Power Plants Everywhere

By Daniel Eisenberg

What's a utility to do when it needs to keep the juice flowing but there's nothing left to squeeze? That's the thorny problem facing New York City as it girds for a summer that could potentially see rolling blackouts like California's. To stave off a meltdown in June, the city needs to have an extra 400 megawatts of electricity (enough to power 400,000 homes) available. But with all of New York's red tape, you can barely get a new power plant running in six years, let alone six months.

Fortunately, New York has come up with a last-ditch solution--which, surprisingly, may be the wave of the future. Despite local community opposition, the New York power authority is racing to install 10 individual generators around the city, each capable of producing 44 megawatts. The system is tailor-made for New York, which is plagued by bottlenecks on its aging transmission lines that often make it hard to import power.

This approach, which has been used in Chicago, is known as distributed generation. Just as the computer industry has evolved from a centralized, mainframe universe to a networked PC environment, a small but growing portion of the electricity industry is moving the power source away from one massive plant to a slew of smaller, cleaner turbines dotting the landscape.

It's not just power providers that are plugging in. More and more small businesses--especially on the West Coast--are purchasing their own micro-turbines, which cost anywhere from $30,000 to $50,000 and produce up to a megawatt of electricity, as insurance against outages.

"Many companies can't afford to be interrupted. It's a matter of life and death," says Dr. Ake Almgren, CEO of Capstone Turbine Corp., which has sold more than 1,000 units in two years to outfits ranging from high-tech start-ups and hospitals to a Blockbuster Video store and a BP Amoco gas station. According to estimates, 10% to 20% of new power will be distributed by 2010, so it's no wonder that heavyweights like Honeywell and Ingersoll-Rand are moving into the burgeoning business. Still, Maureen Helmer, chairman of the New York State public service commission, insists that "this is just a transitional measure." Perhaps. But for utilities grappling with NIMBYism and small businesses worried about an electricity crunch, it could be a long-term remedy.

--By Daniel Eisenberg