MicroCHP: too soon to pick winners

5 July 2007

Tucked away in the footnotes of BG Group’s recently presented 2006 fourth quarter and full year results is the information that the company was “committed to a plan to dispose of Microgen” – the Stirling engine based microCHP system that was being developed by a wholly owned BG subsidiary, Microgen Energy Ltd, established in 2002. It turns out that, despite a year of marketing effort, no buyer has been forthcoming and Microgen has been closed down.

An 11th hour saviour might perhaps emerge, as it did in the case of Sulzer’s fuel cell based microCHP system, Hexis, which a little over a year ago looked like a lost cause but since January 2006 has been in the ownership of a foundation. However, at the time of writing, it looked like the development of the Microgen technology had ceased and BG’s seven years of effort in this area had come to nought.

Against the backdrop of BG’s activities and aspirations in the international gas business this is perhaps a minor consideration, but for those interested in the concept of distributed generation it is a significant, and disappointing, development. Sadly, the distributed power business is no stranger to disappointment.

Technologically the performance of Microgen – employing the free piston Stirling engine technology pioneered by Sunpower in the USA – appears to have been in line with expectations. Only last year Microgen Energy signed an agreement with domestic heating group Baxi and envisaged bringing a unit to market by 2008. This was to have been a wall mounted appliance combining the Stirling engine with a condensing boiler, with a rating of 1 kWe and 5-36 kWt.

The basic problem appears to have been that the economics could not be made to work. The unit cost could not be reduced to something reasonable and no viable business plan could be constructed. There was also a strategic issue for BG, which wants to focus on upstream gas supply rather than the fiddly business of manufacturing residential heat and power systems.

The demise of Microgen provides further confirmation that domestic scale generation – and the vision of a personal power plant in every kitchen – is proving by no means as easy to achieve as its early proponents might have led us to believe. But the concept of distributed microCHP – normally classified as systems generating 5 kWe or less – has a number of attractions, not least of which is the high efficiency which comes from combining cogeneration with the elimination of transmission system losses.

Sadly the field has been plagued with false dawns and an excess of hype – remember the heady days of 1999-2001? At that time GE (through a subsidiary also using the name Microgen) and fuel cell developer Plug Power were setting up distribution agreements for a device called Homegen, which turned out to be far from ready for the rigours of the real marketplace. But there are still some promising technologies out there which may be able to deliver, given some further development and rigorous field testing.

So far, the best, and in fact, as yet, virtually the only, sellers in the world of microCHP are systems based on the good old fashioned internal combustion engine, notably Honda’s ECOWILL system (1 kWe, 3 kWt, 85% efficiency) – said to produce a similar amount of noise to an air conditioning system – and the DACHS unit (5.5 kWe, 12 kWt, over 90% efficiency) offered by Senertec GmbH (a Baxi subsidiary). These two systems currently between them account for about 90% of microCHP sales, with about 15000 DACHS units and getting on for 30000 ECOWILL units installed, predominantly in Europe and Japan, respectively.

Micro CHP based on external combustion, in the form of the Stirling engine, still has its proponents, notable among them New Zealand based WhisperGen Ltd. Trials are underway of the Whispergen system (1 kWe and up to 13 kWt) in some eight European countries, with E.On/Powergen of the UK said to have “made a commitment to order 80 000 systems” (back in August 2004). But, as the Microgen saga shows, it is proving a challenging technology to perfect, and Whispergen, as currently offered, would appear to have the added impediment that it comes in an approximately dishwasher sized floor mounted unit because of its weight.

While the latter problem seems to have been addressed in the latest manifestations of Microgen, some developers of fuel cell based system point to another area where Stirling engine based systems have a potential weakness: the relatively high ratio of heat production to electricity generation.

At the other extreme, Ceramic Fuel Cells Ltd (CFCL) is working on an SOFC system with a heat to power ratio of as low as 0.5 kWt to 1 kWe, with a strategy of achieving the highest possible electrical generation efficiency and operating continuously, in baseload mode, supplying power to the grid when not needed in the home. CFCL sees power companies with an interest in distributed generation rather than the individual homeowner as its market. “We are targetting the home rather than the homeowner,” as the company puts it. In December CFCL announced that it had signed an agreement with utility Gaz de France and boiler manufacturer De Dietrich Thermique with the aim of developing a microCHP product for the French residential market.

Meanwhile, as an alternative to fuel cell and Stirling engine based microCHP, an interesting third way is being pursued by Energetix, whose shares started trading on AIM in August last year.

Energetix is developing a wall mountable 1 kWe microCHP based on Battelle-originated technology employing the organic Rankine cycle, similar to that used in refrigerators. The heat to power ratio (around 10 to 1) would appear to be quite high but the Energetix strategy is to minimise technology risk by making use of a core technology, the scroll expander, that the company says is already mass produced. The expander is basically the scroll compressor widely used in the refrigeration and air conditioning markets, but operated in reverse and driving a generator. In February 2007 Energetix announced it had started initial field trials on a preproduction unit to confirm its machine’s “performance in a domestic environment” and plans wider trials in a number of homes during the winter of 2007/2008.

It is still too early to say which technologies (if any of those currently under consideration) will eventually prevail in the field of microCHP but the winners will need to be very compact (being wall mounted is pretty much essential in the European market), quiet, vibration free, as reliable as a fridge, low maintenance (certainly no greater than a conventional boiler), able to generate the right proportion of heat to power and of course cheap and capable of being converted into a viable commercial product. Micro CHP systems must also look like conventional household appliances and not require householders to have to change their behaviour to accommodate them. Getting all this right will take time and further burning of cash, but the result could be a truly disruptive technology with substantial rewards – although there will inevitably be further Microgen style casualties on the way.

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