Platform for the future: the smart genset

17 September 2018

A recent white paper* from Navigant Research, commissioned by Fairbanks Morse, explores the role of what it calls “platform-based generation from smart gensets.” These are highly efficient, reliable, and will increasingly be deployed via “as-a-service” business models, accelerating adoption of other types of distributed energy resource. Peter Asmus, Adam Forni, and Dexter Gauntlett of Navigant provide a summary of their findings.

Energy markets are rapidly shifting towards greater reliance on distributed energy resources (DER) (Figure 1).

The lion’s share of this DER portfolio is composed of distributed generation (DG) technologies, both fossil and renewable, and energy storage. Navigant Research estimates that annual distributed generation capacity additions will outpace centralised generation three-fold by 2024.

But other resources, including demand response (DR) and other forms of load management and EVs, are all emerging as parts of an increasingly complex puzzle of DER that both create challenges and offer solutions to end-use customers.

Increasingly, these assets will be brought together into distributed power systems or microgrids that will be backed by smart generator sets to aid in their ability to be dispatched quickly or enhance reliability.

How can end users make sense of this evolving landscape and capture the benefits attached to DER rather than be saddled with shortcomings that could retard rather than enhance reliability? The answer lies in distributing intelligence into devices while also managing and monitoring them in real- time to ensure they ensure reliable delivery of premium cleaner power that end-use customers want in today’s digital-enabled energy economy.

If one were to boil down the demands being placed on today’s increasingly diverse DER portfolio—ranging from frequency to voltage deviations and a long list of ancillary services the power grid requires—the word would be “dispatchable.” In a world ever more dependent upon variable generation and loads, and where centralised sources play a shrinking role in maintaining overall grid stability, the industry is moving towards a “platform approach” where a number of energy sources can be integrated at any time and optimised for a variety of applications, from simple fuel savings to enabling DER to interacting to provide services to the grid.

Given the rapid capital cost decline of distributed renewables, and increasing energy storage, one could be forgiven for thinking this was the only pathway. In the near- and mid-term, gensets will continue to be one of the primary DER technologies deployed because of their unique value-add benefits. Gensets provide the backbone to many of the world’s microgrids, for example (see Figure 2), enabling the deployment of remote, distributed power systems and critical black-start functions for grid-connected systems.

What is a smart genset?

In contrast to the traditional standby generator, smart gensets are becoming increasingly interactive with humans, other DER, and the larger electrical grid. Navigant Research defines a smart genset as:

A genset equipped with advanced controls that allow it to interact with remote parties and/or respond to signals beyond just the loss of utility power.

Although smart gensets are not new — they have existed for decades — Navigant Research expects rapid growth in both deployment and sophistication of smart gensets in the coming years. Key benefits of platform-based smart gensets include:

  • High efficiency: The importance of fuel savings to an industrial customer cannot be overstated. C&I (commercial and industrial) facilities operate on lean margins and are highly sensitive to fuel price fluctuations. High efficiency generators both reduce OPEX and reduce fuel price shocks over the lifetime of a system.
  • High reliability: Thanks to advanced remote monitoring technologies, operators can monitor system performance and make adjustments in real-time. With continued monitoring, maintenance teams can be dispatched with the right tools the first time, allowing enhanced system reliability.
  • New business models: High efficiency and high reliability with cloud-enabled monitoring enables performance-based contracting and favourable service arrangements for customers, in some cases allowing them to pay for reliable power as a service.

The market for smart gensets is expected to surpass $18 billion in annual revenue by 2026 at a compound annual growth rate of 10.5%. See Figure 3. Annual global capacity additions are expected to reach 51 GW by 2026. Asia Pacific has the highest demand over the forecast period, accounting for an estimated 38% the cumulative capacity additions to 2026, or 134 GW. Growth in the region is led by developing countries, including China and India, as gensets are deployed to support infrastructure expansion, accelerate rural electrification, and mitigate the power deficits that occur when too little generation is available to meet demand.

North America is expected to account for 20% of the global cumulative installed capacity (72 GW) to 2026, driven by the increasingly smart use of distributed natural gas generation for grid support and resilient power. The Middle East & Africa is expected to account for 18% (62 GW) to 2026, thanks to rapid electrification and infrastructure growth. Europe and Latin America round out the global regions, accounting for 58 GW and 28 GW of capacity, respectively.

In response to customer demands for higher efficiency, lower emissions, and real- time data access and analytics, Navigant Research sees three emerging smart genset platforms that can serve a range of customer types.

These platform types are depicted in Figure 4. System 1 is a traditional standby genset without remote monitoring capability; it turns on only when the grid goes down. System 2 is platform-enabled for self-consumption; it is remotely monitored, and is integrated with other DER in a hospital campus microgrid. System 3 is platform-enabled for grid interactivity; it can be located behind-the-meter at any location, can provide all the services of system 2, and is able to react to signals from the grid to provide dispatchable services to the local energy grid on-demand.

New opportunities for genset providers

Genset providers are in a similar position to utilities, and could view the evolution toward DER such as energy storage, renewables, and digital grid as a threat. Today, however, both utilities and generator manufacturers are realising the value of new partnerships, collaborations, and even acquisitions in the DER space. Both generator manufacturers and utilities are exploring new opportunities within the DER landscape, shifting focus from the assets themselves to creative strategies and new business models that can stack value.

Energy storage is often referred to as the “holy grail” for integration of larger amounts of variable renewable energy while also improving power quality and reliability. Given the billions of dollars in public and private investment, energy storage is largely delivering on aggressive cost reductions (see Figure 5). But cost reductions alone are only part of the solution.

In both developed and emerging economies, generator manufacturers are increasingly delivering integrated solutions that include energy storage, gensets, and renewables. Reflecting this, some recent notable genset company acquisitions and partnerships are shown in Figure 6.

Some generator manufacturers are realising the potential of taking a flexible, open, platform-based approach as a way to future- proof themselves and their customers against energy industry disruption. In short, they have realised that one size will not fit all the needs of their customers. With an open, platform- based approach, these generator OEMs are betting on gaining a competitive advantage by offering customisable hybrid generator solutions that are open to all DER at the customer site, along with third-party software solutions that can form an enabling ecosystem through the Energy Cloud. Here, the platform advantage takes shape when a rich ecosystem of software partnerships can push value-added services (eg, DR, ability to participate in wholesale markets, or creation of virtual power plants, or ability to provide power as a service) to meet end customers’ needs.

These can be customised for specific markets and regions (eg, in terms of regulations, emissions standards, carbon footprints, reliability needs). The enabler of these types of hybrid platforms is now available as a result of the ability to tie into the Energy Cloud.

Fairbanks Morse and Puerto Rico

Fairbanks Morse is an example of a genset OEM player transitioning into a hybrid, open platform, taking a cloud-based approach. The 125 year old manufacturer has been seen as a low-profile player in recent years. However, in 2017, the OEM launched a new, updated version of its opposed piston engine technology called Trident OPTM (Figure 7), claiming best-in-class fuel efficiency and 30% fewer parts over conventional four-stroke engines, offering better reliability and lower overall lifecycle costs (see Modern Power Systems, February 2018, pp 30-31). The engine can be customised into a standalone genset or hybrid power plant dependent on a customer’s needs. Power generation is monitored in real-time and enabled by the cloud, where data is shared with the Fairbanks Morse services team. Integrating machine learning and predictive algorithms to determine preventive maintenance needs can help enable Fairbanks Morse to meet pre-determined reliability or performance service level obligations. Through the platform, Fairbanks Morse is proactively working to identify third-party software providers of DR solutions to allow end customers to tap into local markets and enhance revenue streams for the power they generate.

Fairbanks Morse plans is taking this a step further with its turnkey PoweReliability-as-a-Service(TM) offering. Under this arrangement, customers pay for the reliability they need per-megawatt over a fixed price contract. This service guarantees the customer that their reliability requirements will be met.

The Fairbanks Morse PoweReliability-as- a-Service(TM) platform delivers distributed power generation for independent power producers or large C&I organisations. Backed by fuel efficiency and reliability performance level guarantees that are monitored in the cloud-based platform, PoweReliability-as-a-Service(TM) is designed to reduce the risk and OPEX for end users who want to generate their own power—whether grid-tied, or remote and off-grid.

Fairbanks Morse recently announced that it has delivered the PoweReliability-as-a- Service(TM) platform in Puerto Rico, providing a 10 MW dual fuel CHP microgrid.

“The aftermath of Hurricanes Maria and Irma has shown that new distributed energy strategies need to be implemented that complement – and in many cases even replace – the traditional grid infrastructure”, says David Santamaria, VP, services and support, Fairbanks Morse. “We believe that PoweReliability-as-a-Service(TM) can be very impactful to the recovery of areas across the Caribbean and strengthen them against future power outages.”

Fairbanks Morse notes that nine of the 12 most expensive storms in US history happened in the last three years. Decentralised generation, independent power production, and microgrids can aid in the recovery of power in the wake of such catastrophic events and help protect businesses and communities against future power outages.

By offering guarantees over the long term, Fairbanks Morse envisions its PoweReliability-as-a-Service(TM) contract as enabling customers to determine their generation, emissions, and reliability requirements, based on the specific needs of each site. As an open DER platform, it can be customised to integrate current or future renewables, CHP, energy storage, and other DER to facilitate a variety of use cases and maximise value stacking. This is intended to allow IPPs and C&I end customers to integrate the DER of their choosing to be operated full-time as an independent microgrid or, where available, provide ancillary market services such as demand response and selling power back to the grid when it is needed most. 

* Disruptive generation: A cloud-enabled, platform based approach to reliable power generation, by Peter Asmus, Adam Forni and Dexter Gauntlett 

Figure 2. Technologies currently employed in microgrids (source, Navigant Research)
Figure 7. Fairbanks Morse Trident OP(TM)
Figure 4. Platform-based gensets in the energy cloud (source, Navigant Research)
Figure 1. Annual world installed total DER capacity, by technology type, 2017-26 (source, Navigant Research)
Figure 5. Declining energy storage costs (CAPEX for industrial scale systems, average installed costs, across world markets) (source, Navigant Research)
Figure 3. Annual smart genset additions, MW and market value, 2017-2026 (source, Navigant Research)
Figure 6. Recent notable acquisitions and partnerships in storage/controls/integration sector by genset companies

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