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Industrial Distributed Power Could Grow by 85% in Five Years

The total capacity of industrial distributed generation is set to grow by at least 46 percent between 2011 and 2016, according to a report by Pike Research.

The report, Industrial Distributed Generation, says that total IDG capacity will rise from 91 to 133 GW under a “slow growth” forecast scenario. A more optimistic scenario, assuming a more favorable regulatory environment, projects a rise to 168 GW by 2016, an 85 percent increase over 2011 levels.

While IDG has been dominated by combined heat and power in recent years, the report said the resource mix is getting more diverse all the time, and will continue to do so. CHP makes up 86 percent of the total IDG market in 2011, with nine percent aggregated generation, four percent opportunity fuels and just one percent renewables. But CHP’s share could dip as low as 53 percent by 2016, Pike said.

“Renewable energy, fuel cells, aggregated generation, opportunity fuels, and data center applications are all showing strong potential to capture increasing shares of the industrial power market,” Pike Research president Clint Wheelock said.

Pike said that, although incentives have helped some sectors of the market to grow, the poor economy, uncertainties in natural gas prices, and diminished access to capital are all deterrents to IDG growth, particularly for CHP installations.

At the same time, Pike said, third party providers are creating a new class of large scale distributed generation by aggregating much smaller units into industrial-sized blocks of power, selling energy, capacity, and ancillary services into wholesale markets or in bilateral contracts with utilities, or incorporating them into energy management systems that combine generation with load curtailment.

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