricity
generation May 11 at GasMart/Power '99.
Various regulatory and technical barriers still face the
fledgling industry for producing small generators of 1 megawatt or
smaller capacity, but the heads of two developing microturbine
producers, Ake Almgren and Peter Baldwin, think several niche
markets are ideally suited for their gas-fired products, including
oil field resource recovery, standby generation and small
commercial applications among others.
The U.S. has at least "30 to 40 more years of dependence on a
gas-based infrastructure," said Almgren, president/CEO of Los
Angeles-based Capstone Turbine Corp., noting that in California
alone estimates are a fuel-cell based energy economy would require
a $5 billion investment in a hydrogen infrastructure to support
massive across-the-board stationary and mobile applications of the
"The biggest question long term is what is the future of the
fuel cell? How big an impact will it have?," he said. "In either
case you need hydrogen or methane, which means you have to
radically change today's energy infrastructure."
The interface of distributed power with extensive electric
transmission grids remains a major stumbling block to distributed
generation developing on a board basis, Almgren and Baldwin both
emphasized. "Friendly regulation" eliminating excess charges and
providing for selling excess power back into the grid are needed at
the state level to open up opportunities for microturbines.
As president of Northern Research Engineering Corp., which is
developing a pre-commercial gas-fired microturbine, Baldwin said he
doesn't think regulated utilities should be able to get in the
distributed generation business. "That's sort of like letting the
fox in the hen house," he said, but he added it would be
appropriate for a non-monopoly utility affiliate to compete in this
sector. He sees this already occurring on a larger scale with the
gas-fired combined-cycle merchant plants in the 500-megawatt range
that are popping up all over the country as a form of "distributed
generation," albeit on a larger scale.
The market opportunities for distributed power exist already,
according to the two executives. "Worldwide each year there are
another 55 GW of electricity capacity being added, and about 20
percent of that is in the range of 1 to 10 megawatts (reciprocating
engines)," said Almgren, noting that additionally there is
significant growth in standby power that doesn't even get counted
officially as "new capacity."
In addition to standby power, opportunities include landfill gas
and use of sour gas in oil fields using the flared gas to power
banks of microturbines, and there is also the replacement of added
transmission/distribution (T/D). Almgren cited Capstone's own
experience, selling units to oil field producers in Canada and
Wyoming, and in using their own product at their southern
California manufacturing facilities in lieu of spending several
million dollars for T/D enhancements by its local utility.
"I think transmission and distribution is a driver toward
distributed power," Almgren said. "There is growing concern about
the reliability and availability on the power grid. The faster we
make the microturbines the more sensitive people become."
The so-called T/D function represents a niche market for
distributed power in the sense that today's relatively costly
process of adding T/D can be supplemented more inexpensively by
turbines, according to Almgren, who cites $1 million-per-mile as
the cost of new 500-KV transmission and $400-$500/kwh for added