Distributed Generation Update: Persistence and Growth

The Distributed Generation (DG) industry has not grown in the past decade as much as many had predicted, but its persistence in adapting its offerings to customer requirements over time is providing a durable foundation for further expansion. DG continues to capitalize on economic growth in the developing world and to persevere in slower-growing industrialized regions. Product advancements, sharper focus on promising applications, rising electric power prices, and public policy supports are propelling sales, but DG installations remain a small niche within the power generation business. Developers succeed by tailoring their products and services to local energy markets whose needs can differ significantly from one another.

* Accelerating economies in Asia and rising demand in Eastern Europe, Russia, and Latin America are driving growth in base-load applications where central station power systems are struggling to meet customer energy requirements.
* Customer reliability concerns and supportive energy policies have sustained US and Western European DG markets, although megawatt sales have been more weighted to backup applications recently.
* Fossil-fueled internal combustion engines and gas turbines still represent the majority of megawatt sales, with microturbine and fuel cell manufacturers continuing to refine their product designs and target applications.
* Fuel price increases, electricity tariff hikes, and stronger energy efficiency policies should strengthen combined heat and power and opportunity fuel applications, but DG developers continue to struggle to produce cost-effective systems for the large market segment of potential applications under 1 megawatt.

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