Generation and carbon control

Planning new generation assets for a carbon constrained future

utility future, electric generation, carbon control

In the United States, there continues to be significant regulatory uncertainty in energy generation—particularly so in light of the American Climate and Energy Security Act (ACES) under consideration in Congress. Regardless of the carbon scheme adopted, the challenge will be keeping existing generation assets spinning while planning for and building new assets for an increasing carbon constrained future.

Today reserve margins are looking OK for the immediate- and near-term. Longer-term there is an issue in terms of generation—not only from a supply and demand perspective when the economy gets back on track, but from a Renewable Portfolio Standard (RPS) perspective. More renewable generation is expected. And a majority of the overall renewable energy capacity will be wind and biomass, although solar will also increase.

Getting the power to the load

Generation operates under a full-time production and real-time delivery business model. And generation operators need to get the power to where the people live, where the load is. In the US, the loads are concentrated far apart and concentrated along the coasts. A renewable resource allocation problem exists, where ‘big wind’ tends to be in the center of the country and solar concentrated in the Southwest. Siting transmission across the “dark areas” between the resources and the loads presents us all with a real challenge.

Generation is also becoming more distributed as consumers seek to gain control over their own load, to be “green,” and control their energy costs. Working in harmony with distributed generation, demand response and energy efficiency offer a second source of “sub-plant generation” – with the potential to reduce generation capacity by up to 20 percent at peak. The Utilities control of residential distributed generation will be essential to avoid sudden demands for power based on local weather conditions; such as rapidly forming cloud cover of a high penetration of roof top solar PV.

Energy storage and electric vehicles battery technologies

Emerging energy storage and electric vehicle battery technologies essentially are time- and geographically-displaced load. And these storage technologies are changing the game for generation, reliability and efficiency options. From enabling interconnection of variable energy resources to providing new ancillary services on the bulk grid, energy storage provides new opportunities for moving towards a sustainable electricity generation infrastructure.

Ramping up carbon and sustainability efforts

For carbon management purposes, every generation and energy system technology available today and in the future is needed. And no technology can fail at any substantial level. If one fails the industry will not be able to continue what it is doing and make a dent in carbon at any significant level. While the energy industry is on the right path, carbon and sustainability efforts must be ramped up.

From a planning perspective, utilities are placing bets on carbon, generation and energy efficiency strategies, technologies and programs before standards have been proven. There is pressure from the government and a lot of money at stake propelling the utilities’ current approach. The generation utility perspective on where to place the bets, include:

economics not yet working for IGCC with carbon capture and sequestration
large, utility-scale renewable projects face a lack of financing and the economics of the projects have deteriorated—increasing trend of utilities funding the projects off of their own balance sheets and on the renewable vendors
alower carbon intensity future will need clean coal with carbon capture and storage (CCS) technology, although the economics are clearly not there now
biomass co-firing strategies are dependent on consistent supply chain economics
new nuclear generation is carbon neutral
flexible gas-fired generation will continue to play a major part in the future as it will be required to back up highly variable generation
household energy efficiency combined with demand response and renewable energy.

The Waxman-Markey (ACES) carbon legislation will have a profound impact on the value of different generation technologies. The result is a change of hundreds of millions of dollars in net present value (NPV) in a given technology or project. And the price of carbon will set the magnitude of the benefit or the cost from the legislation. Ultimately, there will be unintended consequences of any national carbon policy that will have to be addressed and that will introduce new risk to the industry.

About the Utility of the Future conference

KEMA’s 2^nd annual Utility of the Future executive conference was held June 18 – 19, 2009 in Washington DC.

For information on the panel participants and keynote speakers, download the conference summary Whitepaper, “Utility of the Future: Navigating energy sustainability.”

Thoughts, comments or insights?Join the KEMA Utility of the Future conversation.