Small scale, big potential

The shift to small scale distributed power generation from traditional central station generating plants looks to be accelerating. Predicting the pace of change is of course very difficult. But for a mere $3150 you can buy a report from BCC of Norwalk, Connecticut, which suggests that in the USA sales of small-scale power plants will grow by an astonishing 32.1 per cent per over the next four years, exceeding $16 billion by 2003, compared with a figure of $4.2 billion in 1998.

In this study “small” appears to be defined as less than 5 MW down to 1 kW. The report’s authors believe the fuel cell market (including phosphoric acid, solid oxide, molten carbonate and proton exchange membrane systems) will grow significantly, from $305 million in 1998 to $1094 million by 2003. They are also extraordinarily bullish, some might say unrealistically optimistic, about the growth potential for microturbines: “A non-existent market in 1998, microturbine technology is expected to gross $8500 million by 2003, contributing as much as 50 per cent to the total small-scale power sector.”

The other two types of small scale power system they consider are engine/generator sets (including diesel and internal combustion engine systems) and combustion turbines. The latter two sectors of the small power market are predicted to grow at the relatively pedestrian, but nevertheless substantial, rates of 11.7 per cent and 15.0 per cent, respectively. The engine/generator set business is estimated to grow from $1914 million in 1998 to $3322 million in 2003, while the corresponding figures for combustion turbines are $1983 million and $3990 million.

Between 1998 and 2003 the authors reckon that around 55 GW of new generating capacity will be installed in the USA and over 200 GW worldwide “and a significant portion of these capacities will be in the form of small-scale power systems in distributed energy applications.”

Looking outside the USA the report’s authors also see major growth possibilities worldwide in small-scale power systems, particularly in areas of the world without any power generation capacity. This is a very large potential market, particularly when it is considered that perhaps 40 per cent of the world’s population are thought to be without electric power.

The potential for small scale distributed power in developing countries is a market opportunity not lost on companies such as Caterpillar, who point to the advantages of distributed power as a way of increasing electricity generating capacity “without the lengthy planning/approvals process and long pay back periods that can be associated with large centralized power stations” and cite Africa as an example.

Only 20-30 per cent of the African population has access to electric power. For the continent as a whole the annual per capita rate of electricity consumption is 492 kWh per year. But this includes South Africa, which accounts for about half of African electricity demand. Take South Africa out and the per capita consumption figure falls to 256 kWh per year, with many of the poorer countries falling below 100 kWh per year. This compares with a world average annual per capita electricity consumption of 2100 kWh..

There is a clear need to invest in generating capacity, with distributed systems having potentially a very large role to play. As well as the basic requirement for more power, there are also the particular problems of providing electricity to rural areas and the need to improve the quality and reliability of supply to industrial users. Distributed systems allow capacity to be added in modest increments, which can be quicker to get off the ground and easier to finance than large centralized stations. Operation and maintenance of smaller systems tends to be simpler and more easily transferrable to local suppliers. There is also the advantage that power can be delivered to remote areas without major investment in transmission and distribution systems.

What about the economies of scale associated with large centralized power plants, which after all was the rationale for scaling up in the first place? These seem to have got lost somewhere along the way, at least according to proponents of distributed systems. Thus Caterpillar claims “significant technical progress and cost reductions in the design and operation of reciprocating engines and gas turbines have allowed smaller scale power plants to become competitive with larger scale generation on a first cost basis”.

Whatever the form of power generation, distributed or centralized, there are still too many barriers deterring private investors in the African power sector, as reported in this month’s news. But development of small scale distributed power projects may be a way of lessening the problems.