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Gas Industry Looks for Gains From Distributed Power

Gas Industry Looks for Gains From Distributed Power

Natural gas and distributed electric power should become 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 several microturbines developers who outlined the "opportunities and challenges" of decentralized electricity generation at NGI's GasMart/Power '99 in Dallas last week.

The fledgling industry for producing small generators of 1 MW or less still faces various regulatory and technical barriers, but Ake Almgren and Peter Baldwin, the heads of two microturbine producers, believe 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, CEO of Los Angeles-based Capstone Turbine Corp., noting in California alone estimates show that 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 fuel cell.

"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 broad basis, Almgren and Baldwin both emphasized. "Friendly regulations," 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-MW 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% of that is in the range of 1 to 10 MW [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 also is 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 T/D.

Richard Nemec, Dallas

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