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An Electrical Safety Net

Micropower is finding some of its first applications in remote operations that have inadequate access to centrally generated electricity. Microturbines have been a hit on oil-drilling rigs in Alberta, Colorado and Texas, for example. These rigs sit above reserves of energy-rich liquid gold, but lie either beyond the grid or at its edge, where the trickle of electricity can’t support heavy equipment. Modern-day wildcatters are also under pressure from environmental regulators to curb the flaring of the sulfur-laden gases associated with many wells. Microturbines will run on just about anything, including this “sour gas,” so haul one to the well head and you can put this environmental nuisance to work powering the pumps.

The economics of generating power without incurring a fuel cost is so compelling that microturbines may turn many oil wells into remote power plants that generate surplus power for sale over the grid. The capacity for expansion is enormous: oil wells in Texas alone typically flare a billion cubic meters of sour gas a year. That’s enough to generate more than 400 megawatts of electricity, equivalent to a mid-sized utility power plant. Landfills and wastewater treatment plants may be the next to cash in. Since last spring, a Capstone microturbine has been digesting the methane that ferments forth from the world’s second largest trash pile-Los Angeles County’s Puente Hills landfill-while generating only 1.3 parts per million of nitrogen oxides. That’s a lot cleaner than the 30 parts per million released when the gas is flared.

But transforming waste gas is a niche opportunity, and companies like Capstone and Ballard are hoping for much more. Their plan: catch the deregulation wave and transform millions of power consumers into power producers. Deregulation is sweeping away the monopoly protections that kept new power producers-particularly residential and commercial consumers-out of the market. “Under the monopoly environment it didn’t matter if you had these wonderful technologies to self-generate because you were obligated to buy your power from the utility,” says Wayne Gardner, manager of business development and strategy at Exelon Capital Partners-the Philadelphia-based venture capital arm of U.S. power giant Exelon.

As deregulation offers consumers greater freedom to generate power, it also gives them more reason to do so. The rocky transition to a deregulated market is casting a haze of uncertainty over the power industry, discouraging utilities from adding generating capacity and upgrading their transmission lines. Energy experts blame California’s hesitating transition toward a competitive power market for its meltdown this winter. And one solution to an ailing grid, it is becoming clear, is micropower. “Premium power is clearly the dominant near-term market for distributed power,” says Dan Rastler, a distributed power expert with the Electric Power Research Institute in Palo Alto, CA. “The existing distribution system is not capable of meeting the reliability needs of that market.”

Premium power is already a $7 to $10 billion-per-year market in North America, according to the research firm Frost & Sullivan. Today, most of that comes from batteries and diesel engines serving as backup power sources. But the freedom to generate one’s own electricity could blow this market open. Seekers of premium power who hook up microturbines and fuel cells to the natural-gas line are no longer limited to using their generators only when the lights go out. They can save money by powering up whenever the grid price exceeds the cost of fuel. Some states even permit micropower producers to sell surplus power back to the grid for a profit.

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