Until a few years ago, the concept of distributed or modular generation was largely academic. Recent developments in the electric power industry, however, have brought this once esoteric subject to the attention of utility executives as well as state and federal policymakers. Centralized, large-scale plans to use modular generators and demand-side management (DSM) to displace utility investments in bulk-power resources and high-voltage transmission projects is unrealistic. Nevertheless, the inevitable growth in the market for distributed generation will place increasing stress upon regulatory and organizational infrastructures.
The basic forces behind the anticipated expansion of distributed generation are the increasing scarcity of resources, the concomitant technological innovations in energy conversion and storage applications, and the evolution of regulatory oversight in response to resource scarcity and technological change. Resource scarcity is reflected in the growing competition over fuel availability, increasing power-plant siting constraints, and the dwindling number of large thermal hosts for cogeneration projects. Downsizing facilities increases both investment opportunities and the number of eligible investors.
Technological change has created a diverse array of commercially competitive products. For example, the average consumer can purchase a portable 2.25-kilowatt (Kw) standby generator at a retail price of about $100/Kw from major discount warehouses. At the other end of the spectrum, large commercial and industrial (C/I) customers can acquire gas turbine cogeneration packages in sizes exceeding 10 megawatts (Mw) per unit. And the future promises even more intriguing products.