Power Predictions 2006: Volatile

January 05, 2006 by Jeff Shepard

This is Part Four of a week-long special series looking ahead to 2006.
by Jeff Shepard, Publisher, Darnell Group

Volatile. When we look back on 2006 twelve months from now, I believe that the year will be summed up in that one word. Overall, 2006 promises to be a year of generally moderate growth for our industry. But under that veneer of moderate growth will be significant volatility. In short: Hang on, we're in for an "interesting" year.

Let's start by looking at one of the "hot" technologies, digital power. Say what you will about digital power and its transformational potential. Customers will continue to demand improved performance, lower cost and multiple sources. This may not exactly be a "make or break" year for digital power. But if the promise of digital power is not translated into significant benefits for a broad range of customers, interest in digital power could shrink as rapidly as it has risen.

A second technology that will get hotter as the year progresses will be the various types of micro fuel cells (MFCs). Accompanying the introduction of commercial MFCs will be a surge of interest in and articles on "system integration issues." But don't count out lithium batteries just yet. Existing makers will have significant challenges from increasing competition from low-cost (and good quality) producers in China on the low-end of the market and from emerging competitors with innovative lithium chemistries on the premium end. In 2006, both lithium batteries and MFCs will experience volatile changes to the competitive landscape caused by advances in nano materials.

The sharp rise in energy prices will also cause increased volatility. Of course, there is the obvious connection between distributed generation, alternative energy and the cost of conventional energy sources. However, political dynamics will continue to cause the markets for distributed generation and alternative energy to lurch forward in a volatile fashion.

Higher energy costs will also impact other segments. The U.S. Environmental Protection Agency's current initiative to improve energy efficiency in large data centers will take on increased urgency. Energy costs will also energize the markets for power semiconductors used with efficient lighting technologies (relying on electronic ballasts), and efficient electronic motor drives in major household appliances. The semiconductor industry will be a target as well as a beneficiary: it has been recently cited for its lack of energy efficiency in production.

The coming year will see the various segments of our industry driven by a wide range of economic, technical, political and possibly even legal factors.

Darnell's PowerPulse will give you a front row seat to monitor the volatile events that will shape our industry in 2006 and beyond. Come along for the ride.