Efficiency gains, if not properly managed, can quietly take away most of the present market for electricity. But they also offer alert utilities an unprecedented opportunity to control risk,...
Saving Gigabucks with Negawatts (1985)
In an age of costly electricity and cheap efficiency, smart utilities will sell less electricity and more efficiency.
falling for years.
That is why it is perilous to ignore the engineering evidence of rising electrical productivity in favor of the evangelical theology of the electricity-GNP ratio — as if these two quantities must spiral ever upwards in a frenetic embrace. Of course, there will be new uses for electricity: there will be robots — which, if used throughout the economy, would consume at most hundreds of megawatts — new industrial electric processes, new home video games and computers, perhaps even Woody Allen’s “orgasmatrons” (shorthand for the not-yet-thought-of uses prominent in many demand forecasts). But I have seen no quantitative proof — only handwaving assertions — that new uses will make more than a minor dent in the immense savings that are clearly cost effective in every sector.
Competition from Entrepreneurs
Nor is efficiency the only formidable competitor with today’s power plants. In the past few years, for example, California utilities have offered to buy privately generated and financed electricity, generally at below full avoided cost. By the end of 1984 they had been seriously offered 18 GWe of alternative generation, of which 1.7 GWe was on line, 9.2 GWe was under contract and construction, and most was renewable. These figures exclude utility-owned capacity and joint ventures; including both would raise California’s offered and on-line renewable and other independent-producer capacity to about three-quarters of the current peak load. And new offers are coming in from entrepreneurs at the rate of about nine GWe per year! Of course, many small-power ventures are driven by tax preferences; but so are conventional power plants, whose subsidies, broadly speaking, tend to be comparable or larger.
Few people realize the scope of the renewable energy revolution — in part because the Department of Energy refuses to keep statistics on it. Since 1979, United States energy supply has been increased more by sun, wind, water, and wood than by oil, gas coal, and uranium (or any of them). More new generating capacity, too, has been ordered from small hydro and wind power than from coal or nuclear plants or both, excluding cancellations. Renewables now provide 9 percent of total U.S. primary energy , and the fastest growing part — outpaced only by savings.
By October 1, 1984, Federal Energy Regulatory Commission permits had been sought for over 14 GWe of dispersed generation — 4 GWe of it in the past year — and at least that much appears to be in advanced stages of planning. (In contrast, only 1.2 GWe of central thermal station capacity has been ordered since late 1981.) During 1984 alone, cogeneration is rising from 5 to 7 percent of national generating capacity. Renewable sources account for about a sixth of the cogeneration permit applications and for a far larger fraction of all new energy supplies: For example, counting both electric and useful thermal outputs, the nation now gets twice as much delivered energy from wood as from nuclear power. Windfarms are competing on the grid in at least six states; 2 to 3 GWe of wind capacity will be on line by 1986;