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It is helpful to consider four perspectives on market size:

Installed DG Base      Annual DG Sales      Recent Interconnections      Potential Market

Installed DG Base

RDC estimates based on a 2001 inventory of installed California DG units (>300 kW) suggest there is at least 34 GW of installed U.S. DG capacity. The Gas Research Institute estimates installed DG capacity in the U.S. (of all unit sizes, including those below 300 kW) as 75 GW (this is an estimate as of 2000). So the installed base is likely in the 34-75 GW range.

Most of the installed base are units less than 2.0 MW in size, as shown in the figure below.

Almost all of the installed base is diesel reciprocating engines, as shown in the figure below.

Annual DG Sales

Gas Turbines

According to Diesel and Gas Turbine's annual survey of unit orders (over 1 MW), turbines provide over 90 percent of new capacity from engines or turbines. However, in the DG size range (under 50 MW), most turbine growth has been for central station peakers (not a DG application). Smaller, DG baseloaded turbines (mostly CHP) have actually declined, from about 160 MW in 98/99 and 99/00 to about 20 MW in 00/01.

Reciprocating Engines

In the past two years, mid-sized engines (2-3.5 MW) provided explosive growth in new reciprocating engine capacity. Capacity from orders of these units quadrupled from 1998-2001; during the same time period smaller (1-2 MW) units grew by 40 percent.

The 1-2 and 2-3.5 MW reciprocating units are mostly peaking/standby units fueled by diesel, with some continuous duty natural gas fired applications. Of these, many can be attributed to data centers, as well as backup power for larger commercial and industrial facilities, particularly in California.

Additional Annual Sales Information and Charts

For further trends in both gas turbine and reciprocating engine sales for power generation, see Diesel and Gas Turbine's website. They provide several interesting charts in Acrobat's pdf format.

Recent DG Interconnection Requests

Under new Rule 21 interconnection procedures, California has been publicly disclosing DG interconnection requests for the last 18 months. From September 2000 through August 2001, 130 applications for DG interconnection were received by the 3 large California utilities. This is an increased level of activity over earlier years.

Most requests were for < 2MW units, with a substantial number of requests for siting units in the midsize 2-5 MW range.

On average, not only are these larger than units in the installed base, but they are also more technologically diverse compared with the installed base.

Potential DG Market Size

The potential market size forecast for DG varies by application. The following table indicates the approximate size of some key U.S. markets, for a few of the customer applications. Any forecast depends greatly on the expected DG capital cost, future fuel cost, and the technology's energy efficiency. All three variables differ greatly by DG technology, making for different market niche applications, as suggested by the range of technologies for which interconnection has been sought in recent months. These estimates were made by identifying specific instances where DG economics can beat grid costs. This does not mean actual sales will be this high; rather it suggests the size of the economic potential market within which DG developers are operating.

As all these variables are changing rapidly, only estimates of sales in the U.S. for 2001-2010 are provided here. Any market forecast depends on how quickly regulatory barriers and other development issues are addressed. Nonetheless, these numbers provide an indication of the size of the potential market.

Generally, energy companies, equipment suppliers, regulators and financial companies are well served by studying each market application in detail for specific regions and for specific industrial, commercial or residential customers.

Market Summary

In the U.S., there is an installed base of mostly smaller reciprocating engines of about 50 GW. Recent annual sales have been 20 MW of DG turbines and 7,500 MW of reciprocating engines. With microturbine, fuel cells and other DG renewables just now coming online, less than 100 MW of capacity annually of these technologies has been sold in recent years. Nonetheless there is the potential to double DG's installed capacity by adding as much as 72 GW by 2010.