Welcome to the new ATP web site. It was recently redesigned. While I generally kept the same format, there are several improvements that utilize more current technology than the old site.
In this time of the COVID 19 pandemic we are observing changes that I believe will have long term consequences for energy. Trends that have been underway for a decade or more are going to be accelerated. The trend that I am referring to is the decline in demand for central station electric power generation. I am not saying the demand for electricity in the US is dropping, but for generation it has been and future growth will certainly be less than in the past.
Demand for electricity from power plants has been flat or even declining for a decade or so. This has largely been the result of energy efficiency measures and a shift away from energy intensive activity to less energy intensive businesses. Along with less expensive natural gas that has made natural gas fired generation more economical, flat energy demand and other cheaper alternatives are forcing coal out of the marketplace. I am of the view that the COVID pandemic will have a negative impact on economic growth for several years (more on this in an upcoming blogpost), which will impact energy growth, accelerating the decline in coal generation that has been occurring for a while.
This is what I had in mind with the Shifting Sands program. Utilities that have relied heavily on large, central station plants, especially coal and nuclear plants, have been struggling due to the high O&M cost of these plants and their decreasing competitiveness. Companies with these enormous capital investments and ongoing costs find it hard to change course, in part due to institutional inertia. Just look at what happened to Southern Company’s Plant Vogtle nuclear plant and their Kemper coal-gasification power plant (now natural gas). These projects experienced billions in overruns and tarnished the reputation of what was otherwise regarded as a well-run utility.
By contrast, new gas generation is much cheaper and can be built on relatively short notice. But, the other area to look at is renewables. A new on-shore wind power facility can be built for $1500/kW or less, and makes energy without fuel cost. Compare this to perhaps $10,000/kW for nuclear and well over $5,000/kW for coal. The newer wind turbines are larger and can operate over a wider range of conditions for higher capacity factors. Wind turbine projects are almost exclusively utility-scale due to the project management and technical expertise that is necessary. Photovoltaics, however, are highly competitive on both utility-scale and on commercial & industrial buildings. Even small towns are able to build their own PV facilities. Combined with storage, these renewable technologies are dispatchable.
The paper that I jointly developed with Sheila Glesmann discusses how smart building management systems are transforming building management so that they better serve the intended purpose, are more efficient, and also offer opportunities for revenue. The increased use of building-to-grid (B2G) generation – using renewables, and especially in combination with storage – will accelerate the trend of reduced reliance on central station generation even further. The power plant of the future may very well look a lot like a Home Depot or Wallmart, or a large office building. Powering homes with PV is a trend that continues, but may not be the dominant trend for PV.
I believe that we need to transform our energy infrastructure into the infrastructure of the future – go where the puck is going, not where it has been. That will be the driver for growth in the energy industry. Just as fossil fuels like coal were the technologies for growth during the mid-twentieth century, other technologies will power us in the future with cleaner, cheaper energy. I’ve long worked to clean coal generation. But, we are reaching the limits of what is possible economically, especially as new, cleaner technologies become more economical. My grandparent’s house was heated with coal. Today, that is incredibly rare in the United States. In the future, coal fired generation will be as rare as heating with coal is today.
Jim Staudt