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