Get ready for more distributed generation from industry – a lot more

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Quick Take: Distributed generation creates both opportunities and problems for utilities, so it's important to watch its progress in your own service territory. Nationally, the market is heading for significant growth, according to a new report from Pike Research. Between now and 2016, industrial DG will jump a minimum of 46%, and could grow by as much as 85% if things go well. - By Jesse Berst

Industrial distributed generation (IDG) – industries developing their own on-site power generation – is expected to climb dramatically over the next five years, according to a recent research report from Pike Research. The market research and consulting firm forecasts the IDG market in the U.S. to hit 46% by 2016, and that's the "low-growth" scenario. Given a more favorable regulatory environment and stronger economic growth, that number could be significantly higher: 85% over 2011 market numbers.

"Industrial distributed generation presents a variety of business opportunities to the end-user to better manage energy use, increase efficiency and asset utilization, and tailor sources of energy to unique site requirements," said Bob Gohn, Pike Research VP. "In addition, if they have access to wholesale electricity markets, end-users can also benefit from additional revenue streams by selling energy, capacity and ancillary services to grid operators."

The Pike report, Industrial Distributed Generation, looks at IDG in the traditional vertically integrated regulatory framework, and in the new grid-level open wholesale markets. In addition to addressing typical systems, business cases and major participants, the report covers growing sectors of aggregated generation, renewables-based IDG and relatively young sectors: biomass/biogas and data center combined heat and power.

The report provides forecasts in three economic growth scenarios and includes company profiles of the top players.

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Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking market entry advice and M&A advisory. A frequent keynoter at industry events in the US and abroad, he also serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment directorate.