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New Delta-ee research forecasts growth for small-scale CHP in the UK over the next 5 years

As part of the Distributed Power Service, a new global research service which considers current trends and future opportunities for distributed power systems in the world’s leading markets, Delta-ee has published its latest report on the UK market for small-scale gas engines. All gas engines used within CHP and stationary power applications - and with capacities ranging from 400 kWe to over 10 MWe - have been considered.

Here, we share some of our key findings:

The UK gas engine market has improved steadily since the major slump in 2008 and we expect continued growth to 2020 driven by improving spark spreads and a supportive policy framework for biogas installations. A gradual recovery from the economic downturn is also likely to improve investor confidence in the second half of the decade, with a stronger emergence of district heating expected nearer to 2020. 



Overall, we expect strongest growth among the smaller sized gas engines - primarily those under 1 MWe in capacity.  Increasingly, we are seeing CHP systems installed within commercial and public buildings while policies are tending to favour smaller systems. Furthermore, as spark spreads improve, small systems which were previously prohibitively expensive are becoming more viable. Specifiers are also turning to CHP solutions in order to meet energy efficiency targets in new build developments.  




The full UK Country Report is available via the
Delta-ee Distributed Power Service, a subscription-based research service. For more information, please contact [email protected].

More about Delta-ee’s Distributed Power Service

The Distributed Power Service covers global markets and provides in-depth market insight to help you grow your business in an increasingly dynamic energy sector. We have designed this service to be as accessible and relevant as possible with Market Intelligence updates regularly sent to subscribers, covering policy updates, product developments, energy price movements, and more. In-depth country reports are published throughout the year alongside segmented sales data and future projections to 2020.

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Russia: a market with huge potential – will decentralised energy take off?

Everyone knows that Russia is a vast market with huge untapped potential. But in the context of a struggling economy and increasingly tense diplomatic relations, what is the future for decentralised energy in the world’s largest country?

Earlier this month, I travelled to Moscow to attend the annual Russia Power conference and trade fair in a bid to find out if Russia is ready to embrace a new generation of efficient, distributed power facilities.



Here are three key messages that emerged during the conference:

  • Energy price trends across Russia are increasing but have been frozen for 3 years amid the uncertain economic climate. A programme of sustained energy price rises has been underway in Russia for a number of years. Mandated by government, these price rises are seen as crucial step towards a competitive and efficient energy market, and follows decades of government subsidies for energy consumers. Yet, the announcement towards the end of 2013 that energy prices are to be frozen for 3 years has undermined investor confidence in the Russian energy sector. It now seems that cost parity is more likely to be achieved towards the end of the decade – perhaps then we may see a new era of Russian modernisation.
  • Weak and out-of-reach electricity grid drives sales of distributed power systems. Vast regions of Russia have no access – or limited access - to the electricity grid. For industrial consumers who require a reliable electricity source, distributed power systems (often gas engines) are frequently the most effective way to secure a supply.
  • Russia is burdened with an over-abundance of aged, inefficient generating plant. Today, the Russian electricity sector has significantly more generating plants than is required to meet what is a reducing demand for electricity. These inefficient plants are badly in need of replacement; yet with the economy weakening, and energy prices frozen, there remains a lack of appetite among investors to build new capacity. Still – there could be good news in store for distributed generators. 50 GWe of distributed generation is set to appear by 2030, driven by industrial consumers looking to mitigate against risks of rising energy prices and security of supply issues.

This month, we are also launching a new Delta-ee research service. Covering global regions for distributed power systems (including Russia), our research will cover both the established markets of today, and the emerging markets of tomorrow.

To find out more about the Distributed Power Service, please click here.

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Recent Comments
Marina Bukhanova
Do you think there can be a barrier in micro cogeneration in Russia the fact of high price of CHP units and high maintenance cost?... Read More
Tuesday, 11 November 2014 16:36
John Murray
Hi Marina, Thanks for your question. Certainly, the relatively high price of 'micro-CHP' compared to more conventional solutions ... Read More
Wednesday, 12 November 2014 10:04
John Murray
In most cases, a payback period of less than 5 years is necessary to promote significant uptake in sales. This is true across Euro... Read More
Wednesday, 12 November 2014 10:09
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The new GE Distributed Power business – do the numbers add up?

At the end of February, GE Distributed Power was launched.  It’s an important market development from one of the big beasts of this fast growing sector. 

I want to make 3 points that suggest GE is doing the right thing at the right time:

1. I recommend a reading of the associated GE DP White Paper on The Rise of Distributed Power.  One of its themes is that the era of utility-based central power is in decline.

What the Paper could add is that this trend looks like it is accelerating faster than even GE thinks: 
  • Most of Europe’s biggest utility companies are on their knees financially.  They are losing money on many of their largest plants and are trying to diversify away from big power generation.  RWE in Europe is a good recent example – it announced last week its first loss in 60 years.  E.ON is also struggling, and is diversifying into small-scale CHP (see my blog on this).
  • In many emerging markets, power demand is surging well ahead of the capacity of centralised utilities to deliver.  DP systems are increasingly the default option for end users.  In past Delta-ee research on the Global Gas Engine market to 2020 (0.5 – 5.0 MWe engines), our top 10 opportunity markets included Bangladesh, Nigeria and Indonesia:

Gas engine (0.5 – 5.0 MWe) sales projections, all power applications.  Delta-ee 2013.     














 

2. The White Paper describes 4 ‘driving forces’ of DP: 
  • The growth of natural gas, including shale gas
  • The high cost and unpopularity of new electricity network infrastructure. 
  • The scope for emerging automated control systems to increase the economic performance of DP. 
  • The growth in demand for ‘resilient’ infrastructure.

I would add 2 more important ones: 
  • The fast expansion of intermittent renewables, including solar and wind power.  This creates network system balancing challenges, and flexible DP systems – including gas-fired CHP systems with thermal stores - are already providing part of the solution. 
  • Economics: in addition to the network savings, critical drivers of gas-fired DP and CHP systems in many countries are policy incentives and the fuel/power price spark spread.  Both are on an upward trend in many countries. 

3. What about the numbers?  GE forecasts an annual market for all global DP investment in 2020 of $206bn.  This is a very large number, but it includes a diverse range of non power applications and widely deployed technologies such as diesel engines. 

Our view of 2020, based on Delta-ee’s global distributed power research, for a subset of the GE DP range - gas engines of all sizes, all fuels and all stationary power applications - is about $35-45bn, more than a doubling from our 2012 data.  I would say the two numbers look broadly consistent - and that the GE numbers do indeed add up. 

Either way, we are clear: DP is a growth market.

Note: Delta-ee’s Distributed Power Service is launching in March 2014.
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