Two frequent topics intersect in this Wall Street Journal article from today, October 29th titled “Power Firms Grapple with Tough Decisions”. The topics are 1) journalists that don’t understand what they are writing about 2) the impossibility of improving our US infrastructure in today’s legal and regulatory climate.
The journalist writes that “A year ago, it looked as if 100 coal-fired plants might get built.”
Only an incredibly naive person who didn’t understand anything about the history of the US energy industry would have assumed for an instant that ONE HUNDRED coal-fired plants could possibly be built in the US. Let’s sum up the power situation for you:
1) NUCLEAR – great, unless you worry about storing the radioactive waste
2) HYDRO – great, unless you love fish and babbling brooks
3) COAL – great, unless you worry about global warming
4) NATURAL GAS – great, unless you are paying the bill
5) SOLAR – great, unless you need power on peak and the sun isn’t shining
6) WIND – great, unless you don’t like the way they look, slice birds, and the fact that they are unreliable on peak
Basically items #1 to #3 are dead in the US. You can’t build even a single nuclear plant, site a hydro plant, or likely build more than a handful of coal plants (and only in the friendliest of jurisdictions). #4 is alive and well, but wait until you see the bill. And #5 is best where the sun is bright and it is even less cost effective than #4, and #6 only works in some areas where land is cheap, wind is constant and the Kennedy’s aren’t looking at the sky.
There isn’t an “answer” to this situation; basically if you assume that we don’t build any new generation (we’d be lucky to keep up with the generation that is coming out of service due to end-of-life) except for the politically correct items (which don’t really help that much on peak), we will be facing a crisis soon, with blackouts looming large.
Two de-facto answers are emerging:
1) business takes the situation into their own hands
2) consumers are forced to invest in power saving measures
Businesses can’t afford unreliable power, which is what the power companies are going to be dealing out to their customers. The businesses are buying generators by the truckload; and using them to provide reliable power that they can’t always get from their strapped local utility. This is a massive shift, and not necessarily an economically “correct” decision; the companies buy small units (gas or diesel fired) that are more expensive per Megawatt when compared to what the utilities would pay on a fractional basis. This shifting of investment and reliability is occurring in an ad-hoc fashion, but do not doubt that it is occurring throughout the US.
Consumers are going to be forced to conserve; this will be helped by the punitive rates that they will have to pay due to scarce local power resources on peak. Consumers haven’t been given incentives to conserve in prior years because the power meters only measure total consumption over a monthly basis and aren’t “time of use” meters that charge more / kilowatt at peak time when compared to non-peak times. This will change as local distribution utilities are forced to try to reduce power usage since no new capacity is coming on line. This strategy is also in keeping with a general environmental awareness that is occurring now (propaganda, some might say) especially among the young. Since adding new capacity isn’t an option the only way out (other than providing less reliable power, which is already occurring) is to use more efficient appliances and begin to educate consumers in the impact of moving energy intensive activities off-peak, and reducing demand (air conditioning, for instance) on peak.
Watch for more investment in demand reduction activities, and more business investment in backup and primary generation.
And don’t hold your breath for new nuclear, hydro or coal plants (except for the occasional oddball that won’t even be enough to replace the capacity that is end of life and coming off line).
They aren’t coming. Ever.
Cross posted at LITGM
“They aren’t coming. Ever.”
Now, now. Ever is a very long time. It may be a while. A couple of good crises will help. But by 2070, the last boomer should be dead and there will be a chance for progress.
I don’t know if we will fail to adapt. Economics speaks very loudly and when people can’t get jobs because they can’t get power then the nimbys may find themselves in hot water.
NRG Energy has applied for a permit to build two new nuclear plants in Bay City, Texas.
And, according to the NYT article I linked to in this post, three other companies are expected to apply for permits before the end of the year.
By the way, here’s a rule of thumb that I have found useful over the years: If someone says that nuclear wastes are a serious objection to nuclear energy, then either they do not understand the subject, or they are lying. (Nuclear wastes are a serious political problem, but the health risks are insignificant, with reasonable handling.)
(There is another objection to building new power dams in the US: The ones that make sense have almost all been built.)
I’ve notice the proponents of solar energy conveniently ignore the thousand upon thousands who die every year from exposure to solar radiation. It is not a safe alternative. There’s a difference between safe and not being able to do something about it. Some how, we deal with it.
If it is really true that “businesses are buying generators by the truckload”, do you own shares of those companies in your trust funds for your nieces and nephews? Your readers want some stock tips.
Libertarians, fully on some academic or company dole, will of course object to govt control and regulation of a form of energy that works. France has it. And there is no atomic waste to dump because it is all recycled. And they have not had an accident! For history, use etc:
http://www.npcil.nic.in/nupower_vol13_2/npfr_.htm
To be clear, I am a supporter of nuclear power and of coal power, and even hydro.
I used to work with NRG and are pretty familiar with those guys; yes they did apply for a license to build a plant in Texas.
Unfortunately, for any proposed plant I’d bet 10-1 that they never get built. There are a lot of steps between applying for a permit and running a live plant and a lot of opportunities for NIMBY’s to gum up the process.
In the past utilities were able to get reimbursed for all the costs of construction, including the time value of money while they built the plant (known as capitalized interest). Now the utilities have to depend on market forces to pay them; there are some subsidies from the Feds for the first couple of plants and a couple MIGHT get built; but they won’t be on line for at least a decade and by then more megawatts will have been retired from our nuclear fleet than the few that we’d add.
I know that there are a lot of companies buying backup generators for power now. I don’t know if there are enough to move the needle to make those companies (that sell generators) a good investment; will have to look into that.
As far as all the good hydro plants already having been built; I am not an expert on hydro but I know in Montana there is a dam by Libby that has a huge generator that they purchased but never installed to appease environmentalists. That is at least a few hundred megawatts lost and probably many more elsewhere. But I can’t speak of hydro opportunities overall because I am not an expert and because NO ONE is even thinking about new hydro now…
What about efficiencies in the use of energy, both at home and in the industry?
Almost all industries generated great efficiencies with the computer and internet revolution, in terms of labor and inputs and also increased their productivity at the same time.
Is it possible that big, medium size or small businesses and individuals could generate greater savings in energy by other means?
Long ago, Japanese car makers (I believe) separated the belt cooling fan from the motor, they installed an electrical cooling fan controlled by an electronic relay and generated fuel efficiencies that turned into more fuel efficient cars.
New air conditioners are more energy efficient, same for refrigerators, dish washers and other appliances.
Also, scientists are already finding ways to deal with heavy industrial environmental pollutants that used to be impossible to get rid of, they are coming up with transgenic plants with greatly increased rates of metabolism and removal of these pollutants (http://www.pnas.org/cgi/content/full/104/43/16816)so I believe is it also possible that they will eventually come up with a similar solution to radioactive waste coming from nuclear plants.
I think that there are a lot of opportunities for efficiencies on the demand (customer) side; in the US we haven’t really pursued them except in a ham-handed fashion because we don’t charge for time-of-use, only for total power used, which doesn’t give people incentives on peak when it is critical. It is very likely that distribution companies will start to aggressively pursue opportunities to reduce demand and this will start to impact individuals and they will start to see more efficiencies in lighting, appliances, etc…
Still, it is hard to beat the generating efficiency of a hydro plant; the marginal cost for power is ZERO. It is near zero for nuclear plants, and low for coal plants (on the margin).
Yes, I think there’s a serious danger that we are headed for an electrical power crisis. And if that happens, we are going to find that you can’t build a major power plant overnight…4-5 years is more like it, even if there are no licensing issues or litigation to slow things down. The only (relatively) quick solution for the grid will be peaking turbines–these run on either oil or natural gas, and while they can generate a lot of power per investment dollar, they are very fuel-inefficient compared with the major plants. This translates into higher prices and to futher strains on the oil and nat gas supplies.
Generators used by private companies or individuals will also require more fuel for a given output than would grid power from major stations (except for some special circumstances like cogeneration, where the waste heat can be applied to something useful)
Note that one of the most promising ways to improve oil-use efficiency in transportation is the plug-in hybrid, and the commercial prospects for this technology could be devastated by a sharp increase in electricity prices.
JoseAngel: there is an organization, US Green Council, that grants “green” certification to buildings being built and products manufactured. It’s based on a complicated system of points, some of them concern energy conservation and use of efficient power methods. Participation so far has been voluntarily, but I believe it might change in the near future. It sponsors various public events and competitions, like this one, but main activity is to broaden participation of industries in energy-efficient practices (well, there is also lots of GW nonsense, too).
Some of the counties ruled all their local government construction will be built according to the USGBC standards – and become LED-certified. The site provides information on the process.
I am planning to become LED-certified professional; looks like it soon be a necessity if I want to get work.
Energy efficiency, like everything else economic, is subject to diminishing returns. The easy gains have nearly all been done. Energy efficiency also has hard upper limits which are enforced by the laws of physics. We need more production, plain and simple.
Tatyana… Yes, buildings/houses/apartments are being built with environmental and energy concerns in mind in addition to comfort and social and contemporary architectural issues. Roof and wall panel components/layers in these new houses are supposed to save us energy when we use ac/heaters. And companies are ever coming up with more energy efficient and environmentally friendly solutions because the eco-energy thing has now turned into a highly profitable issue in all kinds of industries.
There are energy savings all over the place, at micro and at macro levels.
Today I can watch two entire movies in my Ipod if I am the only one who wants to watch that movie instead of using the big flat screen TV.
Sony Vaio laptops boast a battery that is supposed to last 8 or 9 hours.
Low voltage processors are already a reality in most laptops that used to get very hot and used to consume the whole battery in two or three hours. You needed to carry the battery charger with you and make sure to have a jack wherever you were going to have a presentation. A “road warrior” (according to Dell) with a bunch of cables and not very practical accessories.
Three cylinder cars, washer machines with motherboards to better control the use of energy and time the cycles.
Flat screen LCD televisions are also normally more energy efficient than the old cathode-ray tube TVs that are now going the way of the dinosaur.
There are many hybrid cars (although in my country their prices are still prohibitive) and GM promises to come up with a fuel cell car by 2015 or so (if they are not in Chapter 11 by then).
Maybe we can invest more in making our houses “smart” so then, instead of having your old grandmother/mother/wife/husband/sister always annoyingly reminding you to turn the light off every time, a sensor will automatically do the job for you.
Also, can Blogging be made more energy efficient and eco-friendly too? I mean, there are too many of us out there who could be engaging in more productive activities.
I am sure there are some opportunities out there but some of us will just have to make an exception.
Carl, hydropower is great. My company is in the hydro business (in China). Unfortunately, if the industry report I’m reading is correct, 82% of the feasible hydropower generation in the US is already installed and in use.
I may invest in big V-8’s. They’ll be extremely rare soon ;-)
Note also that signifcant amounts of power are used by Internet server farms: Frankly, my dear, I do need a dam.
Also, can Blogging be made more energy efficient and eco-friendly too? I mean, there are too many of us out there who could be engaging in more productive activities.
Got your drift, JoseAngel – and complying already. I limited my blogreading to 9, top – 12 blogs, and occasional post on my own.
The middle of this country is emptying out. In this dark future, what’s a sure draw? Build a powerplant and sell the excess juice on the grid until industry flocks to suck up the new supply. With very cheap land (some municipalities will give you land free on condition you live there) and people desperate to reverse the population drain, I think that NIMBY is a dragon that can be slain on the ‘new frontier’.
Sounds good… except that you can’t get the power into the cities because of insufficient transmission capacity. They have done this a lot in the past, to good effect; much of our power comes from Canada and places like the Colstrip plants in Montana