NCPA - National Center for Policy Analysis

Is Micropower the Wave of the Future?

August 16, 2000

Thomas Edison thought electricity would be generated for consumers via small, local power plants. But the industry took a different tack historically -- with power stations getting ever bigger and transmission grids ranging every wider.

Now, some experts think that electricity deregulation will finally usher in the era of small power plants and vindicate Edison's original vision.

Here are some of the factors which make small generating projects attractive:

  • Even though the power small plants produce is more costly at its source, small plants do no suffer the huge transmission losses distant plants do when sending power to customers.
  • The surplus heat small plants produce can be used to warm nearby buildings, while that resource is usually wasted when big generators are located in the middle of the countryside.
  • Microgenerators often run on natural gas, hydrogen or sunlight -- rather than coal -- making them more environmentally attractive.
  • Industries which rely on steady and uninterrupted power will invest in their own small plants, rather than risk brown-outs and consequent shut-downs.

U.S. venture-capital investment in micropower technology was all but nonexistent until 1995. But with the promise of deregulation, investments began escalating in 1996 and are forecast to reach $800 million this year. Within a decade, the market for micropower-technology equipment could reach $60 billion a year, experts predict.

Source: "The Dawn of Micropower," Economist, August 5, 2000.

 

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