Companies Continue to Invest in Distributed Power Solutions
ACCESS Newswire
Whitefish, MT / ACCESSWIRE / January 8, 2015 / The U.S. certainly isn't at the point where consumers defecting from the power grid are a real concern for utilities, though the trend does continue for increased investment in alternative and on-site utilities. With an increased regulatory environment supporting cleaner power solutions to the traditional electricity grid, which has been spearheaded by states like California and New York, 2014 was a banner year for consumer-oriented products to become more affordable for the average consumer.
Solar continues to gain traction as installation costs decrease, although it still faces a number of challenges, including storing the energy for use when the sun isn't shining. Be that as it may, solar-plus-storage had a year that featured some of the first utility contracts for distributed, behind-the-meter battery deployments on a large scale, likely setting the stage for accelerated growth in subsequent years.
Another catalyst for solar, which currently only comprises 0.4% of all electric produced in the U.S., could be "net metering" laws. Applicable in 44 states, these laws allow solar-powered households to sell electricity back to the grid at retail prices. A study released by Ernest Orlando Lawrence Berkeley National Laboratory shows that an increased market capture of up to 10% by solar power over the next decade could result in a steep cut in earnings for grid-focused electric providers. With that scenario in mind, it's not a big surprise that the debate is heating up over net metering regulations.
Elsewhere in the sector, fuel cell on-site power applications are also continuing to grow, as noted by the U.S. Department of Energy's 2013 Fuel Cell Technologies Market Report, released in November, which showed worldwide fuel cell industry sales reached $1.3 billion in 2013, surpassing $1 billion for the first time ever. In many cases, fuel cells are being used in combination with other green technologies to improve energy resiliency in addition to cutting carbon footprint. Such is the case with Morgan Stanley's (MS) recently installed solid oxide fuel cell system made by Bloom Energy. The system, installed at Morgan Stanley's Purchase, NY headquarters, is part of an overall scheme that includes a solar panel field completed earlier in 2014 to improve energy efficiency and keep the power on at critical portions of the facility in the event of grid outages.
Bloom Energy, who has been the topic of speculation as an IPO candidate, is a fuel cell industry giant with users of its unique "Bloom Box" forming a star-studded lineup including Adobe (NASDAQ:ADBE), Coca-Cola (NYSE:KO), FedEx (NYSE:FDX) and Google (NASDAQ:GOOGL), to name just a few.
Cogeneration, or Combined Heat and Power (CHP), is also seeing a steady flow of new installations, whether micro-CHP or industrial level and everywhere in between as a more efficient and clean means of energy generation. Forecasts for growth are often broken down into separate segments, but taking a look at the industrial CHP market (the most mature segment), Navigant Research projects that after several years of stagnating, worldwide revenue will grow from $19.7 billion annually in 2013 to $29.8 billion in 2023. Part of the rationale in the growth forecast rests in CHP, which creates two forms of energy from one source, being able to utilize a variety of fuels to begin the process.
A point-in-case would be that of the nearly completed CHP energy plant by Blue Earth, Inc. (BBLU) at the Sumter, South Carolina processing facility of Pilgrim's Pride Corp. (NASDAQ:PPC). The source fuel for the system will be methane made from Pilgrim's Pride digester for useful purposes such as hot water, electricity generation, as well as useable gas that can be used in the plant boilers. Currently, the methane is flared off into the atmosphere. Often times, electricity is a primary energy output of CHP units with the byproduct of "waste heat" captured for meaningful use at the application site. In this case, all of the electrical energy generated by the CHP facility will be sold to Duke Energy (DUK) under a power purchase agreement. Blue Earth will own and operate the approximate $5.3 million energy plant.
Tecogen (TGEN) exclusively uses natural gas as the source fuel for its CHP systems. By definition, CHP is far greener than the grid, but Tecogen engineers took it a step further by developing an exhaust system (appropriately called "Ultra") that reduces criteria pollutants to a negligible level.
Tecogen ended the year strong with five different announcements on sales of CHP systems and another on the sale of its natural gas powered chillers. In the last two statements, the company said that it sold two of its INV-100 Ultra InVerde(R) CHP units to an undisclosed "award winning nursing and rehabilitation center" in Brooklyn as an upgrade for a unit destroyed by Hurricane Sandy. Not only with the InVerde system deliver space heat, hot water, electricity and air conditioning (via the unit powering a steam-fired boiler), but also provide immediate stand-by power in the event of a grid outage. Tecogen estimates that the unit will save the nursing and rehab center about $90,000 per year in energy costs.
Separately, Tecogen reported the sale of a Tecogen CM-75 CHP unit to a new luxury condominium residence in New York City's Hudson Yards, the largest private real estate development in the history of the U.S. The CHP system will generate common area electricity, heating and domestic hot water for this newly constructed 10-story building with 107 residential units. The unit is expected to provide savings of approximately $70,000 annually in energy costs.
These types of alternative energies aren't going to put the grid out of commission any time in the near future, but we can be seeing the beginning of an overall trend shift from which there will be no return. To that point, there are some deeply entrenched in the energy space that see distributed energy as a potential dagger in the heart of the electricity grid. NRG Energy (NYSE:NRG) CEO David Crane last year echoed the sentiment of the Edison Electric Institute and Pacific Gas & Electric (NYSE:PCG) CEO Anthony Earley Jr. in warning about a possible spiral effect of greater adoption of distributed energy and how it can impact the traditional model of electric utilities. A paradigm shift is also evident through the new trend in developers to establish so-called "yieldco," a separate business that owns and operates power plants, albeit renewable or conventional energy.
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