PERC director addresses propane’s role in power generation

The propane industry is staking its claim to a greater portion of the power generation market.

Industry leaders say growing propane’s presence in this space not only makes sense from an environmental standpoint – the nation’s fragile electrical infrastructure requires it.

“In a world where the grid is sometimes not as reliable as we would like, propane can fill a role in power generation as a clean fuel,” says Chris DeFilippo of Superior Plus Propane, chairman of the Propane Education & Research Council (PERC).

In discussing its strategic plan during a July meeting in Boston, PERC shared a target for power generation market penetration: growing propane’s portion by 12 percent, equaling about 45 million gallons, over the next five years. Some even say the goal isn’t high enough for a market dominated by diesel and natural gas.

“We believe that as we gain some traction and get some scale in that market, the ability to see transition rates escalate are very real,” says Chris Hill of Meritum Energy Holdings, vice chairman of marketers for PERC. “We’ll be taking the goal to the advisory committee to talk about execution and how we accomplish it.”

To gain a full view of the power generation market, LP Gas talked with Gavin Hale, director of product development and power generation for PERC. His answers to our questions have been edited for length.

LP Gas: There are many categories and options for propane-fueled power generation. Where is PERC’s emphasis when it comes to power generation?

Hale

“We’re focusing on where propane can provide a specific advantage – and how do we craft our solutions to that? Where we have emphasis now on the smaller [applications] would be mobile power generators, temporary power solutions, whether it’s for an event that needs power or on a construction worksite. Rather than have an expensive, complicated diesel generator, have a propane-powered solution that offers all the capabilities of diesel but with clean, onboard, stored fuel.

“The other end: We’re starting work with some of the genset OEMs around the distributed power generation market. That is an area where there’s consistent growth. The electricity grid is stressed. With the increase in electrical demand, the ability to provide power locally on-site, away from the fragility of the grid, is of huge value, and propane can play a role there.

“Combined heat and power (CHP) from a commercial standpoint [is] very viable. We’ve got some good projects around the U.S. for businesses that are, say, 50 kilowatts and above. The technology around CHP scales very well for that. The challenge is in walking that specification back to something that might work from a residential standpoint.”

(Hale spends time talking about the intensive power needs of data centers, a growing market currently served by diesel, and how propane could one day play a role in helping to provide that energy.)

“If you walk back from data centers to demand response, same philosophy. Instead of 300 gensets, you’ve maybe got two outside a supermarket, a grocery store. We have products today that can serve that market. If you want 400 kilowatts as a standby unit that is networked into the grid, that can support the grid during times of stress, we have products available today that will do that. The key is picking markets where propane has a distinct advantage over natural gas from a supply standpoint. A lot of the U.S. doesn’t have access to pipeline natural gas, and that’s really where propane comes in.”

LP Gas: Do you see the industry making inroads right now, or is it still early as far as opportunities? Where are we right now in this market?

“We’ve begun the journey. It’s really about giving our OEMs the capability to represent the technology and the fuel. For the mobile generator sets, the products exist today. They’re in production, and you can go and order them. That’s where our industry can help because they know their region better than anybody else. We now need to educate people and promote the products. For the more developmental side, that’s where PERC comes in because we represent the technical aspect, the safety and the standards that go with that.”

LP Gas: Do you see the momentum for propane growing in this sector?

“For sure. The grid cannot cope. The amount of time, effort and money that’s required to overhaul the grid is monumental. It’s trillions of dollars. … Whether I talk to a vehicle OEM that’s looking at developing electrified vehicles or whether I talk to somebody working the data center market, or builders or specifiers, they’re all assuming it’s going to take 20 years for the grid to get to where it needs to be – if it ever does.”

LP Gas: Is that the ultimate goal – for propane to take over the role that diesel is playing?

“There’s always going to be a role for a diesel application, and I think we work with diesel. Frankly, we need the architecture that diesel engine manufacturers have today. We have to work with them to take their technology and make it propane-capable, simplistically. We need their volumes, we need their supply chain, their relationships with end users and customers and to use propane as part of that solution for some of the markets. … We can displace diesel, but we need to work with the end users and the engine manufacturers and become a partner to them. That’s why we’re investing in research and technology to demonstrate this so we can engage the diesel engine manufacturers and say, ‘Here’s how we can help you. We can help you claim back some of those volumes you’re losing. We can help you retain business in segments that you have today where diesel doesn’t work.’ It’s very much a collaborative thing.”

LP Gas: Do you have any details about the other power generation categories? 

“One of the emerging categories is electric vehicle charging. Propane offers a brilliant solution for EV charging. There’s a number of companies in that space today, and we’re working with those. There’s a number of different configurations for this. There’s the temporary charging solution. You’ve got a worksite with electrified trucks; you’re going to need to charge there during the day. There are mobile solutions for that. There are larger mobile solutions. Imagine a rock concert – 20,000 people show up; the cars are parked outside; 5 percent of those are Teslas. Think in terms of an 18-wheeler truck with a body on the back with charging receptacles. Then there’s permanent on-site charging, for a fleet solution – more of a containerized permanent solution. You have a propane tank there; you’ve got a stationary genset with level 3 charging capability powered by propane. It’s like playing Lego with technology that exists today.”

LP Gas: What’s the message for propane marketers if they want to explore opportunities in power generation? 

“I would focus on mobile 100 percent. There are rental houses, rental businesses scattered across every propane marketer’s territory. Call on them, talk about the products, the capabilities of the products. The infrastructure and ability to support the customer with the fuel is key. We have to be solid on the infrastructure and the support that marketers can give. We have the opportunity to get in front of rental people, construction customers, developers and promote not only the products but their ability to support it. The ball is in their court. This is a local, boots-on-the-ground thing.”

LP Gas: Anything else, Gavin?

“We need to look at the customers that use the products and get in front of them. From an OEM standpoint, the products already exist today. It’s educating the consumer to ask for that product from the OEM, and that has to start from the ground level. It requires the marketer on the ground to get out in front of customers, start knocking on doors, go to your local rental business, your local construction company and say, ‘What power solution do you use on your worksite today? Here’s what propane can offer you, and I as a marketer am prepared to support your business.’ That’s what drives this early growth.”

Featured homepage photo courtesy of Propane Fueling Solutions