GEARING UP FOR DISTRIBUTED GENERATION

Michael T. Burr

Managing Editor

Major manufacturers of generating equipment are gearing up to supply new distributed power technology. Two cases in point are GE and Caterpillar.

Caterpillar is supplying equipment from 800 kW to 2 MW in size. “We`re serving smaller customers who want on-site generation, or utilities who want to install dispersed generation instead of building lines to meet local needs. It`s a better alternative than peak shaving or low voltage,” said Dave Pitts, market manager of dispersed generation with Caterpillar Electric Power Generation Division.

Distributed generation is not a primary power source in such cases. Instead, it provides grid support for peak demand periods. “Utilities are trying to get by with less reserve capacity and more peaking capacity,” Pitts said. Caterpillar is concentrating its efforts, therefore, on structuring partnership arrangements with utilities, wherein Caterpillar can offer distributed generation systems to utilities` customers.

“My philosophy is to work with the utility and make them a partner, rather than an adversary,” he said. “Caterpillar wants to be known as an energy solution provider,” he said. “We will remain flexible, and we will work out a lease deal, a pass-through, or whatever it takes.”

Likewise, in response to growing demands for on-site generation, GE Power Systems added smaller gas turbines, microturbines and fuel cells to its family of products. Strategic moves to increase GE`s offerings in the small power generation market included recent agreements with Elliott Energy Systems (EES) and Plug Power.

GE and EES of Stuart, Fla., reached an agreement to distribute and service EES` new line of Turbo Alternator microturbines, which come in 45 kW, 80 kW and 200 kW sizes, and burn a variety of liquid and gaseous fuels. GE said Turbo Alternators can generate power at the end-user site for 4 cents to 5 cents a kWh, a significant savings over many Midwestern utilities` peak rates. Last fall GE signed a contract to supply EES Turbo Alternators to gas distributor Nicor of Naperville, Ill., which in turn expects to sell the units to customers in the Midwest.

Additionally, last year GE signed a memorandum of understanding with Plug Power of Latham, N.Y., to form GE Fuel Cell Systems, a joint venture to sell, install and service Plug Power-designed and manufactured fuel cell systems for residential and small commercial power applications. In June 1998, Plug Power demonstrated its proprietary Plug Power 7000, a 7 kW residential power system. Commercial sales are expected to begin in the year 2000. In mass production, a residential fuel cell system is expected to retail for $3,000 to $5,000, which yields an average electricity cost to the end user of 7 cents to 10 cents a kWh.

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