Utilities Rule

What Should Utilities and Large Power Providers Do?

Utilities should focus on their core business and develop smart grid management, electrification of the transportation industry and buying power from large scale (zero emissions) power plants.  Services “downstream” of the meter such as energy efficiency, distributed generation and even demand response programs should be left to competitive state and local industry specialists.  Higher price signals and code requirements will move the market far faster and more effectively than incentive programs ever could. This will result in massive emissions reductions and water conservation while providing strong stable growth opportunities for utility stockholders.

 Demand / Load Management. 

Today, utility companies manage their portfolio of power plants to match customer needs or demand.  In other words, power plant selection is based on supplying power when customers need it.  Since more electricity is used in the middle of the day, utilities are forced to build less cost efficient power plants, such as “peaker” plants, that only run part of the time and can start up and shut down quickly.

Today there are two ways to reduce the need for inefficient peaker coal and natural gas plants: end use management and solar peaker plants.  End-use management requires end users, such as large industrial facilities, to install equipment that allows them to shut down part or all of facility operations during “peak periods” to shed unnecessary loads and shave or flatten the utility’s bell shaped demand curve.  Luckily this movement is well underway with smart meter deployments in homes and automatic communications coupled with modern building automation and controls systems.

The second option is to build large-scale solar plants.  Solar is a great “peaker” power plant because peak output occurs when most peak loads occur – during the hottest time of the day, when businesses are in full operation.

While end use management and solar power plants help reduce peak load fossil fuel usage, those technologies do not address base-loads.  A base load is the load that is demanded by the power grid (end users) regardless of the time of day.  Coal and natural gas power plants are great base-load power providers because they provide power no matter the time of day- as long as fuel is available. Unless combined with energy storage, solar and wind power plants are less than ideal base-load power providers because of their intermittency.  Significant advances in heat storage (for solar) and compressed air storage (for wind) are critical if the nation wants to reduce dependence on the volatile-priced fossil resources used today for base load electricity demand.

With continued encouragement from individuals and support from the government, research and development efforts will continue to make these technologies more efficient and economically feasible, ultimately leading to a cleaner utility infrastructure and stable energy prices.

Wind Power Plants

Similar to the sun, wind is a largely untapped resource with opportunities for large-scale development scattered across the U.S. as well as the littoral regions. Recently in the U.S., wind energy capacity has skyrocketed. In 1985, 1,000 MW of wind energy existed. It took one decade for capacity to double. Now, just over another decade later in 2006, wind potential exceeds 11,000 MW.  Since the turn of the century, U.S. wind power capacity has grown on average by 24 percent per year, and for the past two years, the U.S. has led the world in annual wind capacity growth, installing 16 percent of the world’s wind market.[xxiv]

Interest in continued large-scale wind farm development is significant, even amongst investor-owned utilities; however, cost and aesthetics are major barriers prohibiting rapid expansion of this clean technology.  Aesthetics are an issue because adequate wind resources tend to coexist with beautiful mountainsides and ocean views. As demonstrated by the Cape Cod Wind Farm Controversy, homeowners will not tolerate wind turbines cluttering the skyline and obstructing their views of the ocean.  What Massachusetts residents and other wind farm opponents are forgetting is that there is a tradeoff.    If the wind farm that obstructs views isn’t built, then a coal plant will likely be built in someone else’s backyard that pollutes the air, causes smog, affects the health of individuals, and causes countless other damaging environmental problems.  A sustainable future requires compromise, so we must avoid the Not In My Back Yard (NIMBY) attitude toward clean energy projects, compromise a little, and help our nation achieve a sustainable future.

The wind energy industry and utility industry must work together to overcome other barriers slowing development such as: material and manufacturing costs and grid connection transmission constraints. Today, many states already have or are pushing a policy of 20% renewable by 2020, but a much bigger goal of say, 60-80% in the Midwest and windy Coastal states would be more realistic.)

In the interim, a new market is developing for wind energy – building integrated wind turbines. Consumers can now purchase wind turbines designed for grid interconnection to buildings.  These wind turbines, which are already commercially available, are similar to the solar panels mounted on roofs.  Home and building owners who live in windy areas should look into reducing their energy usage, bills, and environmental footprint by investing in this technology.

Solar Power Plants

On a larger scale, Concentrating Solar Power (CSP) technology has the potential to produce utility-scale power by concentrating sunlight with mirrors or lenses onto a receiver. The sun’s energy is converted to heat, which is then transferred to another fluid to produce steam, turn a turbine, and produce electricity. According to the DOE, CSP technology has the potential to be a major contributor to the nation’s energy needs because it provides the ability to deliver power during periods of peak demand, when it is needed the most.[xxv]     Currently the cost of CSP power production technology is $0.16-0.25/kWh compared to coal, which is $0.05 /kWh, and natural gas plants which is $0.09/kWh (which exclude government tax subsidies and enormous health care taxes due to air pollution and global warming).

Solar energy opportunities are unique because of the availability of investments by home and business owners as well as utilities. Continued research and development of these technologies and policies providing tax breaks and rebates for these clean technologies are essential to help reduce costs and make solar technologies competitive with fossil fuels in the energy market. While solar cannot directly replace all power sources because of the intermittency of the sun, the lack of economical storage, and other barriers, it is certainly one-step in sustainably diversifying the nation’s energy portfolio.

Nuclear Power Plants

Similar to wind turbines obstructing views, American’s NIMBY attitude toward nuclear power has halted the development of nuclear power.

It is essential that nuclear energy is considered as a clean energy technology because of its zero emissions.  In 2006, there were 104 operating nuclear power plants in the U.S.  These plants produced over 100,000 MW of electric power, equivalent to almost 20 percent of the nation’s electricity.  In other words, approximately 520 – 1,000 MW nuclear plants would offset ALL the annual fossil fuel usage for electricity in the U.S.  Since nuclear plants don’t emit air pollution, that would be a small amount of land usage to stem a huge amount of air pollution!  The disadvantage is what to do with the long-term radioactive waste.  Long-term storage at Yucca Mountain is a necessity. However, if we do not reverse our fossil fuel addiction, we will not have to worry about long-term storage at the pace atmospheric emission levels are approaching the catastrophic “Doubling Scenario”.

Retrofit Fossil Plants with Carbon Capture and Sequestration

With CO2 regulatory requirements being debated, existing coal-fired power plants reaching the end of their expected lifetime, and additional power needed to meet the nation’s growing demand for energy, utility investors must decide what types of plants will be cost-beneficial in a carbon-constrained world. Investors have three major coal-fueled power plant options: conventional coal-fired power plant, Integrated Coal Gasification Combined Cycle (IGCC) plant, an IGCC plant with a CO2 capture setup.

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The conventional coal-fired power plant requires the lowest initial investment; however, if regulatory requirements are established, the cost to retrofit this plant with CO2 capture is the most expensive. The IGCC plant has a similar upfront cost as the pulverized coal plant in an unregulated emission scenario; however, IGCC is immature technology and is thus more technically risky and not preferred over pulverized coal plants. However, in a carbon-regulated environment, the conventional IGCC plant is preferred because the cost to retrofit it with CCS technology is significantly less. Lastly, the IGCC plant with a CO2 capture setup requires the largest capital investment; however, with carbon regulations, this plant will be the most prepared to capture CO2 for transport and sequestration.

Another concern for utilities is what to do with existing pulverized coal plants when CO2 emissions are regulated. The options are to replace the plant or retrofit the existing plant with a CO2 capture system. Models have been and continue to be developed to determine the most cost-effective method of deploying a carbon capture and sequestration infrastructure. It has been found that the best return on investment depends heavily on factors including the age of the existing plant, plant operating cost, the regulatory price on CO2, the market cost of the retrofit equipment, and the size of the plant.[xxvi] Therefore, utilities must evaluate their economic constraints for building new plants as well as weigh the benefits of preparing for paying for a price on CO2. Regulatory requirements are likely inevitable, so building plants with CCS in mind is essential.

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