Generation: Big orDistributed power may turn
heads, but economics points
to central plants.
By Joseph F. Schuler, Jr.
By 2010, distributed power technologies will make up as much as 30 percent of new electric generation.
So says a 1996 study prepared for The INGAA Foundation, Inc.: Natural Gas Use in Distributed Power Generation Applications.
For its part, the Energy Information Administration (EIA) predicts that 175 gigawatts (Gw) of generation will be added in the United States through 2010. If just 20 percent comes from small-scale plants, distributed generation will account for 35 Gw.
But talk to the engineers, distributed-power experts, manufacturers, power-plant packagers and suppliers, and power marketers working in new technologies and you'll find that few agree with the official predictions. Distributed generation's role as a firm power source (em for now at least (em will take a back seat.
Economics will be the driver in the choice of generation, and every unit will need to meet the mark (em whether it puts out 4 megawatts (Mw) or 400 Mw. What's the mark? From $200 to $450/Mw to install; about 2 cents per kilowatt-hour (¢/Kwh) to operate.
Economic factors will determine the route of new generation after what most agree is three years of remaining capacity. These factors include stranded-cost recovery, exit fees, and wholesale and retail access to electricity.
Fuel costs will be paramount. In fact, two market observers predict the (distant) return of nuclear power. Such plants would be technically flawless, the result of experience in foreign countries where nuclear power is still being installed.