A TRANSFORMING EVENT
Retail sales of gas and electricity run about $300 billion a year. The deregulation of energy production, wholesale logistics, and bulk...
it on a state level. What that does is make planning and resource acquisition even more uncertain, because we don't have a national level playing field or even a regional level playing field. Some states will impose certain greenhouse-gas taxes, and others will not. That uncertainty makes planning and analysis difficult, and makes capital more wary of jumping into energy investments. It's affecting decision-making adversely in a number of ways.
Energy Technology: Covering Left Field
With changes afoot in so many areas, predicting the Next Big Thing is more difficult than usual. However, distributed generation (DG) trends are generating more attention, especially amid growing concern over grid security.
The latest markup of the Energy Policy Act includes $1.15 billion for distributed generation and micro-cogeneration technology development from 2004 through 2008. But how far this technology will go remains-you guessed it-uncertain. In some sense DG might represent a litmus test for the industry's next phase of evolution. The degree to which key stakeholders embrace DG might set the tone of the next several decades. Dominion's Capps, Baker & McKenzie's Zimmer, and Duke Power's Hall debate the future of distributed generation technologies.
Fortnightly: What role does DG play in resource planning today?
Hall: DG is a viable part of an overall infrastructure system. A lot of it is predicated on what customers want to do-if they want to go into their own energy management or look to companies like Duke Power to provide it.
Outside the emotion that gets generated when you have a major blackout, large customers still want to focus on their core business, and want us to help them manage their energy needs. DG is a piece of the overall solution to long-term needs, but I'm not sure to what level folks will embrace that technology.
Capps: Once you get DG where it's economically competitive, it should succeed on the theory that the closer the power supply is to the load, the better off you are. But DG is noisy, and has to be served by fuel, if it's propane or natural gas or diesel, and its success will depend on where it is located.
It's not the panacea. The secret of reliability is, number one, to have some strict reliability standards with teeth in them, not voluntary standards. NERC did a good job, but if you didn't agree with what they suggested, they couldn't do anything to force you to comply. I'm a real federalist on this. The FERC should have authority over [electricity] transmission, as it does over gas transmission. You've got too many cooks in the kitchen on electric transmission siting. One cook needs to look after the interests of everybody.
Fortnightly: Does DG have the opportunity to become a really significant part of the U.S. power system, or will it remain a marginal technology?
Zimmer: It is poised at the cusp of national opportunity. It should happen, but there are no guarantees.
Distributed generation has one of the best opportunities to emerge in 30 years, because of security, fuel volatility, efficiency issues, power quality, pricing, and some