Llewellyn
King
Read Llewellyn's bio and previous columns
June 20, 2008
The Shocking Truth
About Future Electric Supply
TORONTO Nobody knows de trouble I see, goes the Negro spiritual. It
could have been playing as background music in Toronto, where the Edison
Electric Institute (EEI) held its annual convention this week. Things
are not terrible for the U.S. electric utility industry at the moment.
But the industry's future is more uncertain than it has ever been.
The challenge facing the industry is that we are using more electricity
than ever before, with our bigger homes that have more appliances and
gadgets. To meet future demand, according to Jeffrey Sterba, chief
executive officer of Albuquerque-based PNM Resources, the industry will
need to spend $800 billion. Not only is it unclear whether it can raise
this amount of money in a time of constrained credit, but it is also
unclear what expenditures public policy will sanction. Consider:
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The
future of coal, which accounts for more than half of U.S. electricity
production, is uncertain. It is the largest contributor to greenhouse
gases, and the future promise of clean coal is yet to be realized on a
large scale at an affordable price.
The second hope for coal, carbon capture and sequestration is
a hot topic in electric utility circles. But David Ratcliffe, chief
executive officer of Southern Company, confesses that it has been
oversold, and it will be many years if ever before the technical and
legal issues of diverting carbon dioxide and storing it by the millions
of tons underground can be worked out. The uncertainty has already
caused 60 new coal-fired power plants to be canceled, according to
speakers at the EEI convention.
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Nuclear
power, a longtime favorite of utility executives, still faces public
antipathy, and the cost of building the plants has gone up as the
American engineering base has declined. The large steel forgings that
are required for the construction of nuclear power plants can no longer
be made in the United States. They must be imported from Japan at great
expense.
Also the U.S. nuclear industry, thriving in the 1960s, has
been sold off. Where once there were four U.S. companies that offered
nuclear power plants, now General Electric is the only one, and it is in
partnership with Japan's Hitachi. The once mighty Westinghouse Electric
is owned by Japan's Toshiba. And the other vendor is France's Areva.
Only Ratcliffe's Southern Company is sure that it is going to build two
nuclear units. Other companies, including Baltimore-based Constellation
Energy, have expressed interest in about 14 new plants only about half
of these are likely to be built.
The Nuclear Energy Institute reckons the nation needs a
whopping 65 new nuclear plants to meet new demand and to allow for the
retirement of some of the more than 100 operating reactors.
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Wind is a
bright spot. Wind power has proved more effective for most utilities
than they thought, and they are now scrambling to find ways to store
wind power as compressed air. But while the West and the North have good
wind conditions, the Southeast suffers stagnant air at the time it most
needs electricity the summer. It is an energy option that is not open
to every utility and, because of its dispersed nature, it is not as
manageable as a large coal-fired or nuclear plant.
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Then
there is natural gas, which is the most desirable fossil fuel. In the
past 25 years, the use of natural gas to turn utility turbines has grown
exponentially, from 0 to 30 percent of generation. The trouble is that
there is not that much indigenous natural gas around, and there are
demands on it for home heating, cooking and fertilizer manufacturing,
which are seen as higher uses than making electricity.
This has led to a boom in the import of liquefied natural gas
from Asia and the Middle East. But James Rodgers, chief executive
officer of Duke Energy, which is a large gas seller as well as a major
electric utility, says that this is a dangerous route. By the time the
gas gets here, after it has been liquefied and transported in an
oil-burning tanker, Rodgers says it is only 20 percent less polluting
than coal. Worse, he says this will harness U.S. electric rates to the
global cost of oil and gas. That way he sees ruin.
Like their compatriots in the oil industry, utility executives talk a
lot about technology coming to the rescue. But so far, there has been
nothing that suggests a revolution akin to the one that transformed
telephony is in sight. The only really happy thing here in Toronto is
the realization that the plug-in hybrid car is coming, and that it will
boost utilities' revenues by recharging overnight when there is a
surplus of electricity.
© 2008 North Star
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