01 Dec Bia Energy Consulting Interviews Steve Niswander
Bia Energy Consulting recently interviewed our Steve Niswander for perspective on the E | ONE, a private home generation appliance.
The E | ONE – A New High for Engine micro-CHP?
“The advantage of a fuel cell over an engine micro-CHP is the increased electrical conversion efficiency. This matters as electricity is worth more than heat unit for unit. However, that gap between an engine and fuel cells has just got a lot smaller if not totally disappeared altogether, thanks to Enginuity’s E | ONE engine micro-CHP. The E | ONE sits currently at an astounding 30% electrical efficiency from an engine and the upgraded version being developed will hit hopefully more than 35%. This is a massive increase compared to what I would normally consider the electrical conversion efficiency of an engine to be (between 10-20% at peak). This puts it on a par with polymer (PEM) fuel cells in terms of electrical efficiency when running on natural gas. PEM fuel cell micro-CHP is currently the most sold type of micro-CHP in the World and so they need to take note of their rivals new performance.
What’s more is that this efficiency comes in a relatively small form factor. A 8KW electric and 18KW heat output comes in a size no bigger than a floor standing boiler (or typical US gas boiler in the basement), so the E | ONE is being targeted at domestic properties in the US.
A Virtual Power Plant Business Model
Alongside the product comes a new approach to a business model. Historically, engines have a weakness in that when they are turned down from full power, to working at a lower-power output, this results in an electrical efficiency that drops quickly. To counter this, Enginuity and partners have developed a new business plan to avoid the E| One idling at low speeds. Instead of the more obvious consumer proposition to purchase the product outright (which would favour a smaller size unit to avoid turn-down), Enginuity are aiming for a Virtual Power Plant business model, where home-owners rent out their basement to the Utilities who then own and operate the engines. The idea is to work the engines in burst periods lasting maybe four hours, when the utilities can gain the most value from the electricity produced on their grids. Meanwhile, for the homeowner the energy produced is shared out and the needs of the house met during those hours and any hot water demand is fulfilled.
This is not a typical consumer proposition but US metering laws (FERC) means that the market is open for participation from local generators, peak time export can be valuable, local production means avoiding transmission losses and grid resilience is boosted. All these things make remote control of domestic generators an attractive proposition for electric utilities.
A Virtual Power Plant model is therefore a win for electrical grids, and a win for home-owners, while at worst a net-zero proposition for gas networks, which helps with buy in from all players in the energy market. Note, although a Virtual Power Plant model for micro-CHP has been talked about for many years in Europe and Japan, they haven’t yet formed to my knowledge, but things could be different this time and in the US, especially given the low price point per KW on offer.
The E | ONE will produce 8KW electric at peak, with an installed cost of between $1,000-1,500 per KW electric. This is the next pleasant surprise because this price point is attractive. If we compare this number to the value per KW of micro-CHP units in Europe and Japan at the moment, it is a little embarrassing. Fuel cell heating system being sold in Japan, the ene-farms, come at best at around $8,000 per 700W system (or roughly $10,000 per KW) while systems in Germany are at $25K+ per KW installed, £15K+ per KW in the UK. This is not a fair comparison of course, as the European and Japanese systems are designed to provide the baseload heat demand in homes and work continuously, and system costs are fractionally greater for smaller output systems. Nonetheless, it shows how market changing this price point could be especially when combined to a new business model.
The Road To Commercialization
If everything goes according to plan Enginuity hope to be selling many tens of thousands of units within two years, looking to hundreds of thousands in 3-5 years. The large ramp-up of sales comes partly from the ease of installation. With house basements in North America being relatively large anyway (at least by European standards), and with a footprint no bigger than a conventional U.S. water heater or gas boiler, in principle it’s a simple switch from one to another. The backing of their influential partners in the business model will also help when it comes to winning-over customers.
We should however be cautious at this early point in product commercialization, it’s not that there hasn’t been a lot of potential before seen in other engine products. The business model of the E | ONE is still novel and relies on collaboration between many partners to make work (although Virtual Power plants work with other types of generators). Also, there are still questions to be answered about reliability and maintenance of the engine over long periods. Other engine products have in the past had a bad reputation for shaky reliability and the E | ONE will need to avoid this.
Nevertheless, there is massive potential and I look forward to seeing how things work out in the next year for Enginuity. The proof is in the pudding (as they say) and we will get to see some of that proof next year during the pilot plant build and roll-out of demonstration units. The E | ONE could be a product to watch.
Enginuity are also planning to release an E| TWO which will be a larger engine producing around 20-30KW heat output at the same electrical efficiency of 35%+ (target) aimed at the light commercial market.
Conclusion:
It is exciting to think that Enginuity will roll out a micro-CHP system for domestic and light commercial properties in the next few years hitting around the very acceptable $1000 per KW electrical output mark. While the Virtual Power Plant business model is yet to be established using micro-CHP units, if successful it could be copied (regulations permitting) elsewhere in the World. Perhaps most promisingly it could be copied for European countries where the price of electric is high overall.
After personally working on fuel cell micro-CHP for numerous years and seeing how good they are, I never thought I would say this; but this could be a new high for micro-CHP products but from an engine.
My thanks to Steve Niswander, founder and chairman, of Enginuity for his time. Enginuity is currently looking for interested commercial partners in Europe, UK and the rest of the world.
See the article by Steffan Cook at the Bia Energy Consulting website: The E | ONE – A New High for Engine micro-CHP?