USA: A land of opportunity for gas engines
1. Firstly, there’s the phenomenal boom in shale gas supply and the resulting low natural gas prices. Going forward, while there is likely to be upward pressure on gas prices, we believe healthy spark spreads will continue up to 2020 with some States still experiencing electricity prices that are 4 or 5 times more than that of gas prices. We show below the 2012/2013 spark spread snapshot of each USA state.
2. A second key driver is policy. Whether it is to comply with strict federal environmental regulation to cut down greenhouse gas emissions, or to qualify for State-specific renewables or energy efficiency incentive mechanisms, or as a power supply hedge in a black out-prone USA - utilities, industry, and commercial sectors have a much greater incentive to invest in, and support, “cleaner”, efficient, and reliable cogeneration systems. We expect that more States will offer credits or improved incentives in the future to facilitate greater uptake of cogeneration systems.
3. A third driver is the greater demand for flexible generation. We expect the installed capacity of non-dispatchable resources such as wind and solar to rise as individual States ramp up efforts to meet renewable energy generation targets by 2020 to 2025. This will benefit large engine units particularly, with the larger than 5 MWe market segment expanding the most in terms of installed capacity at an average annualised growth rate of ~18.5% / year between 2013-2020.
And what of biogas projects (including landfill gas)? Overall, we expect some growth, but this will be concentrated in systems that are under 3 MWe in capacity and dominated by opportunities in California.
Taking all the above into account - for gas engines sized 400kWe and above - we expect to see a doubling of today’s annual installed capacity by 2020 in USA. While the size of the pie will vary from State to State – overall the USA is a land of opportunities for gas engines.
Delta-ee’s USA country report, available to subscribers of the Distributed Power Service, dives into detail about which States offer the best opportunities and for what customer segments and what engine size classes. For more information on our pricing structure or to discuss this research - please contact Dina Darshini at firstname.lastname@example.org.