The Future Potential for On-Site Small-scale Power Generation

Posted on October 13, 2005
Posted By: Harry Valentine
In recent months, several commentators who have published on EnergyPulse have expressed concern over the future supply and future prices of oil and of natural gas. The increasing demand for oil from growing economies in India and China along with supply interruptions from the Middle East would likely keep world oil prices at over US$50 per barrel for several more years. In the USA, natural gas has become the premium fuel for new power stations. An increased demand for electric power while the supply of natural gas remains constrained means higher natural gas prices and higher electric power prices. Where alternate sources of energy are available, these higher prices would encourage development of alternative energy technologies.

Historically, power conversion began with on-site installations such as water wheels located on rivers to drive machinery, or windmills pumping water or grinding grain into flour. By the early19th century, on-site steam powered engines had been introduced to drive machinery. By the late 19th century, the development of steam turbines, electrical generators and motors led to the introduction of large-scale off-site power generation. The development of AC power transmission allowed electricity to be transmitted over longer distances to distant customers. As the 20th century began, big power stations could provide power to factories and buildings at higher efficiency and at a lower cost than labor-intensive on-site thermal power production.

As the 20th century closed, advances had been made in small-site power generation technology that included the development of new technologies. One such technology was small-site solar thermal power generation using steam that became cost competitive with fossil-fuel power generation by 1990. The development of high-efficiency mini- and micro- water turbines allowed small-site hydroelectric power generation to become economically viable in serving small, local markets. Energy consumption could be reduced in buildings receiving small-site hydroelectric power when they were heated or cooled by heat-pumped low-grade geothermal energy.

Advances in the electronics industry led to the development of photovoltaic (PV) cells. Ongoing research has reduced the cost of solar PV cells that convert energy at 9% efficiency, while more costly premium solar PV cells that convert 27% of solar energy to electric power are now starting to appear on the market. Future research promises to raise efficiency to 36% while reducing the initial capital costs of such technology over the long-term future. Advances in storage battery technology and the appearance of efficient lighting technology has added to the appeal of on-site solar-electric power generation for domestic and commercial use.

New generation Stirling engines can convert over 30% of concentrated solar thermal energy aimed at them into electric power. Recent technological developments that involve thermo-acoustic engines and converters hold the promise of converting up to 40% of high-grade thermal energy into electric power. At temperatures over 200-degrees C, thermo-acoustic engines are pressurized tubes that convert heat into standing sound waves that activate the piston of a linear alternator to produce electric power. These engines are projected to develop up to 100-Kw of power while the largest Stirling engines in existence presently developed up to 60-Kw of power.

Advances in high-temperature optical materials have seen Fresnel lenses and optical fiber lines being made from alumina. Thermally insulated alumina optical fibers could be developed to transmit concentrated solar thermal energy directly into thermal energy storage chambers during daylight hours. As night begins, the stored thermal energy would be used to energize a battery of thermo-acoustic engines or Stirling engines to produce useable power. Research into thermal energy storage technology has revealed that some eutectic metal-oxide compounds can store large quantities of heat with little deterioration after 100,000 repeated full reheat and deep drain cycles.

An ore called diaspore (O=Al-O-H) melts at 450-degrees-C and can be mixed with alumina (O=Al-O-Al=O) which absorbs 458-Btu/lb of heat to melt at 2045-degrees-C. The resulting eutectic metallic-oxide compound would melt at under 400-degrees-C while contained inside corrosion-resistant cylinders made from either silicon carbide or silicon nitride. After sundown, the compound would release over 500-Btu/lb of heat at over 300-degrees C and energise thermo-acoustic and/or Stirling engines for several hours, or raise steam for use in steam engines. On overcast days, these on-site externally heated engines would be energised by combusting natural gas, gasified biomass, gasified solid fuel or a low-cost liquid fuel.

At locations where such fuel would regularly be burnt to produce power, new small-scale on-site thermal power technologies that can operate on a compound cycle may be used. Solid-oxide fuel cells operate at high enough temperatures that allow the hydrogen they need to operate to be separated from liquid hydrocarbon fuels or from natural gas. The remaining heat rejected by the fuel cell could energise either thermo-acoustic or Stirling engines, which in turn could reject enough heat to heat buildings during winter or to drive absorption-refrigeration air-conditioners during summer. The thermal efficiency of a small-scale compound-cycle could exceed 50% to produce power. When this system is expanded into a cogeneration system where a building is heated or cooled by the reject energy, overall thermal efficiency could exceed 80%.

The same high efficiency could be realised for a compound-cycle involving a small-scale steam engine running on ultra-critical steam. Enginion from Germany recently developed and tested a small-scale steam engine of 100-Kw output while running on ultra-critical steam. It delivered a thermal efficiency comparable to that of a large power station. Enough reject heat was available to have energised a thermo-acoustic or Stirling engine. Steam engines have greater fuel flexibility than fuel cells and could be more widely used in on-site power generation. The combined fuel cell and thermo-acoustic engine system does have the advantage of only one moving part; that being the activation piston of the linear alternator. This low complexity system could offer high reliability and a long service life at a competitive capital cost.

The operation of automated on-site compound-cycle/co-generation small-site power installations could potentially become cost competitive against multi-megawatt commercial power production. As demand for electric power increases as power prices rise, the feasibility of installing such on-site small-scale power technologies would become more attractive. Small-site power installations could supply internal markets that include commercial tenants renting space in office buildings or a campus of such buildings that are located on a single commercial property. Residential tenants of high-rise apartment buildings where their rent includes heating, cooling and power could also become indirect customers of a small-scale on-site co-generation system.

Small-scale power conversion technologies are presently being developed to convert low-grade geothermal energy into electric power during winter months. Such technology would use refrigerants such as R-34 in engines using scroll compressors to produce power from a temperature difference of 20-degrees C (58-degrees F). Low-grade geothermal heat could be sourced from and stored in converted salt domes that are located deep underground (see Energy Pulse article 1082) as well as in the deep underground porous rock of exhausted natural gas wells. Several thousand such wells exist in Western Canada and the USA where natural gas exploration prevailed.

Ground water that seeped into these dry wells over several years has been measured at over 25-degrees C (over 80-degrees F). During cold northern winters, the temperature difference between the ground water and the winter air could vary from 20-degrees C to as much as 60-degrees C (140-degrees F). During sub-freezing winters, small-scale on-site power installations could produce power and supply heat in commercial buildings during business hours. During the overnight hours, geothermal energy may pumped into on-site thermal storage chambers containing eutectic metal-oxides that melt between 40-degrees C and 60-degrees C. This stored heat could then provide additional daytime power and heating in commercial buildings during winter.

Ongoing research and development into cost-competitive, automated small-scale on-site power generation technologies could begin to reverse the trend toward mega-power stations that began during the latter 19th century. As the 21st century progresses, a proliferation of cost-competitive and efficient small-scale on-site power stations could appear and supply electric power to internal markets located on a single extended private property, as well as to external markets. The higher efficiency of small-scale compound-cycle/co-generation installations could realise sufficient cost savings over purchasing regulated commercial power, to justify investment in such technology. Potential for using new-generation small-scale on-site power generation technology exists worldwide, in climates ranging from tropical to sub-arctic.

Authored By:
Harry Valentine holds a degree in engineering and has a backround in free-market economics. He has undertaken extensive research into the field of transportation energy over a period of 20-years and has published numerous technical articles on the subject. His economics commentaries have included several articles on issues that pertain to electric power generation. He lives in Canada and can be reached by e-mail at .

Other Posts by: Harry Valentine

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October, 13 2005

Mircea Faur says

RE: "Ongoing research has reduced the cost of solar PV cells that convert energy at 9% efficiency, while more costly premium solar PV cells that convert 27% of solar energy to electric power are now starting to appear on the market. Future research promises to raise efficiency to 36% while reducing the initial capital costs of such technology over the long-term future."


FYI, the bulk of commercial solar cells (more than 90%), namely those fabricated using crystalline silicon substrates (single crystal, and multicrystalline) have an average efficiency of 13.5% to 14%. The highest one Sun silicon solar cell efficiency of small area laboratory cells is approaching 25%, but are cost prohibitive for any applications. Commercial thin film solar cells have efficiencies below 10%, and as low as 2%. In principle, solar cells that are designed to work under concentrated sunlight can indeed achieve efficiencies over 20%, but no commercial product exists thus far. Higher efficiency commercial cells (> 20%), which are based on multilayer III-V semiconductors, used for space applications, are right now cost prohibitive for terrestrial applications.


Dr. Mircea Faur, R&D VP and CTO SPECMAT, Inc. Cleveland, OH

October, 13 2005

Len Gould says

Keep it up, Harry, you're on the right track. kudos

October, 14 2005

Todd McKissick says

Excellent article, Mr. Valentine. Cuts straight to the point. It's nice to see this option compared on technical merit alone without confusing the issue with temporary public or political support.

It does beg the next question... Who are the key players and how does the average Joe support this. Are there any commercially available systems now, or are we still in the stage of hunting for them as investment opportunities? How promising is this as a stand alone distributed generation renewable energy competitor? We certainly can't depend on 10% PV or 35% capacity wind for a country's energy supply.

October, 14 2005

Graham Cowan says

I find it hard to believe that AlOOH melts at all, much less melts at 450 Celsius. It looks to me as if it would lose half a water,

AlOOH ---> (1/2) Al2O3 + (1/2) H2O(g).

at some lowish temperature ... maybe as high as 450, but more like 200 would sound better to me. Heat transfer salt, (KNO3 NaNO3 NaNO2), has in fact been used for storing heat from a solar concentrator. It melts 140 Celsius.

--- Graham Cowan, former hydrogen fan
boron as energy carrier: real-car range, nuclear cachet

October, 15 2005

Len Gould says

Graham: Wether or not diaspore can survive repeated meltings, its a non-issue as there is a very broad range of well-known materials which will serve the same purpose, eg. one you are certainly more familiar with, diBoron triOxide also melts at 450 degC, is quite inexpensive and has a heat of fusion of 352.8 kJ/kg. (couldn't resist 9<] )

October, 17 2005

paul wilkins says

There is a magazine called Home Power that covers renewable energy for the Average Joe. There are hundreds of dealers in the US that can install systems in a matter of weeks. I retired from solar Electric installs and publishing directories 6 years ago and the industry keeps growing and growing. I run most of my grid tie house on PV and am writing this on a solar powered computer.

October, 18 2005

Sean Casten says

Excellent article. One caution however is not to percieve the market for DG as driven solely by new technologies, as this tends to obfuscate the actual market barriers which are unfortunately dominated by continuing regulatory predilections for more expensive, less efficient central power.

Thomas Edison's first power plant was a CHP facility, with 50% overall efficiency. The current central station is just 33%. Doing nothing more than deploying the technology Edison used in the late 19th century (coupled with a bypass of the T&D system, which cuts out the single most costly part of the central power model, on a $/kW basis) can compete favorably with existing retail power rates. Run the math: At ~$1300/kW for the average T&D on a national level, 9 - 10% distribution losses and 33% average generation efficiency, even $2000/kW DG technologies that maximally use waste heat recovery can compete quite favorably. This, in a nutshell explains why 9% of current US power generation is CHP plants that would all classify as DG, as they are small and sited at/near the load and - for the most part - is based on mature technologies (steam turbines, gas turbines, recips).

Unfortunately, the development of these markets - and of businesses to participate in these markets - remains hampered by explicit barriers (interconnection, standby rates, special "anti-cogen" rates, etc.) and by an overall regulatory philosophy that subsidizes our current central paradigm and thus dulls the economic signals that would otherwise drive the deployment of DG. Most damningly, a regulated utility seeking to build a new central station or transmission line gets ratepayer-backed financing that cuts way down on their financial risk - effectively gambling with other people's money. The DG on the other hand is predominantly deployed by businesses who are either not in the power business (paper mills, hospitals, etc.) or else unregulated participants who have pay off their lenders, their shareholders and still leave enough savings on the table to convince the power user to sign a contract. In both cases, this drives up the required capital recovery rates for DG much higher than it is for the central station alternative. Typical DG returns for the bulk of the installed MW range from 30 - 50% ROA, while central power rarely sees returns above 12% or so. The wonderful thing about DG is that even with these higher capital thresholds, there has still been a lot deployed, based only on savings relative to the central alternative. But there could be so much more if the regulatory signals didn't try to pick winners.

October, 18 2005

Brian Braginton-Smith says

Excellent piece Mr. Valentine, I would have to echo the opinion of several other readers, the present industry is set up to protect the central generation concept (20th Century model). As our new world view and 21st century reality takes hold the concept of distributed generation will become more the norm than the exception. Unfortunately the regulatory matrix is slow to change which is problematic for the evolution of the distributed energy market place whether it be conventional CHP systems or renewable sources. As long as punitive stand-by rates and tarrifs are part of the regulatory matrix distributed systems will suffer in spite of favorable market economics and efficiencies that would otherwise be realized.

October, 18 2005

Mike Cocking says

Great summary of the new and changing environment for DG. However, as other readers have commented on, and I would wholeheartedly agree, is that nothing will change until regulatory practices regarding DG change. Utility regulations are Neanderthal-like in their approach to the market. A classic example is the fragmented net metering regulations that all citizens (and companies) are faced with when employing small scale DG. This is a disruptive technology and as Clayton Christensen pointed out in his book The Innovator's Dilemma, comfortable companies (read Utilities) have no reason to support this approach as it is a threat to their existence.--- and goes on to say that if it is not dealt with, the companies will meet their demise. Final point---- Sean Casten above is right on in his final paragragh about the private/public sector issue---- Good Job!

October, 18 2005

Jim Brumm says

I'm not so sure the blame can be put on regulators. Even in areas where regulatory barriers have been cut back, along with some prices -- such as New Jersey Natural Gas' eastern New Jersey service area -- response to distributed generation has been non-existant.

October, 18 2005

Patrick Mazza says

This is a very useful, informative article that underscores the diversity of DG options available. I must concur with the comments by Thomas Casten and others that dated utility regulatory systems pose major hurdles to widespread adoption of DG and CHP, not to mention a host of new energy technologies. This was one of the top conclusions to emerge from a year-long collaborative process involving over 70 energy and economic development experts from over 50 insitutions. The aim was to identify ways to accelerate advanced energy technology adoption in the Pacific Northwest. Results of the process are reported in a new paper from Climate Solutions, "Powering Up the Smart Grid."

A number of regulatory reform concepts that emerged would eliminate utility disincentives and provide positive incentives for implementing DG, CHP, load management and end use efficiency, among them: 1. Provide financial incentives in ratemaking sufficient to compensate for risk factors in new technology adoption. 2. Break the link between kilowatt throughput and profits through decoupling. 3. Reward new technology adoption with performance-based ratemaking. 4. Mandate that utilities optimize their networks for minimum line losses and deny cost recovery for losses above this level. 5. Apply least-cost planning to transmission and distribution as it has been applied to generation. 6. Make sure utilities account for climate risk.

The common theme is to engage the utilities themselves in changing the central station paradigm by re-shaping the framework of financial incentives that governs utility decisionmaking. The utilties themselves have a huge interest in this. As Valentine's article should indicate, the emergence of competitive DG is a disruptive technology that will eventually force utilities into new business models if they do not place themselves ahead of the curve. The inevitable changes can be long and conflict-ridden, delaying realization of the full benefits of advanced technologies. Or it can be collaborative and win-win, fully realizing their benefits in a much shorter timeframe.

This is economically a huge deal. Both Pacific Northwest National Laboratory and RAND Corporation assessed the 20 year savings of implementing advanced technology versus meeting power demands with traditional central plant and T&D infrastructure. PNNL found a $46 billion-$117 billion in reduced need for investment in traditional infrastructure, while RAND found $57 billion. (Figures net present value). So unless we have money to burn, we need to re-gear the regulatory system in ways that encourage new technologies.

October, 19 2005

Jack Ellis says

Perhaps another, more important impediment is the naturally risk-averse tendency of most electricity consumers. Most of them are either more concerned about not making mistakes that could cost them or their employers money, or they can only be enticed to dip a toe in the water if the payback period is extremely short - on the order of a few months up to perhaps two years. Hard as it may be to hear this, any transformation away from central station generation is going to take several decades rather than several years, and then only when solutions are well-proven and exhibit a fortuitous combination of short payback periods and high returns on invested capital.

October, 19 2005

Todd McKissick says

Ok, will all the policymakers and bean counters please put your hand down. Let's hear from some people who can talk about a technical solution without mucking it up by whining that it's the fault of the regulators or the market or someone else trying to make their own buck. I've re-read Harry's terriffic article here and found absolutely no reference to anything but technical information. For the most part, you all praised it. So why do you insist on injecting massive quantities of the very red tape that you rail about? Mr. Valentine has graciously supplied us with a number of solutions and all he's returned is why it can't work. I say let's turn the discussion back towards what he actually wrote.

In my personal opinion, conservation, emissions, cost, waste heat recovery are all secondary problems. We need to capture the massive amount of solar energy and turn it into electricity in a renewable way. Wouldn't that solve it all? Even 2% efficient PV cells supplying every bit of energy the world uses would be cheaper than all the studies, lobbying, political posturing, reporting, promoting and regulating that's going on. I'm betting we can do much better than 2%. Thoughts?

October, 20 2005

Dr. Hussain Alrobaei says

I have read with great interest your article entitled: The Future Potential for On-Site Small-scale Power Generation My recent research paper in field of high maneuver industrial Combined Cycle Power Plants (CCPP) and the finding closely related to your article cited above. Thereby my comment includes the following points: Recently various technological developments are employed to lower the fuel consumption and emissions of thermal power stations. It is sought to decrease fossil fuel consumption due to ever increasing costs of fossil fuel and the awareness of the impact on the environment of burning fossil fuels. In grid connected power stations, the large or medium size CCPP represent the most advanced standard in conventional power generation technology and are implemented world wide in increasing numbers. Thanks to their high efficiency, operability and reliability, they help to save CO2 emissions compared to standard thermal power plants using just a steam turbine. Modern CCPP achieve up to 58%, whereas the standard thermal power plants typically achieve 40%, older ones are even below that. Another point favoring staging a CCPP is that the gas turbine plant (or CCPP) per kilowatt cost does not seem to increase significantly for smaller units, as is the case for steam power plant. Currently the mainframe concept of standalone power stations is gradually replaced by the dispersed power generation concept. This means that smaller, cheaper and simpler facilities must be installed. Combined cycle concept looks like logical approach in raising the efficiency of standalone power stations. Whereas considerable improvements of performance are possible with small and micro gas turbine units that have quite a low efficiency in simple cycle operation, but can take advantage of combined cycle mode to reach higher efficiency. The results of recent study in field of high maneuver small size and micro CCPP refer to the thermal and environmental effectiveness of modification twin shaft industrial gas turbine units to CCPP for mechanical drive applications and independent on site power generation. The efficiency of proposed CCPP scheme at nominal power is 43.4 % and at part load (40 % from the plant rated capacity) is 35 %. Dr. HUSSAIN ALROBAEI DEPARTMENT OF MECHANICAL ENGINEERING HIGHER INSTITUTE OF ENGINEERING HOON ; LIBYA

October, 20 2005

Robert Hoffman says

Great article, and comments were equally interesting. While technical innovation is certainly a driver, commercial and regulatory framework are needed to make things happen. There is room and need for both.

I am glad Mr. Valentine moved beyond conventional gas fired Distributed Generation (DG) to recognize other forms of DG, including photovoltaic. As may have been pointed out, DG offers attributes beyond the generator bus bar, including reduction in transmission/distribution system losses, resource diversity, and overall reliability at the point of end-use. There are also inherrent environmental attributes for many forms of DG, including offsetting central power plant emissions reductions. The economics of DG is often compared to centralized power generation (iie: combined cycle pertormance), the more appropriate economic basis is retail cost of power (from lend-user point of view).

DG is not the ultimate solution, we will continue to need centralized generation and transmission/distribution systems. DG can be an optimal complement, contributing to overall system resource adequacy. It is unfortunate that system attributes provided by Distributed Energy is not fully recognized. In my opinion, the missing link is to find a way for all resource participants (including DG) to move energy in and out of the system, looking to the grid as a pooled network to transact with, providing energy balancing services. Net metering is a good start, but needs to move beyond that. Need better differentiation between wires, grid management, and generation services at the point of end-use. Need to differentiate between capacity and energy value.

Bob Hoffman Energy Dynamix

October, 27 2005

Todd Halvorsen says

After researching the industry for a while and having recently attended some DG technology conferences I have come to believe that our transition to more intelligent energy use will require the use of the smartest technologies for specific applications and geographies. Ultimately leading to a hybridized sytem in most geographies. Further, I feel for the CEOs of many of the emerging DG tech companies seem rather beat up from trying to raise capital for their heavy cash consuming r&d and regulatory/utility roadblocks. I firmly believe the technology is going to be there to make the transition, but nothing is going to truly take hold in the US until the US gets serious about carbon. It is clear there is a smarter market friendly environmental movement on the move, but is it getting the support it needs to develop? Just look at the number of clean tech companies that are traded publicly today compared to fiive or ten years ago. Very few of these companies with promisising technology are cash positive and many don't even have the black in their radar. However, the telecom and other industries craving reliable uninterruptable power which is getting the ball rolling, but will that be enough? What will it take for the US to get serious about carbon and to truly shift from an outdated energy policy to a smarter system? Your vote and a whole lot of cash. Unitl we have policy makers that have vision and can act beyond the status quo, the change may remain dangerously slow.

October, 28 2005

Graham Cowan says

What it will take for the US to "get serious about carbon", if that means not putting so much of its dioxide into the air, is a reduction in carbon taxation. Policy makers are not typically going to have vision if vision means impoverishing their fellow tax takers.

--- Graham Cowan, former hydrogen fan
boron as energy carrier: real-car range, nuclear cachet

October, 31 2005

Todd Halvorsen says

GC: I am curious. What is your connection between decreasing carbon emissions and decreasing carbon taxation?

November, 01 2005

Graham Cowan says

It is hard for workers and owners in the private oil patch to levy punishments on you, either de jure or de facto, if you use less oil than they would like, for instance by driving a small car and obeying the speed limit.

Reducing carbon taxes means more of your fuel dollar goes to these relatively powerless people, and less to people in government. These latter people have both the means and, through carbon taxation, the incentive to make fuel savers' lives miserable in both direct and subtle ways. If you want to build a house too close to where your work is, they can say, No. Not zoned residential.

If you want to drive in a fuel-economizing way, they can, by capricious and nearly absent enforcement of speed limit laws, ensure that trucks stream up behind you, dodge around you, and swing in front; and obedient taxpayers in the passing lane or lanes see that it is you who are causing those -- to them -- relatively slow trucks to dodge in front of them.

If you want research on fossil fuel replacement to be done, they can fund programs they expect to fail.

Reducing carbonaceous fuel taxes reduces their payoff for doing all these things.

--- Graham Cowan, former hydrogen fan
boron as energy carrier: real-car range, nuclear cachet

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