The market
The global market for emergency power generators was approximately $11.5 billion in 2010. In 2009, some 9.3 million backup power systems were installed worldwide. This number is expected to reach 13 million units by 2013. While the sector was severely impacted during the 2008 recession, the fact that approximately 80 countries worldwide face long-term power shortages ensures that demand for energy security systems will increase as soon as the economy recovers. The crisis surrounding the collapse of the three Fukushima nuclear power plants in Japan has propelled this otherwise predictable country to the top of the list of emergency equipment buyers, adding 1.5 GW to its small gas-fired power plants. Aging infrastructure and the increasing frequency of climate-related disasters have further reinforced structural demand. Every region of the world regularly affected by typhoons and hurricanes, earthquakes and tsunamis takes precautions. Even the United States, a market known for its stable and inexpensive energy supply, saw sales of backup power systems reach $1.2 billion in 2010. However, it is the mobile telecommunications sector that has driven the market to unprecedented global sales over the past decade. Every transponder tower requires backup power. While in 2005, 81% of all backup systems were still diesel-powered, emissions controls are forcing a shift to gas and fuel cells. The market share of gas-powered systems has increased in five years, from nearly zero to 12%. The latest push in Japan for this type of generator is expected to push it above 20%.
Innovation
In emergencies, exemptions to standard environmental regulations are quickly granted. Even worse, renewable energy sources are rarely considered because solar panels and wind turbines take time to transport, install, and operate, and are more fragile to handle. Another stumbling block is that most renewable energy sources cannot provide the baseload power needed to ensure a stable electricity supply. In addition to these drawbacks, the cost of renewable energy is considerably higher. This is why local power supplies are usually provided by kerosene and compressed natural gas, which are the preferred fuels for small, portable generators. Although almost all generators are noisy, they are more readily available due to planning and permitting issues. Innovations in these systems have therefore been limited to noise reduction and energy efficiency. Over the years, Morten Sondergaard has made a name for himself as an entrepreneur in the telecommunications and internet sectors. When central Japan faced power outages due to the electricity shortage following the Fukushima nuclear disaster, he wondered how to ensure the power supply for a megacity like Tokyo. Installing a series of small generators would be a mere blemish on a vast open wound. He recalled that oil platforms have power supply vessels that provide the baseload power for offshore operations. Since the local grid is intact—as is the case in Tokyo and inland Tohoku—it is possible to generate electricity with a power vessel, utilizing existing turbines and combined heat and power (CHP) units already installed on board. This power vessel produces megawatts of electricity with unprecedented flexibility and even mobility. In Tokyo's case, the vessel can be docked in the city center. However, if that proves difficult, the supply vessel could be located in international waters, with a cable to connect to the shore and feed directly into the grid using a standard transformer.
The first cash flow
Mr. Sondergaard then outfitted the Dubai-based power vessel, installing two state-of-the-art Siemens generators and preparing the ship to house eight generators, with a combined capacity of just under 200 MW/hour. He then decided to use biodiesel to create the first-ever biofuel-powered power vessel ready to provide electricity to a disaster area or to supply supplemental power during peak periods, such as the hot and humid summer in Japan when nuclear disasters disrupted the local power supply. The power vessel is not unique; there are an estimated 160 equivalent floating power providers. However, its use for emergency relief has never been undertaken before. Mr. Morten's proposal involves equipping several ships and placing them on standby so that, when disasters strike, such as a nuclear meltdown, endangering the livelihoods of large urban areas along coastlines, these powerful generators can provide the massive aid that is urgently needed. These ships are typically located in areas where offshore oil platforms are operational, such as the European North Sea, the Gulf of Mexico, the Middle East, off the coast of Brazil, and along West Africa, from Angola to Ghana. Since the locations of these ships are spread across the globe, it is not only possible to plan for rapid arrival, but it is also possible to plan for the ship's cargo space to be filled with biofuels en route to its destination, making this operation as sustainable as possible. A fully loaded vessel could carry up to 80,000 tonnes of biofuel and provide an independent electricity supply for three months without stopping, at a rate of nearly 200 MW/h. This strategic choice should not be limited to emergency situations; it can also provide the additional energy needed for major sporting events such as the Olympic Games or the FIFA World Cup.
The opportunity
Using available ships to rapidly provide local renewable energy is an opportunity closely aligned with the concept of the Blue Economy. While difficult questions must be addressed regarding the use of biofuels, which cannot compete with food security, the option of powering this emergency supply with multiple renewable fuels is potentially advantageous. One of the main considerations is speed and cost. Since the ship can be operational on-site within weeks, it is possible to provide electricity on a large scale without the need for infrastructure investment. The second advantage is that the floating energy vessel can deliver electricity to the end user at the same price as the grid, even if the intermediary's margins are reduced. However, in an emergency, it is perfectly understandable that the enormous markup of a factor of 5 to 10 that electricity companies typically impose on production costs does not apply. How could the power company possibly profit from a disaster—caused by its own failure to fulfill a mandate? In Japan's case, the usual cost per kWh has been around 25 yen, but recently, charges have risen by 25 percent due to higher investment and fuel costs. Floating electricity can be delivered at the same rates. In the Japanese context, this represents a huge commercial advantage and an opportunity to open the market to qualified suppliers. Anyone interested in securing a summer without power outages can purchase their needs online. Given the horrific experience of Tokyo residents who had to carry overnight bags to work because, for weeks, no one was sure how the deployment of power outages would affect the office or public transportation, Japanese citizens are expected to seek certainty. Floating electricity could then become people power, breaking the corporate monopoly. This is an opportunity to develop social capital, a key concept of the Blue Economy.
