Big and Tall, Light and Small

Issue 4 and Volume 104.

The Y2K Scare Brought Two Disparate Technologies into the Realm of Public Consciousness. A ludicrous made-for-TV movie painted nuclear power plants as accidents waiting to happen when the clock struck midnight on Dec. 31, 1999. Concerns about power loss also prompted a run on generator sets, furthering the cause of distributed generation.

These two technologies-nuclear power and distributed generation-couldn’t be further apart in terms of capital cost, size and application, but they co-exist in our generation fleet because they provide diversification. Diversification-the strategy made popular by financial planners-has an important place in U.S. energy policy, not only to prevent over-reliance on one technology or one fuel, but also to keep the nation’s energy costs down. Well-run nuclear and coal plants keep the pressure on combustion turbine facilities to operate cost-effectively, and vice-versa. Similarly, low capital-cost diesel engines act as a price hedge against small gas engines and turbines.

The nuclear power industry faces prodigious challenges in the years ahead: continued uncertainty surrounding the fate of spent nuclear fuel; opposition from anti-nuclear groups, particularly strong in Europe, but growing in other countries as well; damaging fallout (no pun intended) from nuclear mishaps in Japan, Europe and the U.S. (Indian Point’s leak in February); and rising pressures to reduce production costs, due to escalating industry consolidation.

In the face of these challenges, however, the nuclear industry continues to thrive, albeit with fewer plants. In 1999, the industry saw a dramatic increase in electricity production that was equivalent to adding six or seven large nuclear reactors, according to the Nuclear Energy Institute. At least 15 of the nation’s 103 operating reactors set production records, and through November 1999, the average capacity factor of U.S reactors reached 86 percent, an eight percent improvement over the same period in 1998.

Production costs continue to plummet, according to Steve Tritch, Westinghouse senior vice president, moving toward the Westinghouse vision termed “1 in 21”-one cent per kWh in the 21st century. At least 10 U.S plants have already achieved average production costs of less than 1.5 cents per kWh and another 70 or so have driven their costs below 2 cents per kWh. Several plants are within one- to two-tenths of a cent of reaching the 1 cent barrier.

At the other end of the market spectrum, distributed generation is making significant in-roads into the world of power generation. While it’s still difficult to accurately characterize this market segment-because of a wide range of technology options, a wide range of end users, and a wide range of as-yet unresolved issues pertaining to interconnection, safety and system stability-distributed generation is no passing fad.

The increasingly high-tech nature of modern business, coupled with a 24×7 global economy, is forcing more and more companies to prioritize the need for reliable power. The Y2K fervor can take credit for some of the run-up in orders for on-site power in 1999, but generator manufacturers are expecting a stronger year in 2000, indicating that there’s more to the rise than Y2K. And it’s not just hospitals and high-tech manufacturing facilities that are investing in on-site power systems; the retail industry is getting involved as well. The neighborhood Wal-Mart superstore not only can’t take the hit in lost or spoiled merchandise if power is lost, it also can’t afford to be shut down for extended lengths of time when it could be generating revenue.

The size of the distributed generation market depends on what qualifies as distributed generation, but even if the market amounts to only 5 percent of installed capacity, about 40 GW, that translates into 80,000 installations (at an average installation size of 500 kW). That’s a lot of activity, and it’s extending to smaller and smaller facilities. The market potential for gensets in the minus 200 kW range, for example, is the same as that for engines in the 200 kW to 2 MW range, according to Joel Haefelin, Caterpillar’s worldwide marketing manager for engine products.

As we enter the baseball season, every team will carry a few utility players-players who don’t make the big bucks, but who make a steady, reliable contribution to the team’s success. I currently see both nuclear power and distributed generation in this role, one as David, one as Goliath, but equally powerful when used effectively.

I am pleased-and proud-to be introducing two new monthly sections beginning in this issue. John Zink, former Power Engineering managing editor, will be providing his analysis of the nuclear industry in a section called “Nuclear Reactions” And Ann Chambers will be compiling a new section called “DG Update” which will provide news and views on the evolving world of distributed generation.

I’m hopeful you’ll find these sections informative and insightful. As always, we welcome your input so that these sections-and the magazine-meet your needs and expectations.