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Summary:

Familiar with that trend the consumerization of IT, where work IT tools are increasingly distributed and controlled by employees? Well, a similar thing is happening with the decentralization of energy, and in 2012 it was driven by cheap gas, fuel cells and extreme weather.

Last year I wrote an article on the “Consumerization of Energy” in which I compared a growing trend towards distributed energy to the “Consumerization of IT.” I predicted that:

“Distributed energy technologies . . . will soon be able to provide electricity at costs and reliability levels that are competitive with grid power. For the first time in 100 years these technologies will enable consumers to bypass their local electric utility company.”

This article examines what has and hasn’t changed in the intervening year.

Low natural gas prices

Let’s start with one of the biggest factors driving this trend — one that hasn’t changed — which is the availability of abundant cheap natural gas in the U.S. Natural gas spot prices generally stayed below $3.50/mmBtu in 2012, reaching a low of $1.95/mmBtu in April, and prices are expected to remain low for the foreseeable future according to EIA forecasts.

naturalgaspipe

Shale gas continues to revolutionize the U.S. energy industry, driving the shift from coal to natural gas in traditional power generation, spurring interest in liquid natural gas exports, reviving plans for natural gas vehicles and making it more difficult for renewable energy to compete with fossil fuels without subsidies. Distributed generation technologies like fuel cells and turbines that use natural gas as a fuel will continue to benefit from low fuel prices, making these resources increasingly attractive from an energy cost perspective.

Severe weather & the grid

The first and most important actual change in 2012 was the impact of severe weather events on grid reliability — specifically the impact from Hurricane Sandy, which devastated large portions of New York and New Jersey. It’s fair to say that Sandy was the watershed event that is forcing utilities, governments and energy consumers to rethink the concept of reliability in an era of increasingly destructive and more frequent severe weather events.

Many articles and studies have pointed out that the grid is not adequately designed, built and operated to withstand these types of storms. However, measures to harden the grid by burying or relocating transmission and distribution infrastructure are very costly and may not resolve the issue. Indeed, a recent New York Times article pointed out that ConEdison “expects to spend as much as $450 million to repair damages to its electric grid in and around New York City.”

Hurricane Sandy

Typical residential bills “would have to rise by almost 3 percent for three years to cover those expenses alone. Putting all of its electric lines underground would cost around $40 billion, the company estimates. To recover those costs, electric rates would probably have to triple for a decade or more.”

However, a much greater use of distributed energy resources integrated as part of smart buildings and community micro-grids could be a much better solution to reliability in the face of severe weather events. For example, New York University’s recently commissioned combined heat and power (CHP) plant remained operational during Hurricane Sandy while the surrounding areas of lower Manhattan lost power. NYU’s CHP plant uses natural gas and steam turbines to provide electricity to 22 buildings and heat to 37.

Future with fuel cells

Another change worth noting has been the increasing popularity of fuel cells. Like NYU’s CHP plant, at least two major fuel cell installations remained operational during Hurricane Sandy. Delmarva Power had one such installation and stated that its “Bloom Energy Servers in New Castle, Delaware rode through Hurricane Sandy without incident and continued to feed power to the regional power grid despite all the challenges the storm presented.”

The other installation was a UTC Power PureCell system installed at 1211 Avenue of the Americas that powers part of News Corp. headquarters. It is notable that UTC Power is being acquired by another fuel cell company, ClearEdge Power, creating a fuel cell solution provider capable of serving a range of residential, small business and large enterprise customers.

Bloom Energy, Fuel Cells, Not A Good Match For Utilities -- Yet

Also notable is the traction that Bloom Energy has been gaining, particularly with mission critical facilities like data centers. In 2012 Bloom Energy signed a landmark deal with eBay wherein the fuels cells will be the primary energy source for its new data center in Utah. Bloom also announced aditional deals with AT&T, making it Bloom’s largest non-utility customer.

My (unofficial) prediction is that the combination of low natural gas prices, severe weather events and advances in fuel cell and CHP technologies will be the primary drivers going forward for the consumerization of energy.

This article originally appeared on IDC Energy Insights.

IDC Energy Insights provides research-based advisory and consulting services focused on market and technology developments in the energy and utility industries. IDC Energy Insights serves a diverse global client base, including electric, gas and water utilities, IT vendors, independent power producers, retail energy providers, oil and gas companies, equipment manufacturers, government agencies, financial institutions, and professional services firms. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company.

  1. Jeff Williams Sunday, January 6, 2013

    Nice article… I think this is really good that we are finally seeing the benefits of Fuel Cell Technology…
    How about Municipal Wastewater Treatment plants? Taking a HUMAN WASTE and turning it into 3 value streams? What is this worth?

    “New fuel cell sewage gas station in Orange County, CA may be world’s first”
    http://abclocal.go.com/kabc/story?section=news/local/orange_county&id=8310315

    “It is here today and it is deployable today,” said Tom Mutchler of Air Products and Chemicals Inc., a sponsor and developer of the project.

    Construction of world’s largest fuel cell power plant. (in South Korea? with USA developed fuel cell technology??)
    http://www.fuelcelltoday.com/news-events/news-archive/2012/october/construction-of-worlds-largest-fuel-cell-power-plant-expected-to-commence-in-2012

    and

    2.8MW fuel cell using biogas now operating; Largest PPA of its kind in North America
    http://www.fuelcelltoday.com/news-events/news-archive/2012/october/28-mw-fuel-cell-using-biogas-now-operating-largest-ppa-of-its-kind-in-north-america

    Microsoft Backs Away From Grid
    http://blogs.wsj.com/cio/2012/11/20/microsoft-backs-away-slowly-from-the-grid/

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    1. Largest fuel cell plant in the world is US developed and US manufactured. Well at least the fuel cells are, they are made in kit form and then sent for assembly in south Korea.

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  2. I retired from the Electric Power Research Institute in 1998 and moved to Baja California and have lived in a solar home ever since. In 1998, the manager of generation and storage division at EPRI showed me a fuel cell, residential home size, that he had in his office from overseas and said I should see these being rolled out in the USA around 2002 or 2003.

    It is now 2013 and still hasn’t happened and as far as I am concerned as long as the utility companies in the old country can stop this from happening, it isn’t going to happen. They stand to lose to much.

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  3. Fuel cells need to be able to compete with conventiona natural gas generators and turbines. If they can beat the, they will be the way to go. Right now they exist because of a green aura.

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, air conditioners, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It is used to make many products. It lowers CO2 emissions. Over 3,900 natural gas story links on my free blog. An annotated bibliography of live links, updated daily. The worldwide picture of natural gas.
    ronwagnersrants . blogspot . com

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  4. Too bad the tech is only affordable because it’s subsidized. As for gas, the boom is mostly because there’s an excess of supply. Once the demand catches up through building of new pipelines, prices will rise to their traditional average.

    Meanwhile the real low cost, green energy continues to be vilified in the MSM.

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  5. Harshavardhan Ravula Sunday, January 6, 2013

    Great article. It will be great if you can share what is the cost differential by using fuel cells

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  6. The increasingly unmentioned elephant in the room is methane losses at ever stage of the natural gas fuel cycle. Latest estimea dorm US government show 9 percent, not the already bad 3%. Methane has about a 20x impact as a greenhouse gas as natural gas. Start with the links at http://thinkprogress.org/climate/2013/01/02/1388021/bridge-to-nowhere-noaa-confirms-high-methane-leakage-rate-up-to-9-from-gas-fields-gutting-climate-benefit/

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    1. Quite a few of the recent fuel cell plants going in are running off bio-gas which is a pretty green way of doing things. Fuel cells also produce fewer other emissions such as nox and carbon particles making them in general a greener option than other combustion technologies. I agree with the sentiment though, they might have less impact than other technologies but they are not zero emission.

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      1. Chris, can you provide some technical details on your claims?

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      2. 3 of the of the 4 links in Jeff Williams comments are for bio-gas powered fuel cell plants. According to fuel cell energy’s web page 40% of it’s California installations are bio-gas powered. A lot of the data centers are looking to use bio-gas if you want a more info on bio-gas projects I suggest googleing “bloom bio-gas” or “Fuelcell energy bio-gas”. As for the other emissions there are fundamental reasons why fuel cells do not make them. Sulfur is a poison for fuel cell catalysts so is removed from the fuel before entering the fuel cell stack so there is no SOx. Fuel cells do not operate at high pressure so NOx cannot form, without NOx there is no ozone. Explaining why fuel cells don’t make carbon particles is a bit trickier but essentially a fuel cell is not that dissimilar in construction to a giant catalytic converter (please note the high temperature fuel cells do not have platinum catalysts in the cells unlike catalytic converters which do). Fuelcell energy have excellent data sheets in their product brochures that give good detail on the emissions from their plants (http://www.fuelcellenergy.com/dfc3000.php). Since fuel cells are in general far better than combustion engines from an emissions perspective most fuel cell companies will provide this data on their web page or on request.

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  7. Nice article, fuel cells are slowly coming of age. Fuel cells today do a good industry review each year for those who want a bit more of a global view. I think it is worth mentioning that this quiet revolution is not one technology or one application or even one nation. The forty thousand micro chp’s in Japan used for peak shaving are very different to blooms big uninterruptible power supplies or boc’s little lighting unit for building sites. In a similar vain the molten carbonate, phos acid, polymer and solid oxide fuel cells might fill similar markets but are very different technologies. I think because of these differences we’ll probably not notice fuel cells sneaking into our life. In fact I think they already are….

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