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Technology Is the Key
To Cleaner Generation
By Dennis Wamsted
For more than a century and a quarter, technological
innovation has kept the U.S. electric system strong.
Innovation has increased efficiency and reliability in
generation and delivery, and even has changed the ways
we use electricity. It has helped cut air emissions and
improve environmental quality. It has helped meet
soaring demand in an increasingly technological world.
For shareholder-owned electric companies, technological
innovation is where energy, climate and the
national economy meet.
The Price of Success
The industry keeps investing more in the system: Edison Electric
Institute (EEI) estimates that the industry invested approximately $69
billion in 2007 to meet the nation’s rising electricity needs.
Looking forward, EEI projects that environmental compliance costs just
for the federal sulfur dioxide (SO 2 ), nitrogen oxides (NO x ) and mercury reduction
rules currently in place will cost the industry roughly $48 billion
through 2025. In addition, says EEI, investments in the high-voltage transmission
system will top $37 billion from 2007 to 2010. Even more
significant, it also projects that spending on local distribution upgrades will
average at least $15 billion a year for the next decade. Rising construction
and commodity costs may push all of these figures higher.
The driving force behind these investment needs is simple: Electricity
use has skyrocketed. Indeed, it is arguably the most successful “product”
ever introduced. Consider that from 1950 to 2000, while the population
of the U.S. grew by about 90%, electricity use soared by some 1,315%.
And the growth shows no sign of slowing — in 2007, total electric output
hit 4.1 million gigawatt-hours (GWh), topping the 4 million GWh
mark for the first time.
Long-term forecasts by the U.S. Department of Energy’s analytical
branch, the Energy Information Administration (EIA), peg growth at
roughly 1.1% annually through 2030. While that may not sound like
much, it adds up quickly. At that rate, EIA says an additional 240
gigawatts of new generating capacity will be needed to supply the new
demand and replace older units that will be retired. If EIA is right, one
400-megawatt (MW) generating plant will need to come on line somewhere
in the U.S. every two weeks for the next 22 years.
The Right Path for CO 2 Legislation
Mounting concerns about greenhouse gas emissions — particularly
the carbon dioxide (CO 2 ) emitted during the combustion of fossil fuels
— and the potential for long-term climate change have introduced a significant
degree of uncertainty into utility planning efforts.
The support of the presidential candidates for CO 2 reduction measures
will likely push legislation targeting greenhouse gases in the next
several years. Such carbon constraints would create even higher costs for
electric companies, which must install new (and as yet unproven) CO 2
emissions technologies while maintaining balanced fuel supply options
and meeting surging electricity demand.
One of the keys that will differentiate any CO 2 reduction legislation,
according to Tom Kuhn, president of EEI, is how it treats technology.
New technologies are going to play an absolutely essential role in meeting
future greenhouse gas reduction mandates, he says.
“Realistic carbon reduction targets that give industry the time to
develop and deploy a full suite of climate-friendly technologies to achieve
them” are going to be crucial, Kuhn told Wall Street analysts earlier this
year. “…[T]hese technologies include an expanded role for energy efficiency,
plug-in hybrid electric vehicles, renewable energy sources, greater
nuclear capacity and advanced nuclear designs, clean coal technologies
and carbon capture and storage.”
Edison Electric Institute
America’s electric companies are transforming
the way we meet our customers’
demands for a reliable, affordable and
environmentally sensitive electricity supply.
Edison Electric Institute is expanding the
role of energy efficiency: We’re broadening
and intensifying our investments in
renewable energy sources; we’re developing
advanced coal and new nuclear
energy plants; we’re conducting research
and pilot projects on carbon capture and
storage technologies; and we’re working
with industry allies to develop the nextgeneration
hybrid vehicle — the plug-in
hybrid electric vehicle.
“Some of these technologies are available —
although at a higher cost than conventional
generation sources — but many are not. All
have different time horizons, but all are critical
to reducing greenhouse gas emissions. The goals
for these emissions reductions must be harmonized
with the development and commercialization
of the technologies.
“This is a critical point,’’ he continued. “The
consequence of not harmonizing emissions
reduction goals with technology will be
massive fuel-switching that will result in
tremendous price pressures on natural gas,
higher consumer prices and heavy burdens on
the competitiveness of U.S. industries.’’
Advanced nuclear technology is one aspect
of that harmonization. Currently, nuclear
energy produces roughly 20% of the electricity
used in the U.S. — and it does so without
greenhouse gas emissions. Advanced nuclear
units are smaller, more efficient and more
standardized; and several companies already
have applied for licenses to build and operate
new units, the first of which could be on line
But nowhere will this harmonization be more
important than for coal, which currently supplies
about 50% of the electricity consumed
annually in the U.S. Enacting mandates that
effectively preclude the use of coal for electricity
generation simply doesn’t make any sense — it is
too important an energy source for that. The
truth is, canceling coal-based electric generating
plants likely would leave many of us in the dark.
What does make sense, however (in addition
to making any carbon legislation economywide),
is to harmonize reduction targets and
timetables with the development and deployment
of advanced coal technologies. It won’t be
easy or cheap, but companies in the utility
industry already are looking for cleaner ways to
use the nation’s abundant coal resources.
They’re intent on developing technologies
like highly efficient supercritical and ultrasupercritical
coal-based plants, integrated coal
Building this portfolio of technologies
is essential for meeting the electricity
demands of an increasing population, a
growing economy and a rising standard
of living, and it will be vital to do so in
a way that limits our carbon dioxide and
other greenhouse gas emissions.
Our goal is clear: We’re investing in America’s
Annual Capex Tops $70 Billion Through 2009
U.S. Shareholder-Owned Electric Utilities (in $ Billions)
2003 2004 2005 2006 2007 2008p 2009p
p = projected
“The consequence of not harmonizing emissions reduction
goals with technology will be massive fuel-switching that
will result in tremendous price pressures on natural gas,
higher consumer prices and heavy burdens on the
competitiveness of U.S. industries.’’
– Tom Kuhn, President, Edison Electric Institute
Chairman, President and CEO
More and more people move to the South
each day. In fact, the U.S. Census Bureau
estimates that by the year 2030, 40% of
Americans will live in the region that
stretches from Texas to Virginia. Many of
these new neighbors will look to Southern
Company to serve their energy needs.
At Southern Company, we’re poised to
meet rising electricity demand by pursuing
a balanced approach to energy. We are
planning to build new nuclear power — a
clean, safe and economical form of generating
electricity. We’re developing new
technologies that will allow us to use coal,
our nation’s most abundant energy
resource, in a cleaner, more efficient
manner. Natural gas, the fuel of choice for
electric generation in recent years, remains
an important option for us, as does
renewable energy, like biomass and wind.
We continue to promote energy efficiency
by working with our customers to reduce
energy use in their homes and businesses.
Southern Company is implementing
the most effective solutions to keep up
with growing energy needs. The nation’s
economy, quality of life and ability to
compete in the world’s markets will
depend on a reliable and affordable
energy supply — and one that can meet
the commitments of ever-increasing
gasification and combined-cycle plants, and
carbon capture and storage.
In an earlier era, concerns about SO 2 and
NO x dominated the environmental debate.
Since the 1970s, electric companies have produced
technological progress in systems to control
those emissions, with spectacular results. A
transformation similar to that is possible with
CO 2 , according to EEI’s Kuhn, but it will take
time, money and common sense.
Part of that common sense is to realize that
while some low- or zero-emissions technologies
are currently available, such as wind and solar,
they are not “baseload” generation. They also
have cost realities, in both production and siting.
For example, the best sites for both of these
technologies are frequently located far from traditional
load centers, requiring the construction
of new, or the upgrading of existing,
transmission lines to get the green power to
market. These lines are costly and often generate
strong local opposition, particularly when
the power is being shipped across state lines.
Easing those concerns and reducing construction
delays will help keep costs down, which in
turn benefits everyone.
Energy Efficiency, Smart Grid:
Keys to the Future
Energy efficiency is another area long supported
by the utility industry because it can at
once lessen strain on the system and play a
major role in meeting greenhouse gas reduction
targets. From 1989 to 2005, utility efficiency
and demand-side programs saved almost 860
billion kilowatt-hours of electricity, which is
roughly the amount of electricity it would take
to meet the power needs of 76 million households
in the U.S. for an entire year. As a result,
the industry was able to avoid building some
110 power plants (each rated at 800 MW).
This is just the beginning of what is
possible, however. Increasingly, industry
executives see energy efficiency and “smart
grid” technologies as means of generating
power for their customers without any
The smart grid clearly is an area of intense
utility activity, with programs under way — from
boosting transmission capacity to upgrading
customer meter technology across the country.
Two-way meters will enable utilities and
customers to transfer data in real time, and from
there a dizzying array of options is available.
Electric companies need all the technologies
— from plug-in hybrid vehicles to carbon capture
and storage to renewables — to meet climate
goals and rising demand. The industry
can make it happen. Exactly how these various
technologies and supply options will play out is
important, but so is getting the ground rules
right — and assuring we will have the technologies
and supply options we need. The
industry is set to transform itself, so that it can
continue to innovate and to produce the economical,
increasingly clean electricity on which
the nation has come to rely.
Edison Electric Institute