Distributed Generation Races Centralized Generation
The rise of distributed generation (DG) is one of the most important trends in the energy industry today, according to Navigant Research’s report, “Global Distributed Generation Deployment Forecast.”
New DG capacity additions worldwide will surpass new centralized generation capacity additions in 2018. This trend will continue with more DG capacity installed annually than centralized capacity through 2023. Navigant Research estimates that between 2014 and 2023, DG will displace the need for at least 321 GW of new large-scale power plants, valued at more than $1 trillion in power plant construction revenue.
Diesel generator sets (gensets) will lead all DG technologies in deployment, followed by solar PV and natural gas gensets. As the least mature technologies, stationary fuel cells and small wind turbines will represent less than 2 percent of DG installed capacity during the forecast period.
Policy has been the single most important driver of DG to date, according to Navigant’s report. On the fossil fuel side, emissions regulations for gensets have led to highly efficient diesel- powered reciprocating engines that have hit the market across a wide variety of power classes and applications. At the same time, the shale gas boom is leading to significant growth in natural gas gensets that offer an attractive replacement to diesel in markets where NG infrastructure exists and gas prices are lower.
On the renewables side, 138 countries now have renewable energy support policies at the national or state/provincial level. In addition, 16 US states have Renewable Portfolio Standards (RPSs) with solar and/or DG provisions. DG has long been the primary target of European policy, and now even China has a target for distributed solar PV. In some cases, renewable energy targets at the state or national level, such as in the United Kingdom, have resulted in the growth of fossil fuel DG technologies to balance the grid due to the intermittency challenge associated with renewables.
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