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Deregulation Spurring Distributed Power

Deregulation Spurring Distributed Power

Deregulation is creating more opportunities for distributed generation than there have been since the 1920s, according to consultant Frost &amp Sullivan. Although regulatory, technical, economic and environmental hurdles remain, deregulation has prompted utilities and other energy providers to start offering distributed generation as a value-added service to retain customers. Also, some industrial and commercial customers are buying generators to gain independence from electric providers.

Frost &amp Sullivan said deregulation of the electric industry is the main factor impacting the distributed generation market. The company's survey examines attitudes and opinions of two end-user groups toward deregulation and distributed generation.

The first end-user group targeted for the Frost &amp Sullivan survey consists of utilities and other energy providers, including investor-owned electric utilities, munis and co-ops, federal, state and local utilities, energy management companies, energy service companies, and power marketers. Most energy providers are in favor of deregulation, and they expect lower costs, the ability to reach new customers, lower emissions and better power quality to work to their advantage. In addition, many respondents from this group believe deregulation will lead many energy providers to use distributed generation. The most popular technologies are expected to be combustion turbines, micro turbines and fuel cells.

The second end-user group, made up of facility and energy managers of industrial and commercial companies, also believes deregulation will have an overall positive effect on their companies, although many are concerned power quality and reliability may suffer. This group anticipates lower electric rates, reduced operating costs, increased profitability and higher productivity due to deregulation.

According to Frost &amp Sullivan analyst Ella Battle, the major market for distributed generation is utilities, and their interest lies mainly in fuel cells. Industrial and commercial firms have less of an interest, in part because they are not well informed about product capabilities and benefits. However, the majority of those who are interested plan to purchase gas turbines and fuel cells.

Joe Fisher, Houston

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