Jan
23
What the Utility Companies Are Thinking to Change
January 23, 2009 | 1 Comment
The Edison Electric Institute, a creature of the utility industry, has a paper out that outlines what they believe are the technologies that would be most beneficial to “reducing greenhouse gas emissions.” Its also an outline of where they think investment must go to reduce fossil fuel use and keep the grid running at proper current.
The prime purpose of the paper is to position the industry such that the needed legislation to get from current conditions to where they expect conditions to be. It is understandable, simplified and actually might be passable by Congress. The position paper offers some interesting takes and stays within the known scaleable technology.
Highlights are:
Efficiency and renewables are key to near-term reductions.
Maximizing new nuclear is key to mid-to-longer term reductions.
The aggressive development and deployment of carbon capture and storage coupled with advanced coal technologies are necessary to preserving the coal option.
Plug-in hybrid electric vehicles (PHEVs) and electric vehicles (EVs) can make a major contribution to reducing net GHG emissions, as well as to reducing foreign oil dependence and consumer prices at the pump.
Other no and low-emitting carbon technologies should be pursued (e.g., smart grid).
For many clean technologies, renewable, and alternative technologies the views of the utility companies are vital because they’re single largest energy market. Opposite to technology is the nature of utility companies; driven by their needs to be reliable they are notoriously conservative about investing in new technology. But slowly, the utility industry is coming around to the position that they have the major role in both in converting energy sources to useable electrical forms and playing a positive environmental role.
But for everyone else, electric utility companies are the 800 lb gorilla both to the consumer and fuel supplier but perhaps more importantly they are the reasoned representatives of nearly everyone with the government. They merit your close observation, as their economic impact will be single most influential role about the future.
The most encouraging part of the paper is the sensitivity to the consumer about driving increasing expenses to the electricity rates. To protect customers and the international competitiveness of U.S. industries, the EEI framework also calls for a “price collar,” which would include both a firm price floor and ceiling for the cost of carbon. The EEI Board is recommending that the cost collar start narrowly and gradually expand over time as climate-friendly technologies become more readily available. Offsets also are an important means of addressing costs.
A reading of the paper reveals that the motivation is coming from emission of CO2. In the face of a cooling climate that basis should become weaker should the climactic conditions stay on the current track. That opens the items listed from the paper above to some thoughts.
In many states the requirements for renewables is well underway. What is still weak is the utility companies role in driving efficiency. The issue is still that profits are drawn from the maximum sales of power, not the amount of work done for the lowest cost. Regular readers know this site is motivated to get more work done cheaper. One key is to reposition the utilities to profit from a growth of lower cost work rather than simply total power sales. The utility business needs to find ways to drive efficiencies for profit rather than simply increasing sales. Today it is factually a matter for individual states, but the opportunities for the economy in reconstruction, growth and economic security are huge.
Until certainty exists in fusion, fission nuclear will need expanded. The drive for more power supply should come first from efficiency, but when that runs past the big and easy savings the market will inevitably need new supply. While the utility industry seeks “maximizing” new nuclear and it is today the sure resource, the consumers need to add voices to both accelerating the effort of the fusion researchers and apply pressure to reduce the costs of new fission nuclear. The obvious reason is to keep rates low, but secondarily, when or if fusion becomes viable ratepayers will wish that a large sunk investment in fission be as minimized as possible. Paying for obsolescent technology for half a century or more would be a dreadful economic anchor to pull free.
Their answer to the environmental special interest’s power is seen in the “aggressive” deployment of carbon capture and storage coupled with advanced coal technologies.” Without saying who is going to pay for this (you are, one way or another), the industry is acknowledging that for years to come coal is going to be required. This conundrum, a variable coal price becoming more and more tied to oil, the costs to clean emissions, the absence of efficiency drivers for the market, and technology still not ready to take CO2 and recycle it economically for reuse poses an expensive problem. CO2 is still a high cost, and we are still not ready to take CO2 and make it profitable or cost reducing market. Algae may get there, and one could reasonably use expected the capture and storage costs as savings to capitalize a drive to more CO2 recycling.
It seems that the utility companies know that electric drive vehicles are a market with good potential. The paper isn’t very strong in the discussion and a cynic would suspect the companies are “laying in wait” for the market to emerge. There are still the technology hurdles of vehicle storage, but battery manufactures around the world are readying to answer and the super and ultra capacitor research proceeds with enthusiasm, and the hurdle of getting manufacturing volumes to drive down costs. Confidence is high that the technology issues will get resolved leaving the actual market acceptance by consumers as the last matter of concern. In a week of under $40 oil it is a worthy concern, but only for a period of time.
Perhaps its time to consider that the utility companies are going to be people’s lifetime partners in getting things done from heating, cooling and powering households to powering business, industry and the jobs that go with them and now a better than even chance that they’ll power transportation is a large way. Usually people are confronting the industry, and there is good reason to believe the ethics and morals of some are due more oversight. But the situation is that as well as criticism, encouragement is needed with consumer expectations made much more clear.
I tend to avoid direct political suggestions, but in regards to utility companies one other thought comes to mind. They enjoy oversight that for the most part guarantees profit – the reward is a sure thing. We need to consider adding risk back to the calculation. There must be a way to put those profits at risk for low efficiency in the customer base – a strong incentive for better companies and a healthier economy.
Your thoughts on that are welcome. This is a large market we all must use and it will become more important over time.
Comments
1 Comment so far
Feedburner
Reddit
Stumbleupon
I’ve written my congress-critters (for all the good it does…), with the following suggestions:
1. Fund thorium reactor engineering work
2. The alternative fusion ventures are interesting, have at least as much probability of practical electric generation as tokamak, and are cheap to explore to the proof-of-concept level. Twenty million funds them all. Print the money and do it now.
3. Research funding (in millions) and prizes (in billions) for items like a practical automotive battery or an aerogel formulation that can be injected in existing wall cavities.
My experience is that a few elected congress folk actually do look at the mail. If they get a goodly number of these letters they may just scratch that itch, or at least have a moderate epiphany about the technology that is out there.
JP Straley