E.ON’s 17 May announcement that it is developing small gas-fired CHP systems (<1 MWe) for the retailer METRO is a significant one – mainly because such activity in Europe by a large integrated utility has been a rarity for almost two decades. So rare as to be almost be invisible.
A few regional and municipal utilities have developed such projects in a few countries, but the predominant players across Europe have been relatively small and specialised developers.
Indeed, one analyst quoted in the Wall Street Journal after the announcement indicated that E.ON’s timing is wrong, that it’s late in the game, that the smaller players have got there first. We’re not so sure. And, for us, that’s not the right question to be asking.
Delta-ee’s research indicates that the markets for gas engine based CHP – both natural gas and biogas fired – in several European and non-European countries have plenty of untapped economic potential. Even in Germany, the world leader in the development of such projects.
Overall, we believe that most of the key drivers for this scale of project are net positive for the period to 2015 / 2020. We project annual European deployment of around 1.5 – 2.0 GWe of projects in the 0.4 – 5 .0 MWe size range by 2020, and up to 1.5 GWe in the 10 – 400 kWe size range. That’s more than a doubling of today’s rates.
That is potentially very good news for the product manufacturers – and there are new engines coming into the market almost every month, especially in the smaller size ranges – and the developers. Including new ones like E.ON.
So the market looks likely to be there for E.ON, and the timing is not bad in our view. The main question is: can a company of this scale develop a new and nimble business with the right sales, marketing and after-sales service strategies to win new customers and build great relationships with them?
Only time will tell, but the commitment is clearly there - E.ON has already made steps into decentralised customer solutions in a few markets, including PV, district heat schemes and heat pumps.