According to the report, if energy prices stay at their present level, microgeneration will create an Internet of energy that eventually impacts on incumbent energy providers.
17th May 2006. Cambridge, UK: Since the 1970s oil price shock, an enthusiastic minority of homeowners have powered their homes with energy derived from renewable sources. According to a report published this week by Cambridge UK analysts CarbonFree, these enthusiasts have recently been joined by a growing number of householders hoping to use microgeneration to reduce fuel bills and perhaps sell surplus energy to grid operators. According to the report, if energy prices stay at their present level, microgeneration will create an Internet of energy that eventually impacts on incumbent energy providers.
As Remi Wilkinson, Senior Analyst with Carbon Free, explains, "Inevitably, the growth of distributed generation will lead to the restructuring of the retail electricity market and the generation, transmission and distribution infrastructure." She goes on to point out, "The power providers may have to diversify their business to make up for revenues lost through household energy microgeneration."
In the report "Householders As Energy Providers", CarbonFree identifies key areas where energy companies are already using microgeneration to open up new markets. One example is electrically powered ground based geothermal heating systems that replace oil central heating. According to the report, electricity companies see geothermal technology as a tool to expand electricity sales.
The report identifies a potential market worth over $1bn per annum within five years which is highly dependent on factors such as the number of housing starts that incorporate microgeneration technology and whether domestic renewable energy vendors achieve scale before energy prices ease.
According to the report, solar hot water technology, while offering no scope for reselling electricity, can be a cost effective way of reducing domestic water heating bills. CarbonFree notes that while DIY solar hot water systems are cheap and simple, plumbing and installation drive up the cost of commercial systems.
The report acknowledges that solar photovoltaic technology is expensive, but notes that it is simple to install, in hot climates it can generate surplus electricity and, in many countries, installation is supported by government grants.
CarbonFree identifies small-scale wind turbines as a cost effective way to produce electricity for household use. Even so, the report suggests vendors need to reduce the cost of turbines. CarbonFree notes that DIY retail chains attempting to source wind turbines for resale have, to date, been unable to find a low cost device manufactured in sufficient volume. According to the report, unless existing wind energy vendors ramp up production and develop a sub $900 system, they will eventually lose the toehold they have achieved in European and US markets.
The report "Householders As Energy Providers" is available from the CarbonFree website. http://www.carbonfree.co.uk
CarbonFree carries out research and analysis in a wide range of alternative energy related fields and disseminates results in its highly focussed CarbonFree reports. It also helps organisations reposition themselves in the rapidly evolving alternative energy market.