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The growing use of onsite Gas Generation

Traditionally, when we have talked about onsite power generation, it is usually meant how it applies to various types of renewables technologies, such as wind, solar and energy storage.

But in many countries onsite generation is usually dominated by diesel Gensets. But, increasingly we are seeing a growing demand for onsite gas fuelled Gensets, and other gas fuelled power technologies including fuel cells, and micro-turbines.

There is an increase interest in such gas powered generation technologies for a number of reasons. These include tougher environmental regulations and increasing availability of affordable piped natural gas or LNG.

Onsite gas generation market

According to energy industry research company Navigant Research, it forecasts in a recent report that they expect the onsite gas generation market to reach at least $6 billion in annual revenue or about an extra 18,000 MW of annual capacity additions by the year 2028.

An increasing number of commercial and industrial sites including factories, data centres, hospitals and shopping centres are producing their own onsite power, independent of the traditional grid. These include power consumers in remote locations distant from the grid, such as mines and farms. Others are businesses seeking; stable and affordable power solutions that enable them to control their energy bills and also earn income by selling surplus power to the grid. Furthermore, provide temporary additional power at major events such as the World Cup, Olympics or Eurovision Song Contest. For example, the $200 million contract to provide temporary power for the Tokyo Olympics this summer in Japan is being provided by British based company Aggreko. Aggreko has supported a number of high-profile events recently.These include the Gold Coast 2018 Commonwealth Games, the Glasgow 2018 European Championships and the Ryder Cup at Le Golf National in Paris.

It’s all part of the growing market trend of power being produced at or near the point of use. Such systems are often less than 100 MW of generation capacity, supplying power to small commercial and industrial sites, often as part of combined heat and power (CHP) projects and micro grid installations. For example, the Port of Liverpool in England has a 30 MW combined heat and power plant providing energy to a district heating and power system in the port.

Drivers behind demand

Navigant research suggests there are several important drivers affecting the demand for distributed gas generation. These include increasing market demand for compact, robust and dis-patchable power. In addition, Navigant researchers find that demand for distributed, reliable power continues to grow worldwide. This is especially the case of developing and emerging economies, where reliable power is essential for economic prosperity and development.

In addition, as the extreme weather events in south-eastern Australia and California has showed the importance of having robust, reliant and flexible power sectors in order to maintain essential services, at times of crisis.

Barriers behind adoption of onsite gas generation

Although there has been growing interest in the usage of onsite gas generation, there are still a series of barriers affecting its adoption. These include lack of access to piped natural gas or LNG, opposition from some environmentalists, higher capital costs as compared to diesel Gensets, also limited knowledge and experience about the benefits of such technology as compared to its rivals.

However, in many emerging economies such as India and Pakistan, until a nationwide network of gas pipelines is in place, it is unlikely that there will be widespread adoption of distributed gas generation solutions.

Applications beyond Gas Gensets

At present, gas Gensets dominate the market for distributed gas generation; this is because they are a mature and inexpensive technology as compared to its rivals. But fuel cells and micro-turbines despite their additional costs can still deliver value for money. This is because they emit fewer emissions than gas Gensets, and are experiencing funding in further developing this emerging technology, especially in the transportation sector including maritime shipping, trucking and rail freight.

Also, micro-turbines which are small-scale systems usually between 30 kW and 250 kW are increasingly popular for on-site applications by customers seeking a reliable source of backup power and heat generation, when the national grid proves unreliable because of power cuts. Also, in the UK for instance, such on-site micro turbines are being used by factories to reduce utility power costs and cut a business’s carbon footprint, especially if grid provided power is dirtier than on-site generation.

Collaborations with Renewables

In recent years we have seen an increasing trend of gas Gensets working in collaboration with renewable power projects. This is to ensure that when no wind or sun is available, the Gensets can switch on to maintain power supplies.

However, with small-scale renewables, we are seeing gas Gensets facing increasing competition from energy storage solutions in providing the required power. Although there are many cases where gas Gensets work in combination with energy storage and renewables, as in the UK.

Ongoing developments

One thing is clear onsite gas generation is power generation is playing an important power solution for not only small scale but also large scale users of power. It has been suggested that a network of onsite gas generation plants supplied by LNG or piped gas could prove the answer to solving South Africa’s dysfunctional power supply problems. As it would empower local businesses and communities to own and operate their own generation capacity, and would enable such consumers to be independent of the state power company Eskom.

Such a solution with industrial consumers would mean that when the national grid fails, they can immediately switch on their on-site gas generation plants, thus preventing the loss of production because of power failure. In addition, such distributed gas generation operators could sell their surplus power to the grid, thus creating a new income stream for both businesses and communities.

One thing is clear, there are likely to be more opportunities for onsite gas generation in providing additional sources of heat and power for local grids and meeting the growing needs of electrified transport worldwide.

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