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DG is a major imponderable of the evolving competitive electric power industry. DG applications may increase significantly over the next decade and this could have profound impacts on the nature of the electric power business and the fortunes of many energy companies. Power generators, fuel suppliers, energy retailers, equipment vendors and wires companies could all be affected.
Investors are already taking note of DG. Major brokerage houses and investment banks are eagerly seeking offerings related to DG. The recent run-ups of prices in fuel cell stocks are another example. Moreover, those power companies that have seen their stock values increase the most over the last years are firms that have very visibly focused on a new technology business.
Despite all the hoopla, the ultimate role of DG and how this will evolve is far from clear. Serious players in energy markets must anticipate potential changes in the business and implement strategies that allow them to prosper regardless of what develops.
We can assist financial firms in their assessment of the DG market and how DG manufacturers, energy service companies, utilities, wires companies and other energy companies may fare as the technology, economics, and regulations emerge and evolve. We offer two services to assist financial firms with these technical assessments.
1. Worldwide Distributed Generation Business and Market Opportunities
Estimates indicate that the worldwide market for distributed generation applications will grow significantly over the next few years. In this service, U.S. and worldwide forecasts of DG use are made, including:
 | An estimate of market size, |
| Information on which technologies, sizes, and applications provide solutions to customers, |
| Data on which regions offer the greatest potential, and |
| An understanding of the drivers, barriers, and opportunities in the high potential regions and customer segments. |
Estimates are by country with more detailed assessments in high potential regions. DG applications considered include:
| On-site generation/cogeneration (with and without grid backup), |
| Peak shaving, |
| Premium power services, and |
| Niche applications such as green power and remote power. |
Market assessments are specifically prepared for the DG products, services or programs offered by companies you wish to examine. As the market dynamics vary considerably by customer application, genset output, efficiency, thermal utilization, fuel use, fuel price, emission levels, noise levels, capital cost, operating costs, utility interconnection rules and backup power policy, it is necessary to consider product or program specifics when assessing market opportunities.
Analyses are performed using our DIstributed Power Economic Rationale SElection (DISPERSE) model. DISPERSE is the leading tool used to forecast the potential for DG technologies. Using DISPERSE, the costs and benefits of DG to energy users and the impacts of policy alternatives on DG can be estimated, while considering multiple parameter changes. DISPERSE was extensively vetted and peer-reviewed for the critical role it played in estimating DG impacts for the Administration’s Clean Energy Futures Study (April 2000).
The bottom line is an estimate of the potential size of a DG business in regions of interest, with a disaggregration by customer type, technology, size, and application. Revenue estimates will be prepared by examining possible DG equipment pricing strategies. Finally, companies that may fare well, and those that may be negatively impacted, will be identified. This will help financial firms better assess how DG will impact shareholder value in energy companies.
2. U.S. Distributed Generation Market Assessment
Similar to the first service, here we assess the U.S. market at the state level and in more detail. Varying state regulations for environmental parameters, utility interconnection requirements, and access to the retail electric market affect the market potential of specific DG products. These and other regulations, DG economics, and the technical capabilities of company products are assessed simultaneously.
Current DG applications in the U.S. include:
| Allowing customers to generate their own electricity, with or without grid backup, |
| Permitting customers to generate power while serving their thermal and/or cooling loads, |
| Giving customers the option of generating a portion of their electricity onsite, to reduce their peak demand and/or lower the amount of electricity purchased during peak price periods, |
| Permitting customers to sell excess generation back onto the grid when their own demand is low, especially during peak pricing periods, |
| Allowing customers a cost effective option to improve their power quality, and |
| Serving niche applications, such as providing "green" power or remote power. |
This service assesses market size for each of these customer applications, together with ways firms may reach customers by:
| Identifying high opportunity states, applications, and market segments for DG services, |
| Evaluating the technical and economic feasibility of serving these high opportunity markets with DG, and determine which DG technologies, based on cost and performance characteristics, best match the high opportunity states, applications and segments, |
| Estimating the potential size of a DG business in the each state of interest, and |
| Considering how these forecasts impact specific energy company prospects and profitability. |
Cost
The cost of these services depends on the exact scope of the effort. Typical costs range from $60-120,000 for a global or U.S. market assessment, varying by the number of DG companies considered.
For More Information, Please Contact
Paul Lemar
President
Resource Dynamics Corporation
8605 Westwood Center Drive
Suite 410
Vienna, VA 22182
703-356-1300, ext. 202 (p)
703-356-2230 (f)
pll@rdcnet.com