1Q 2017

Distributed Natural Gas: Five Trends for 2017 and Beyond

Distributed natural gas (DNG)-fueled generation is undergoing a transformation despite its relative maturity. Thanks to key developments in technology, new business models, and the changing regulatory environment, established technologies are being used in new applications. Access to cheap natural gas, demand for resilient onsite power, and improved controls offerings are improving the value proposition for customers. Meanwhile, regulators are beginning to officially recognize the benefits of cleaner, dispatchable distributed generation as grids experience growing supply variability from intermittent renewables. Despite having some carbon emissions, the relatively low amounts exhibited by DNG technologies compared to alternatives like diesel are expected to drive additional demand.

Opportunities are opening for players across the industry value chain, including energy consumers, software vendors, utilities, and equipment vendors that manufacture the generator sets, turbines, microturbines, and fuel cells that form the core of the industry. Flexibility—both in the ability of companies to react to disruptive industry change and the ability of the technology offerings to react to a more dynamic grid—will be rewarded. Partnerships across the value chain will also be key to success; load-serving entities, equipment vendors, software vendors, and major energy users can offer contributions to such arrangements.

This Guidehouse Insights white paper analyzes five global trends for DNG in 2017 and beyond. The study examines the key determinants driving global investment in DNG and the related opportunities. Each of the topics in this white paper is examined more deeply in research reports and ongoing research from Guidehouse Insights’ Distributed Natural Gas Research Service.

Pages 25
Tables | Charts | Figures 2

  • What are the new business models driving industry transformation in distributed natural gas (DNG)?
  • How will the growth of renewables and grid-tied energy storage affect demand for DNG technologies?
  • What opportunities exist for stationary fuel cells in the coming years?
  • What is the expected impact on DNG technologies of regulatory actions at the global, national, and state levels?
  • How will the drive toward distributed generation affect natural gas technologies?

  • Natural gas generator set vendors
  • Fuel cell vendors
  • Microturbine vendors
  • Large industrial power users
  • Energy developers
  • Utilities and grid operators
  • Industry associations
  • Investor community

1. Executive Summary

1.1    Introduction

1.2    DNG: Five Trends for 2017 and Beyond

2. Five Distributed Natural Gas Trends to Watch

2.1    Five Years Later, the Golden Age of Gas Goes Global

2.1.1   Distributed Natural Gas-Fueled Generation Rides the Golden Age of Gas

2.1.2   Infrastructure and International Trade Grow

2.1.3   Opportunities

2.2    To Support Renewables, Gas Will Compete with Storage—and Often Win

2.2.1   Energy Storage and DNG: Both Competing and Cooperating

2.2.2   2017: DNG Complements Renewables at Site Level

2.2.3   Beyond: DNG Complements Renewables Gridwide

2.2.4   Opportunities

2.3    DER Software Surge Will Unlock DNG Revenue Stacking in the Energy Cloud

2.3.1   2017: Proof of Concept: edgeGen

2.3.2   DNG Expands into Virtual Power Plants

2.3.3   Opportunities

2.4    Stationary Fuel Cell Vendors Mending from a Tough 2016 Will Look Abroad

2.4.1   2017: Industry Regroups after Tough 2016

2.4.2   Beyond: Global Opportunity

2.4.3   Opportunities

2.5    Regulators Will Recognize the Locational and Fast-Start Benefits of DNG

2.5.1   2017: FERC Lets Fast-Start Resources Set Prices

2.5.2   2017: New York State and California Decide the Value of DER

2.5.3   Beyond: Value of DER Recognized Across the Grid

2.5.4   Opportunities

3. Conclusions and Recommendations

3.1    Conclusions

3.2    Recommendations

4. Acronym and Abbreviation List

5. Table of Contents

6. Table of Charts and Figures

7. Scope of Study and Methodology, Notes

  • Renewable Energy Curtailment Scenario

  • Key Use Cases for Storage and Distributed Natural Gas