Distributed generation and mandates of the Kyoto protocol couldmean great things for gas demand and are reason enough to make theindustry super bullish, according to the Edison ElectricInstitute’s (EEI) Charles Linderman, director of fossil fuels,renewable energy and rail policy.

“I challenge all of you to think not of 30 Tcf as the ultimategoal, as a ceiling, [for gas demand] but as potential for futureopportunities.

“There are wonderful opportunities for thermal, gas-basedtechnologies ahead, but not very far ahead. And the implicationsfor both the gas industry and the electric industry are enormous,”Linderman told attendees Tuesday at the Ziff Energy North AmericanGas Strategies Conference in Houston.

As an example, Linderman said Allied Signal is planning toproduce 3,000 gas-powered 75 kW microturbines a month beginningthis June, and GE Fuel Cell Systems and New Jersey Resourcesrecently announced a joint venture. Despite technological advances,deregulation, environmental and reliability pressures makingdistributed generation more attractive, there are obstacles,Linderman cautioned.

“Microturbines take a little more pressure than may be generallyavailable on the [local] system. We are in early discussions withAGA [the American Gas Association] about what’s the obligation toserve requirement of the gas LDC if somebody has put in a gas-baseddistributed generation unit. Do they have to serve in times ofstress?” EEI and the Gas Research Institute (GRI) are studyingapplication of distributed generation and seeking to overcome caseswhere distributed generation could not be sited due to constraintson gas supply. Linderman said power grid issues, such asinterconnection standards and market timing and load requirements,also need to be worked out.

Distributed generation is attractive as a back-up supply ofelectricity to businesses such as grocery stores, which need anuninterrupted stream of power to prevent food spoilage, Lindermansaid. Distributed generation also is seen as politically attractiveas it can enhance electric system reliability, he said.

Specifications of the Kyoto protocol – renewable energyrequirements notwithstanding – are good news for the gas industry,Linderman said. EEI iscompleting an analysis of the protocol’simpact on the gas market. The institute’s base case scenario wouldboost gas to 25% of the U.S. power generation mix by 2010. A highcase has gas taking 48% of the generation mix by 2010. Gas demandcould hit 34 Tcf by about 2009. Linderman said. A scenario forgeneration demand factoring in Kyoto shows gas holding 48% of thegeneration market versus coal with 24% in 2010. Projections notconsidering Kyoto show coal with 50% of the market and gas with 25%by 2010.

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