Microturbine market holds promise and uncertainty

The market for microturbine products will be a significant niche, totaling $2.4 billion to $8 billion by 2010; more than 50 percent of that market will be international. That’s one of the conclusions reached by microturbine stakeholders, according to a GRI consensus market forecast.

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Microturbines, typically operating in the 25 kW to 300 kW range, are modular turbine units being touted for their operating efficiencies, high reliability and low emissions. This line of products is of growing interest for distributed power generation-the placement of small generation units close to the customer to achieve cost, efficiency and reliable-power benefits.

The purpose of the project was to develop an expert-based perspective of the microturbine opportunity, to separate hype from economic reality. Thirty-seven experts, representing microturbine manufacturers, utilities, venture capital firms, energy service companies, government entities and other stakeholder organizations, were interviewed and surveyed.

The study concludes, while initial sales of microturbines will occur primarily in North America, more than 50 percent of sales will be international by 2010. Many stakeholders feel microturbines can provide eight percent of the estimated one million MW of new power capacity that will be needed by 2010.

Manufacturers, experts and utilities believe growth rate and market acceptance will be greater internationally, in the long run, because:

  • Fewer barriers are likely to be imposed by existing utilities, power providers or regulators;
  • Fewer interconnection issues will arise because many applications will be for prime power without grid interconnection; and
  • Shorter value chains are expected, which would reduce cost premiums.

Other conclusions were:

  • Cost targets are aggressive. The acceptable cost target for microturbine power is $0.05 per kWh, which would present a cost advantage over most utility power. The units must have an installed cost of about $635 per kW in 2000 and $480 per kW by 2005 (for 30 to 75 kW units).

  • The bigger the better (able to hit cost targets). Most manufacturers believe cost targets are more easily attained with larger microturbine units over 70 kW.

  • Durability and reliability may offer advantage. The ability of microturbines to deliver on lower lifetime maintenance costs may prove to be a more significant advantage over conventional diesels and gas-powered internal combustion engines than those products’ first-cost advantage. Significantly fewer parts, little or no oil, significantly less vibration and cleaner burning add up to a meaningful advantage in overall operating costs over the life of the unit. Typical life is estimated at 40,000 hours before major maintenance.

  • Manufacturer mix will evolve. The community of microturbine manufacturers is expected to be in a state of flux, with companies exiting and entering the market-eventually, there will be only five or six well-financed manufacturers committed to bring microturbine solutions to the marketplace. The major manufacturers of microturbines are Allied Signal, Capstone, Elliott (GE), Turbek (ABB Volvo) and NREC, but others are trying to determine if market entry is worthwhile.

    Additional information about GRI’s “Microturbine Market and Industry Study” (GRI-00/ 0073) is available at 773-399-8100, or e-mail www.gri.org.

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