Are utilities ready to really engage customers, and get them to care about more than just whether the beer stays cold? Or will we turn our focus away from customers, because we don’t know how to...
The U.S. faces a near doubling of population this century. Will there be enough power for the people?
On this the 75th anniversary of its publication, -a journal that has sought out the truth through its investigation and understanding, been a place for knowledge and scholarship, and been a medium for intellectual discourse within the energy industry-looks out to the future.
In 2004, the quintessential question remains what it was 75 years ago: How will the energy industry meet the demands of tomorrow?
In the early 20th century, a mere 247,000 out of a potential 5 million customers had electricity, according to the National Academy of Engineers. Today, the investor-owned utility industry serves almost half of the 293 million who live in the United States. The average number of electric utility customers has run as high as 135 million, according to Energy Velocity. The industry has come a long way.
But looking to the future, one sees clouds beginning to form. The answers to the questions become more difficult. The limitations and the obstacles increase. As we see a linear increase in demand, the difficulty of meeting that demand grows exponentially.
In 100 years, the U.S. Census Bureau projects that the U.S. population could double to 570 million people-and that's a conservative estimate. Furthermore, the highest projections are 553 million people by 2050 and 1.2 billion by 2100. (These numbers account for below-replacement-value fertility rates and include immigration. Certainly, both trends are subject to change.)
By contrast, the U.S. Energy Information Administration (EIA) predicts a more modest growth in population. According to , total population growth will remain fairly constant after 2002, growing by 0.8 percent per year on average. Nevertheless, even EIA forecasts a 54 percent increase in electricity consumption by 2025. According to EIA's conservative estimates, the country will need 428 GW of new generating capacity by 2025 to meet the growing demand for power electricity. That is equivalent to 1,427 new power plants of 300 MW each. Shocked yet?
Any seasoned utility executive will see immediately that new demand of this magnitude will force some big changes in the next 20 years, not to mention the next 100. Even the EIA's rather conservative growth forecast would force a doubling of installed capacity. That would impose big challenges-on the investor-owned power sector, as well as the public power sector, which includes co-ops, municipal utilities, and the Power Marketing Agencies (PMAs) organized under federal law.
For example, shareholder-owned generating capacity hit 397,982 MW in the United States as of Dec. 31, 2002, accounting for about 41 percent of the nation's total installed capacity of roughly 981 GW. A doubling would require a significant fund-raising effort in capital markets-and even more if the co-ops, munis and PMAs don't build new plants with the same enthusiasm. (Anybody heard of Bonneville Power planning to build new mega-sized dams anytime soon?)
Of course, no discussion is complete without considering the effects of economic growth-the second-strongest driver of electric demand, even if the need for power stays constant in terms of kilowatts per dollar of