Frost: Efficiencies, Incentives to Boost Cogeneration Capacity
September 4, 2009 // Published as a news service by IHS
The installed capacity of cogeneration systems is expected by Frost to grow at a compound annual growth rate of .7% from 2008 to 2015, reaching 134,022 MW.
Frost pointed out that rising prices in fuels used to generate electricity has caused a need for technologies that offer greater efficiency of fuel conversion.
"The higher efficiencies and potential cost savings linked to cogeneration equipment encourage greater long-term investment in the market," said Frost & Sullivan Industry Analyst Georgina Benedetti.
Adding to the incentives for cogeneration is increased electricity demand, aging equipment and more strict environmental standards. Frost noted that to promote CHP system installation, governments are introducing incentives, subsidies, favorable emissions legislation and loan programs.
Because of possible climate change legislation, Frost said the gas turbine segment may see higher growth compared to the steam turbine segment of cogeneration.
At the same time, natural gas price volatility has caused end users to withhold investments in cogeneration equipment, such as gas turbines, until a more favorable climate emerges.
Frost suggested that to offset price fluctuations, vendors can invest in R&D to develop cogeneration systems that use biomass as the fuel.
"In doing so, the vendors can enter the markets where there is plenty of biogas supply, high power demand and government incentives," said Benedetti.
Looking forward, the consultancy said technological advances in the cogeneration market will allow CHP equipment (depending on size and design) to provide greater flexibility to a facility by switching fuels, shifting loads and shaving peaks.
Source: Frost & Sullivan.