ZPEnergy.com - Homeowners Bullish on Onsite Power in North America

PRIMEN Press Release: Homeowners Bullish on Onsite Power in North America, as International Markets Begin to Grow - For immediate release

22% of Households Express High Interest in Backup Generation, Baseload Generation, and/or Utility Dispatch Leasing Program

Palo Alto, Calif. - September 21, 2004 - Distributed energy (DE) is making inroads into residential markets in North America and beyond. This may come as a surprise to many, as the market for on-site power generation has long been focused on the commercial and industrial sectors. However, new research from Primen, a subsidiary of EPRI, finds that in a recent 12-month period, nearly one million onsite generators were sold to households for either their primary residences or vacation homes.

Still, only 6% of U.S. households currently have an onsite generator, most of which are portable models that are exclusively used during power outages and need to be manually started. However, a growing number of homeowners are purchasing permanently mounted, automatic systems, and nearly one in six households surveyed expressed high interest in an onsite power system that would produce the majority of their electricity requirements. All told, about 22% of households would be interested in some form of DE, either for backup, baseload generation, a utility dispatch leasing program, or some combination thereof. These and other findings are part of a new Primen study based on an online survey of 1,301 households in the U.S. and Ontario, Canada.

The study, called "Residential Distributed Energy: Customer Views and Outlook" provides an up-to-date examination of the market for residential onsite generation, including recent trends, customer views, and market summaries by census regions, household income, and other attributes. The report also reviews the growing markets for residential onsite generation in Europe and Japan, and the efforts by some of the European and Japanese companies to bring their products to North America.

"Companies in Europe and Japan are already making bets that residential DE is taking off," says Primen senior director, Nicholas Lenssen. "The world's largest investor-owned utility, Germany's E.ON, recently signed a contract to buy 80,000 units of a residential power generation system to sell in European markets over the remainder of this decade." Meanwhile, Honda has sold some 4,800 residential systems in Japan over the past fiscal year, far more than the planned 1,000.

Such systems are only beginning to be commercialized in parts of North America, where, on the surface, the economics for residential baseload onsite generation are likely to make for a tough sell. "But given that some households are already paying $5,000 or more for backup generation systems, the incremental cost of a baseload system may be less challenging to justify than supposed," says Lenssen, "particularly for applications that can take advantage of the heat produced by these generators for space or water heating."

Primen found that many homeowners are willing to accept fairly lengthy paybacks for their investments in baseload DE. Among households with $100,000 in annual income, 36% say they would accept a payback of five years or longer, while for the general population, twenty two percent are willing to accept a similar return on investment.

North American utilities have so far been relatively inactive in the marketplace for residential DE equipment. That could change, however, if efforts to use residential DE for demand response prove successful or if equipment vendors start actively selling baseload systems to households.

The Residential Distributed Energy report is exclusively available to subscribers to Primen's Distributed Energy Strategic Service. Companies can request more information on this research advisory service at http://my.primen.com/Registration/DEResreg09162004/signin.asp, or by contacting Primen at 877.976.4681 or by email at ask@primen.com.

Primen (www.primen.com) is an energy market intelligence company that develops, analyzes, and delivers timely information and analysis tools related to electric and natural gas markets, competitors, pricing, and new energy products and services. Primen is a subsidiary of the Electric Power Research Institute (EPRI).

EPRI (www.epri.com), headquartered in Palo Alto, Calif., was established in 1973 as a non-profit center for public interest energy and environmental research. EPRI's collaborative science and technology development program now spans nearly every area of power generation, delivery and use. More than 1000 energy organizations and public institutions in 40 countries draw on EPRI's global network of technical and business expertise.

Contacts:
Primen: Nick Lenssen, (303) 545-0100 X336
nlenssen@primen.com
EPRI: Jackie Turner, (650) 855-2272
jturner@epri.com