Increasing competition for electricity customers and competing generation technologies, are driving electric utilities down a difficult road trying to develop new products and services to differentiate themselves and create a competitive edge. But in an ironic way, future electric utility marketers may wind up finding themselves competing with small scale, self generation technology in jurisdictions where electricity rates are high enough to allow large electricity consumers to economically adopt new generation technologies.
Traditional electric utilities and emerging new private generation companies with visionary products and services, are investing in new technologies as a way to exploit electricity and natural gas. Although existing electric infrastructure continues to serve primary power needs, electric generation requirements are starting to change as more and more electric networks are opening up to various suppliers and technology sources of generation.
Part of the change in the electricity supply mix is the fact that large electricity consumers are seeking affordable, on- site, reliable power that the industry's central power plants cannot provide. Developments in low-cost, efficient modular power sources may well satisfy these demands. Just as large mainframe computers gave way to personal computers, large power plants may soon give way to modular ones, giving electricity customers more control and the ability to self generate high-quality, dependable electricity at their sites.
The potential widespread installation of smaller, more efficient generation equipment next to customer sites could reduce the value of central generation assets. Distributed generation is now enabling customers to choose a low-cost alternative power source at any time, an option that will give them a powerful bargaining tool.
The availability of distributed generation initially may be viewed as a type of insurance against market disruptions. Given recent weather-related outages, as well as the need and desire for clean power, the demand for distributed generation may grow substantially.
A recent American survey of electric customer opinions regarding distributed generation indicated, about 45 per cent of commercial customers thought that on-site generation could compete with their existing electric supplier. In many cases, the local power supplier is viewed as the source of power disruptions and is vulnerable to a competing reliable source of power.
Companies such as Allied Signal Inc. and Capstone Turbine Corp. are ready to commercially produce low- nitrogen oxide generators based on supercharger turbine technology. Allied Signal plans to market its unit through Public Service Enterprise Group Inc. in the eastern U.S., New Energy Inc. in the West, and Unicom Corp. in the Midwest. In addition, companies like Whisper Tech Ltd., in partnership with Southpower Ltd. of New Zealand, are making rapid progress in environmentally friendly and quiet microgeneration sets using the Stirling engine.
Ballard Power Systems Inc., a leading Canadian company in the fuel cell technology world, has developed technology which may not only affect how stationary power is generated and delivered, but also could replace the combustion engine for transportation applications such as cars, buses, and trucks. In addition, GE Power System s joint venture with Plug Power Inc. earlier this year was a milestone that validated fuel cell technology. This joint venture company, GE Fuel Cell Systems, will market, sell, install, and service Plug Power-designed and manufactured fuel cells for residential and small business customers worldwide. Electricity customers will have a compact generator that is environmentally friendly and highly reliable at their location. Importantly, excess heat will be used for hot water and space heating, which will significantly improve system efficiencies. In addition, the steady stream of current in many fuel cell systems also guards against voltage surges that cripple sensitive power devices.
The interconnection of numerous distributed generation units into a local area network could result in the formation of local distribution grids. The high reliability levels attained by linking together several modular units at a single site or on a microgrid ) such as a housing development or a shopping center) essentially make customers immune to outages resulting from weather-related outages. Ideally, these microgeneration installations could be grid-connected and benefit from net metering.
However, if utilities resist net metering and impose unreasonable interconnect restrictions and costs, then customers who install microgenerators could very well leave the grid entirely. In the end, as North American electric utility monopolies are broken down and replaced by open markets, so too will paternalism give way to electricity independence for suppliers and consumers alike.
Randolph Hurst
Publisher
rwh@istar.ca