Thinking small: Onsite power generation may soon be big

Utilities are retheinking the way they do business. Eventually, smaller and cleaner generation units located near major load centers could begin to supplement power from central plants. The technologies necessary to this transition are emerging in the form of [open quotes]distributed generation.[close quotes] These technologies typically produce power on a relatively small scale (less than 50 MW per unit) and can be sited in congested urban areas as well as near remote customers. This allows utilities to meet new demand for electricity without building central generating stations and without substantially expanding or upgrading the power delivery system-in other words, at lower cost. Some distributed-generation technologies, such as fuel cells and solar energy harnessed by photovoltaic (PV) cells, are just beginning to carve out niches in th power market. Others, such as engine generator sets and battery storage, have evolved into robust, high-technology systems. In the case of fuel cells and engine-driven systems, natural gas is emerging as an environmentally friendly fuel that should remain available for decades at competitive prices. As gas-fueled distributed power is deployed, utility infrastructures for delivering gas and electricity to customers could become more integrated, allowing planners to smooth load profiles for energy services and creatingmore » greater synergies between the two. As distributed-generation technologies become more practical and cost-effective, utilities may find that change can be a path toward least-cost service and sustainable profitability.« less