The Energy Ecosystem And The Energy Risk

The Energy Ecosystem

A vision of the Smart Grid that focuses on the importance of energy efficiency, demand response and distributed generation, including viewpoints from: Acterra, Ausra Inc., Hydro One Networks, National Resource Defense Council, Pacific Gas & Electric, San Diego Gas & Electric, Stanford University and The Brattle Group.

Energy Risk - Marked Shift in Policy

Carbon constraints are coming to the United States. But the key question is whether Congress or the Environmental Protection Agency compels them. EPA now officially considers carbon dioxide and other greenhouse gases to be harmful to human health, which is the legal prerequisite to regulate those releases under the Clean Air Act. That designation is a marked shift in U.S. environmental policy and signifies a clear move toward regulating the heat-trapping emissions from all sources. But while EPA says that it is prepared to draft the official rules, it would rather defer to Congress.

"This finding confirms that greenhouse gas pollution is a serious problem now and for future generations. This pollution problem has a solution, one that will create millions of green jobs and end our country's dependence on foreign oil. In both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act."

The pronouncement in mid-April begins a 60-day comment period in which all sides have a right to weigh in. At the end of that time period, the agency will release its regulations that all parties, once again, will be given time to respond. The pending regulations will pressure Congress to come up with its own laws by year-end. Limiting the level of greenhouse gases will assuredly affect the U.S. economy, touching everything that consumes fossil fuels from automobiles to power plants to manufacturing facilities. And while environmental organizations applaud the announcement, business groups remain cautious but say that they are willing to work with policymakers to arrive at an optimal solution. EPA's action comes amidst a U.S. Supreme Court decision rendered two years ago. That ruling said that the agency had the authority to regulate all greenhouse gases under the Clean Air Act if they were deemed to be harmful to human health or the public welfare. EPA now concludes man-made greenhouse gas emissions lead to global warming, which causes increased droughts and flooding as well as to poorer water quality. Even though the state of Massachusetts initiated the case and it pertains strictly to automobile emissions, EPA's position will apply to power plants as well. The move runs counter to that of the Bush administration, which had vigorously opposed regulating greenhouse gases. As such, the Bush White House never moved to make any formal declarations on the issue, although its own EPA scientists had determined that greenhouse gases were detrimental to human health.

"This proposal will cost jobs. It is the worst possible time to be proposing rules that will drive up the cost of energy to no valid purpose."

Official Recognition

EPA's decision will clearly put the focus on congressional efforts, where utilities and other industrials might have more sway. Those groups, in fact, have said that they would rather work with lawmakers so as to ensure any future bill makes gradual advances in an effort contain costs. That is unlikely to satisfy green groups, but they will nonetheless agree to such compromises. The practical effect of carbon limitations would be the setting of performance standards for all coal-fired power plants that are estimated to contribute about a third of all such releases. They would have to use the modern equipment that presumably would include both advanced coal generation and carbon sequestration tools. The ultimate goal is to capture all pollutants and then bury the carbon before it would leave the smokestack. Emitting carbon, meanwhile, will come at a cost. That is, industrials will either have to eventually buy allowances or pay taxes on such releases. That would force those businesses to shift to cleaner burning alternatives so as to bring down the level of carbon emissions -- a move that pits business and green groups against one another. The former is saying such policies will add to energy costs and thereby eliminate jobs while the latter is maintaining it will lead to a new era of innovation and job creation. Specifically, the notable draft now floating on the Hill has been authored by House Energy and Commerce Committee Chairman Henry Waxman of California and his environmental subcommittee chair, Edward Markey of Massachusetts. Their joint measure would cut greenhouse gas emissions by 20 percent from 2005 levels by 2020 and by 83 percent by 2050. The Waxman-Markey bill endorses cap-and-trade but is silent on the issue of whether the credits should be auctioned or initially given away. The measure furthermore requires each utility to meet a renewable portfolio standard of 25 percent by 2025. Such a mandate is necessary if the country is to reverse warming trends, the bill's sponsors say. In an effort to placate lawmakers from coal states, the measure would also give $10 billion in financing to commercialize carbon capture and sequestration technologies. The two sponsors say that EPA's actions give its legislative initiative new momentum. The Pew Center on Global Climate Change agrees, noting that any future delays would only prove more costly for the environment and the economy.

"I applaud the EPA for officially recognizing that greenhouse gas emissions are a danger to our public health and welfare that, if unchecked, could have potentially serious impacts to our environment and well-being."

EPA's position now forces the industrial sector to get on board. And it will, recognizing that the agency would then go forward with its own carbon rules. By participating in the process, skeptics can influence an eventual bill -- one that they hope would slow down timetables and add financial assurances. That's the kind of measure that utilities will back and the type that can pass the full Congress.

No New Coal And Nuclear Plants Are Needed!

Energy Regulatory Chief Says New Coal, Nuclear Plants May Be Unnecessary

No new nuclear or coal plants may ever be needed in the United States, the chairman of the Federal Energy Regulatory Commission said today.

"We may not need any, ever."

The FERC chairman's comments go beyond those of other Obama administration officials, who have strongly endorsed greater efficiency and renewables deployment but also say nuclear and fossil energies will continue playing a major role.

Bloomberg News

Jon Wellinghoff, the chairman of the Federal Energy Regulatory Commission, said renewables like wind and solar will provide enough energy.

Wellinghoff's view also goes beyond the consensus outlook in the electric power industry about future sources of electricity. The industry has assumed that more baseload generation would provide part of an increasing demand for power, along with a rapid deployment of renewable generation, smart grid technologies and demand reduction strategies. Jay Apt, a professor at Carnegie Mellon University's Electricity Industry Center, expressed skepticism about the feasibility of relying so heavily on renewable energy.

"I don't think we're where Chairman Wellinghoff would like us to be. You need firm power to fill in when the wind doesn't blow. There is just no getting around that."

Some combination of more gas- or coal-fired generation, or nuclear power, will be needed, he said.

"Demand response can provide a significant buffering of the power fluctuations coming from wind. Interacting widely scattered wind farms cannot provide smooth power."

Wellinghoff said renewables like wind, solar and biomass will provide enough energy to meet baseload capacity and future energy demands. Nuclear and coal plants are too expensive, he added.

"I think baseload capacity is going to become an anachronism. Baseload capacity really used to only mean in an economic dispatch, which you dispatch first, what would be the cheapest thing to do. Well, ultimately wind's going to be the cheapest thing to do, so you'll dispatch that first. People talk about, 'Oh, we need baseload.' It's like people saying we need more computing power, we need mainframes. We don't need mainframes, we have distributed computing."

The technology for renewable energies has come far enough to allow his vision to move forward, he said. For instance, there are systems now available for concentrated solar plants that can provide 15 hours of storage.

"What you have to do, is you have to be able to shape it. And if you can shape wind and you can effectively get capacity available for you for all your loads. So if you can shape your renewables, you don't need fossil fuel or nuclear plants to run all the time. And, in fact, most plants running all the time in your system are an impediment because they're very inflexible. You can't ramp up and ramp down a nuclear plant. And if you have instead the ability to ramp up and ramp down loads in ways that can shape the entire system, then the old concept of baseload becomes an anachronism."

'A lot that is still not understood'

Asked whether his ideas need detailed studies, given the complexity of the grid, Wellinghoff said the technology is already moving that way.

"I think it's being settled by the digital grid moving forward. We are going to have to go to a smart grid to get to this point I'm talking about. But if we don't go to that digital grid, we're not going to be able to move these renewables, anyway. So it's all going to be an integral part of operating that grid efficiently."

The North American Electric Reliability Corp. reported last week on challenges in integrating a twentyfold expansion of renewable power into the nation's electricity networks but did not specifically address whether additional baseload generation would be needed. A spokesperson for NERC did not have an immediate response to Wellinghoff's comments today. Revis James, who directs energy technology assessment for the Electric Power Research Institute, said recently that it is not clear how fast renewable energy can be added without creating reliability issues.

"No one knows what the magic number is. Are we moving too fast? On the policymakers' side, there's a lot that is not still understood about the implications of a large share of renewables."

Impact on nuclear power

Wellinghoff's statement, if it reflects Obama administration policy, would be a huge blow to the U.S. nuclear power industry, which has been hoping for a nuclear "renaissance" based on the capacity of nuclear reactors to generate power without greenhouse gas emissions. Congress created significant financial incentives to encourage the construction of perhaps a half-dozen nuclear plants with innovative designs, and Energy Secretary Steven Chu has promised Congress to accelerate awards of federal loan guarantees for some of these proposals. But a major expansion in U.S. nuclear energy would require a high effective tax on carbon emissions from coal plants, or an extended loan guarantee and tax incentive policy, according to the Congressional Research Service and outside consultants. The leading energy bills before Congress do not provide more loan guarantees.

"If expansion of nuclear plants is the nation's policy, then Congress has to recognize that the U.S. energy companies cannot afford to do this alone."

"The president needs to show his cards on nuclear energy. He cannot keep this industry, which must make investments with a 50-year or longer horizon, in limbo for much longer."

"I think [new nuclear expansion] is kind of a theoretical question, because I don't see anybody building these things, I don't see anybody having one under construction."

Building nuclear plants is cost-prohibitive, he said, adding that the last price he saw was more than $7,000 a kilowatt, more expensive than solar energy.

"Until costs get to some reasonable cost, I don't think anybody's going to [talk] that seriously. Coal plants are sort of in the same boat, they're not quite as expensive."

Can renewables meet demand

There's enough renewable energy to meet energy demand, Wellinghoff said.

"There's 500 to 700 gigawatts of developable wind throughout the Midwest, all the way to Texas. There's probably another 200 to 300 gigawatts in Montana and Wyoming that can go West."

He also cited tremendous solar power in the Southwest and hydrokinetic and biomass energy, and said the United States can reduce energy usage by 50 percent.

"You combine all those things together ... I think we have great resources in this country, and we just need to start using them,"

Problems with unsteady power generation from wind will be overcome, he said.

"That's exactly what all the load response will do, the load response will provide that leveling ability, number one. Number two, if you have wide interconnections across the entire interconnect, you're going to have a lot of diversity with that wind. Not all the wind is going to stop at once. You'll have some of it stop, some of it start, and all of that diversity is going to help you, as well."

Push for grid modifications

But planning for modifying the grid to integrate renewables must take place in the next three to five years, he said.

"If we don't do that, then we miss the boat. That planning has to take place so you don't strand a lot of assets, a lot of supply assets."

Unlike coal and nuclear, natural gas will continue to play a role in generating electricity, he said.

"Natural gas is going to be there for a while, because it's going to be there to get us through this transition that's going to take 30 or more years."

Chu reiterated before the House Energy and Commerce Committee today that he supports loan guarantees for new nuclear power plants and is working with the White House on the issue.

"I believe nuclear power has to be part of the energy mix in this century."

Chu also noted today that nuclear technology, along with renewables, is an area where the United States has lost its lead.

"We are trying to start the American nuclear industry again."

Coal currently provides half of U.S. power, while nuclear energy accounts for about 20 percent.
Senior reporter Ben Geman contributed.

For more news on energy and the environment, visit www.greenwire.com.

The funny thing in this article, I think, is that nobody mentions the most important energy source of the future, geothermal energy! Thanks to geothermal power, no new coal and nuclear plants will ever be needed again, I'm convinced!