Distributed Generation Trends
The on-site power generation marketplace including CHP, fuel cells and solar, are going through a tremendous growth phase. There are five key trends that are accelerating the move to on-site CHP for our clients.
Rising Costs due to Supply and Transmission Constraints
- Power demand continues to grow despite a constrained generation and transmission infrastructure creating the need for new generation options closer to the electricity consumer.
- Nuclear plants are still very difficult and expensive to permit.
- Traditional coal and hydro (maybe nuclear) are no longer feasible for new construction due to environmental concerns.
- New large-scale generation solutions are finding it increasingly difficult to get permitted near major population centers such as New York, Boston, Washington/Baltimore, Philadelphia, San Diego, Los Angeles and
- Transmission grids require upgrading to carry larger loads, but this is expensive and often in conflict with local Public Utility Commission and citizen concerns.
Grid Reliability and Power Outages
- Customers are experiencing an increase in blackouts, storm outages, brownouts from damage to transmission infrastructure, insufficient generation capacity and 100-year weather events that now occur several times per decade.
- Customers with perishable items are particularly exposed as most insurance does not cover weather-related grid outages. We advise potential clients to read the fine print in their insurance policies.
Climate Change Concerns
- Climate change concerns by consumers and corporations have caused enterprises to invest in energy efficiencies that can fulfill corporate commitments to carbon reduction while reducing energy expenditures and polishing ‘green’ credentials.
- Retail customers increasingly reward companies with ‘green’ initiatives.
- Deregulation of the energy generation and distribution markets has created opportunities for new, frequently smaller, entrants including Independent Power Producers (IPP), smart grid services, commercial ground-mount solar and wind, and commercial and residential rooftop solar installations.
- The DOE’s Office of Energy Efficiency and Renewable Energy (EERE) and related Industrial Technologies Program (ITP) are responsible for ‘improving national energy security, climate, environment, and economic competitiveness by transforming the way US industry uses energy.’ CHP systems are among the most promising energy-efficient technologies supported by ITP. In December 2009, the DOE set an aggressive goal of having CHP comprise 20% of the US generation capacity by 2030. In this study, Oak Ridge National Laboratory (ORNL) estimates that, if CHP were to provide 20% of U.S. generation capacity, this alone would avert 60% of potential growth in carbon dioxide emissions between 2006 and 2030; this would be equivalent to taking more than 150 million cars off the road. For a more comprehensive review of the DOE’s position on CHP please click here to view the DOE report.
- More recently CHP is gaining wider acceptance at the State level as constraints in the Utility generation infrastructure result in rising energy costs jeopardizing the State’s ability to attract and retain industrial and commercial enterprises. New Jersey recently implemented a “2011 Energy Master Plan” and updated in 2015, which prominently featured distributed generation and CHP as a major initiative.
- Solar power initiatives and their financing programs have forced Utilities to simplify grid interconnection rules and bureaucracy for facilities less than 2-4MW enabling other on-site power generation services like CHP and fuel cells to take advantage of the energy off-take options and the lower cost financing sources that back-up off-takers enable.
- In much the same way as the computing world moved from a centralized computing structure to a decentralized and distributed computer paradigm, and then to a meshed, redundant, cloud-based service delivery infrastructure; new, smaller, more efficient on-site energy solutions can be combined and meshed with traditional power delivery infrastructure and compete effectively with traditional centralized power plants employed by Utilities to generate baseload and peak power.
- Robust, decentralized generation solutions like CHP are further enabled by the implementation of “smart grid”, electricity transmission and distribution system solutions by major utilities and independent energy solutions vendors. CHP is unique within the distributed generation marketplace because of the ability to parallel and net meter with the grid and, when the utility is down, CHP can power its host facility in “island mode” as well as provide “black start” support to the grid to help the transmission network to recover from a partial or total shutdown.