The year 2001 was a rocky one for the power market. The realization that the electrical grid can't meet the market's demands left consumers searching for other ways of obtaining reliable, high-quality power. Distributed generation and ride-through technologies are among the new market niches that promote power quality and reliability. This article reviews past market trends and future outlooks for these developing technologies.
Today, end users have the option of generating electricity themselves instead of purchasing it from the grid. This alternative is known as distributed generation (DG). DG converts external fuel sources into electricity — as long as those sources continue to supply fuel. Typically, the owners of DG hardware don't own the distribution wires, but end users are able to place power generation close to the load and reduce transmission losses.
DG comes in many shapes and sizes, depending on a particular site and its application. The DG market is highly diversified and influenced by a variety of volatile forces acting upon it. For example, each DG technology is uniquely influenced by the lack of interconnection standards, end users' demands for backup power, standby charges, fuel prices, government funding, emissions regulations, grid pricing, and perhaps most important, DG technology developments.
In 2000, North American fuel-cell sales totaled more than $40 million. That number is expected to reach $900 million by 2005 (see Fig. 1). Here's how the market looks if you break down fuel-cell technology into specific types.
Solid oxide fuel cells (SOFCs)
Out of all the fuel-cell technologies, this one has been kept off the market for the longest time, perhaps because it's the most challenging to develop. Commercial sales in North America are expected to begin in 2002 and should see significant growth through 2005. However, the true potential and growth of these fuel cells won't be seen until after 2005, when prices begin to compete with proton exchange membrane technology. Major manufacturers include Siemens Westinghouse, Global Thermoelectric, and Ztek.
Phosphoric acid fuel cells (PAFCs)
These fuel cells have been commercially available from UTC Fuel Cells (formerly International Fuel Cells) for more than 10 years. Today, they account for the majority of the fuel-cell dollar market.
Proton exchange membrane (PEM) fuel cells
Most PEM fuel cells currently in development are between 1kW and 10kW. They are scheduled to join the market sometime this year or possibly in 2003. Nearly 70% of all fuel-cell suppliers are currently involved in PEM technology. This market should be fueled by residential applications among such suppliers as Plug Power, IdaTech, and Nuvera Fuel Cells. The PEM fuel-cell revenue growth rate is expected to peak in 2003 due to the large influx of new commercial systems at that time.
Molton carbonate fuel cells (MCFCs)
These fuel cells will play a role in the industrial and combined heat and power market segments. In addition, they will generate high revenues (relative to unit shipments) because of their high selling prices and large sizes (250kW to 1MW). Currently, FuelCell Energy is the only major MCFC player in North America.
Alkaline fuel cells
Alkaline fuel cells have been used since the 1960s, primarily for government applications. Expect these fuel cells to experience slower growth than the rest of the fuel-cell market.
North American microturbine sales nearly surpassed the $25 million mark in 2000. Venture Development Corp. expects sales to reach more than $500 million by 2005 (see Fig. 2).
Microturbines in the 30kW to 100kW range are commercially available now, and those in the 200+kW range will begin selling this year. The higher power-output ranges are expected to represent the real market potential for microturbines. Their market success hinges on developing before solid oxide and molten carbonate fuel-cell technologies, which could establish themselves as significant competitors as early as 2004. There are less than 10 North American microturbine suppliers, with Capstone Microturbine, Elliott, Ingersoll-Rand, Bowman Power Systems, and DTE Energy topping the list.
Reciprocating Generator-Sets (Recip Gen-Sets)
Reciprocating engines dominate today's DG marketplace. They are used primarily in backup applications (with or without a ride-through device), but they are also used for base loading and peak shaving. Estimates of the North American market range from $1.3 billion to $2.5 billion. The market saw significant growth in 1999 because of the Y2K scare, but it's generally considered mature and relatively slow growing. Recip gen-sets currently occupy the market space that microturbines and fuel cells are attempting to capture (e.g., backup, base loading, and peak shaving). Many people in the industry believe that fuel cells and microturbines will never significantly impact recip gen-set revenues because the market size for recip gen-sets is so much larger. But as prices for fuel cells and microturbines decline, end users will be more likely to leave their recip gen-sets behind and move on to these newer technologies.
Small gas turbines
Gas turbines come in a variety of sizes, from 30kW microturbines to massive centralized power plants. Small gas turbines (with power ranges from 1MW to 10MW) are used for DG applications located close to the end user. The market for gas turbines has grown steadily the last few years. This growth, coupled with other additional power capacity, has created a potential generation surplus in certain parts of the United States, specifically the New England area, upstate New York, and Texas.
Photovoltaics (solar power)
Solar-system prices have dropped significantly since the 1980s, but they are still high compared to other forms of DG. This factor, combined with lower reliability standards, limits solar systems to specific applications (base loading, peak shaving, electrolysis) and market niches (environmentalists). A number of solar-cell technologies are currently in development, all with the hopes of achieving the price reductions necessary to compete with the grid. Estimates of the world market for photovoltaics range from $1 billion to $2.5 billion. Production-capacity shortfalls may occur if the market grows significantly.
Ride-through systems (also known as uninterruptible power supplies (UPSs), power backup systems, or energy/electricity storage systems) store energy in a number of ways (see the table). The major difference between ride-through technologies and DG is the time period in which the systems provide power to the load.
DG provides power indefinitely, as long as an external source supplies the fuel. Ride-through technologies, on the other hand, provide power for a finite period of time. In some cases, such as compressed air energy systems (CAESs), the time period is rather long. Generally, ride-through technologies can provide uninterrupted power to the load within ¼ cycle of a primary power-system disturbance (excluding some CAES, micropump storage, and hydrogen storage types). Some use the term “ride-through” to describe systems that provide uninterrupted power for short periods of time (minutes), while they use “power backup” for those systems that supply uninterrupted power for longer periods of time (hours). Here are the market outlooks for the main types of ride-through technologies.
Flywheel and rotary technologies
The North American flywheel market earned nearly $120 million in 2000 and is expected to garner almost $250 million by 2005 (see Fig. 3). The market is segmented into low- and high-speed flywheels. Low-speed systems provide ride-through energy, while high-speed systems provide ride-through energy and storage. Applications for flywheel ride-through systems include remote energy supply and storage, standalone power supply and storage, and energy management. Some of the players include Active Power, Acumentrics, AFS Trinity, Beacon, HiTec, Piller, and US Flywheel.
Super capacitors and ultra-capacitors
Ride-through technologies using super capacitors or ultra-capacitors are based on traditional capacitor technology using modern materials, including dielectrics and aerogels. Similar to battery UPS systems, super capacitors are often stacked to meet power requirements.
Over the years, the emphasis has expanded from low- to high-power applications. Low-end capacitors can be used as ride-through devices for adjustable speed drives.
Super capacitors are typically used in conjunction with battery UPS systems that handle large transients, provide longer ride-through durations, relieve batteries from peak power demands, and extend battery lives. In 2000, the North American super capacitor market reached $2 million. Engineers in the automotive industry are currently looking into super capacitors for future applications.
Superconducting magnetic energy storage (SMES)
SMES systems store energy using magnetic fields. In each system, a superconducting coil made of niobium-titanium wire carries large currents at low electrical resistance. A magnet is contained in a vacuum-cooled cryostat with liquid helium at 4.2K. The system produces a magnetic field and stores energy through inductance.
The systems are generally used to address power quality issues rather than as backup systems, specifically at facilities susceptible to inductive losses. SMES systems use high-temperature superconducting (HTS) wire, which provides 100 times the capacity of copper wire in 1/20th the space. SMES units are also often used by utilities to help improve power quality for end users. Currently, the only major player in this market is American Superconductor.
Compressed air energy storage (CAES) and micropump storage
These technologies are generally used to store energy through increased potential energy. CAES systems store energy using compressed air and micropump storage systems do so by pumping water to higher elevations (e.g., water towers or reservoirs). The energy is stored during peak periods of excess grid capacity and produce electricity in the event of grid outages or for peak-loading applications.
The next decade should provide tremendous opportunities for DG and ride-through technologies. Clearly, 2001 taught us that the power grid can't meet all of the market's needs. In addition, companies dependent upon high-tech equipment and customer satisfaction will continue to demand higher power quality and reliability. For these reasons, manufacturers of DG and ride-through systems are in a good position — one that is poised to expand new market niches and overturn old ways of thinking.
Nathan Andrews is an analyst with Venture Development Corp. in Natick, Mass. You can reach him at [email protected].