Posts tagged “electricity”
The following article was written by S. Michael Holly, the Chairman of Sorgo Fuels & Chemicals, Inc. Sorgo has developed technology for the production of ethanol, electricity and protein from sweet sorghum. Mike was formerly an alternative energy engineer and business analyst with the Minnesota Department of Energy and Economic Development. He holds masters degrees in chemical engineering and business administration from the University of Minnesota.
Many U.S. special interests are misrepresenting wind power costs, including the wind industry, environmental groups, utility monopolies, independent system operators, educational and research institutions, and even federal and state governments. On September 24, Bill Ritter, the current director of the Center for the New Energy Economy at Colorado State University and former Governor of Colorado, wrote in the Wall Street Journal that “Long-term contracts for wind energy are being signed by utilities in several states in the range of 3 cents per kWh over 20 years” (1). Xcel Energy, the nation’s leading wind-generating electric utility, declares “wind power is simply the cheapest resource” (2).
In the most recent issue of our subscriber-only newsletter, Energy Trends Report (ETR), I took a look at the lessons learned from the decline of the US coal industry. As we have done previously, we would like to share a story from ETR with regular readers of this column. Interested readers can find more information on the newsletter and subscribe for free at Energy Trends Report.
Lessons From the Beginning of the End of America’s Coal Industry
Only a few short years ago the U.S. coal industry enjoyed a mini-renaissance with several new large power plants brought on line in 2010 and 2011, which at the time firmly entrenched coal as the dominant source of electric generation in the U.S. Since then, coal’s share of the electric market has contracted sharply, and against the backdrop of the White House’s new position on climate change is why many see an industry in serious trouble.
The U.S. coal industry has been left to fight an uphill battle with the EPA over the agency’s authority to set rules on CO2 emissions from power plants. The coal industry is fighting this battle virtually alone, as traditional fossil fuel allies sit on the sidelines (oil) with no direct stake, or wait eagerly to absorb market share (natural gas). In parallel to this new policy reality, technology developments – from advances in unconventional gas extraction to startling declines in the cost of renewable energy generation and efficiency – are redefining the economics of electricity markets.
There is substantial opportunity to incorporate next-generation nuclear energy — through either large, advanced reactors or emerging SMR designs or both — more significantly into a productive strategy for reducing carbon emissions in the long and short term, writes Matthew Stepp.
Half of California’s Nuclear Generating Capacity Shut Down
I’m still digesting last week’s announcement by Southern California Edison that the utility’s San Onofre Nuclear Generating Station (SONGS) in Southern California will close permanently, nine years prior to the expiration of the facility’s operating license. The plant’s two nuclear reactors were shut down for repairs in early 2012, and the Nuclear Regulatory Commission (NRC) still hadn’t approved the company’s plan to restart them, despite a protracted review. Although this event is quite different from the 2011 Fukushima accident in Japan, its ripples are likely to extend beyond California, where both the state’s electricity market and its greenhouse gas emissions will be adversely affected.
California’s Emissions Could Increase by 6 Million Tons per Year
Before considering how the San Onofre closures will affect the nation’s nuclear industry and generating mix, let’s focus on California. While accounting for only 3% of the state’s 2011 generating capacity from all sources, the SONGS reactors typically contributed around 8% of the state’s annual electricity generation, due to their high utilization rates. That’s a large slice of low-emission power to remove from the energy mix in a state that is committed to reduce its emissions below 1990 levels.
In our energy finance newsletter a few weeks back I wrote about some possible fallout after Energy Future Holdings (EFH), the massive private equity-owned Texas electric holding company and the result of one of the largest leveraged buy-outs ever, formally warned that it might need to seek bankruptcy protection.
Last week, EFH offered a restructuring plan to creditors in an effort to avoid bankruptcy. The restructuring offer will almost surely be rejected, but may lay the initial groundwork for some type of structured resolution outside (or even inside) of bankruptcy court.
A little more than five years ago EFH was created as the vehicle for the most expensive leveraged buy-out in history when a private equity group led by KKR, TPG and Goldman Sachs Capital Partners bought the Texas energy company at a price of $43.2 billion. The failure of EFH will be hugely important in terms of the direct impact on investors, lenders and the private equity market, but perhaps more important will be what this failure means for the broader energy landscape.
By Sam Shrank/GreenOrder
Utility operations are being forced to evolve as customer expectations shift, technological change continues and new players enter adjacent markets. As utilities chart their course in areas such as energy efficiency, smart grid, and distributed generation, they find themselves in unfamiliar positions. The second in our four-part series (See Part I by my colleague, Mat McDermid, Finding the Regulated Utility Role in a Shifting Energy Landscape), we discuss how utilities can leverage behavioral science research as they expand into markets where they are not a monopoly and customers need to be convinced about the benefits of the products and services offered.
Since setting up auto-pay the day I moved into my apartment, I’ve given no thought to my utility bill. Given that my job is to analyze and advise utilities, I’d venture to say most people are no more engaged. However, with an evolving set of customer offerings—energy efficiency (EE), alternative fuel vehicles, demand response, and the like—many utilities are realizing that they may require better, different, or more communication. In short, they are discovering what it means to sell.
And not only are they beginning to market things customers may not feel they need, they now have competitors as well, particularly in the EE market. Various other entities are looking to advise large electricity and gas users about how to lower their bills and provide help with financing, sell devices directly to customers that increase automation and control, or take over the utility’s role as the provider of EE offerings funded through utility bill surcharges. All of these reduce both the direct benefit to utilities from performance incentives and the indirect benefits from higher customer satisfaction, improved regulatory relationships, and perceived leadership.
By Mat McDermid/GreenOrder
Energy is being reshaped as more than just a commodity: evolving customer expectations, new technologies and market entrants, and vying interests are challenging the traditional regulated utility model. However, regulated utilities possess an inherent advantage other industries could only dream of: a largely protected customer base. The first in our four-part series, we set the stage for how focusing on the customer can provide the pathway to growth and reinforce the relevance of the utility role in the future energy landscape.
For decades, end users’ relationship with energy (whether gas or electricity) has been relatively constant: our lights and stove work on demand, we receive a bill every month (that we don’t understand), and occasionally the power goes out. Regulated utilities earn reliable returns for keeping this system humming, which regulators make sure they actually do. This model is now being challenged, however.
In a move that is increasing uncertainty among investors, even as it provokes anger among climate change activists, Britain is set to unveil the minimum prices that utilities will charge for electricity generated from both nuclear and renewable sources, beginning in mid-2013.
The highly anticipated Electricity Market Reform bill will be introduced into British parliament next week, stipulating the nation’s plans for improved infrastructure in its energy industry, while luring those who would like to be included in the $525 billion of investment that the sector is expected to require through 2030. (Read More: World Energy Consumption Facts, Figures, and Shockers)
A coalition of scientists in the United States has released a report suggesting that as many as 353 coal-fired electricity plants in the country should be retired due to their extreme age and general inability to compete with cheaper alternatives like natural gas and wind power.
Issued by a group called the Union of Concerned Scientists, the report targets a total of 59 gigawatts of electric power generating capability across the country, representing more than 6 percent of the total amount of electricity used by American citizens and businesses. The plants in question, each well-aged and operating past their 30 year lifespan, generate the bulk of the nation’s pollutants and greenhouse gases; with the costs of keeping them up to official standards taken into account, the report suggests that none are worth maintaining in the long run. (Read More: The Death of American Coal Producers — and a Potential Lifeline)
We all saw last week the largest blackouts in history, as first 300 million people in India, then 600 million lost electricity. While power is back up, it was a huge embarrassment to the government that exposed major difficulties in the power sector.
There are many problems with the Indian economy, like corruption, lack of long-term planning, and investment restrictions that hold it back from its potential. It has been difficult to remove the layers of bureaucracy that thwart investors. Corruption has remained pervasive at all levels. Political populism has led the government to impose strict price controls on many goods – this has hampered investment. The remnants of India’s post-war anti-import government policies have slowed the ability of foreign companies to directly invest in the country.