Deregulation is creating more opportunities for distributedgeneration than there have been since the 1920s, according toconsultant Frost &amp Sullivan. Although regulatory, technical,economic and environmental hurdles remain, deregulation hasprompted utilities and other energy providers to start offeringdistributed generation as a value-added service to retaincustomers. Also, some industrial and commercial customers arebuying generators to gain independence from electric providers.

Frost &amp Sullivan said deregulation of the electric industryis the main factor impacting the distributed generation market. Thecompany’s survey examines attitudes and opinions of two end-usergroups toward deregulation and distributed generation.

The first end-user group targeted for the Frost &amp Sullivansurvey consists of utilities and other energy providers, includinginvestor-owned electric utilities, munis and co-ops, federal, stateand local utilities, energy management companies, energy servicecompanies, and power marketers. Most energy providers are in favorof deregulation, and they expect lower costs, the ability to reachnew customers, lower emissions and better power quality to work totheir advantage. In addition, many respondents from this groupbelieve deregulation will lead many energy providers to usedistributed generation. The most popular technologies are expectedto be combustion turbines, micro turbines and fuel cells.

The second end-user group, made up of facility and energymanagers of industrial and commercial companies, also believesderegulation will have an overall positive effect on theircompanies, although many are concerned power quality andreliability may suffer. This group anticipates lower electricrates, reduced operating costs, increased profitability and higherproductivity due to deregulation.

According to Frost &amp Sullivan analyst Ella Battle, the majormarket for distributed generation is utilities, and their interestlies mainly in fuel cells. Industrial and commercial firms haveless of an interest, in part because they are not well informedabout product capabilities and benefits. However, the majority ofthose who are interested plan to purchase gas turbines and fuelcells.

Joe Fisher, Houston

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