Enron Corp. has purchased wind-power developer and manufacturer, Zond Corp. of Tehachapi, Calif., and plans to form a new business unit, the Enron Renewable Energy Corp., which will be responsible...
Roundtable: The Future Of Generation
Meeting tomorrow's power needs will pose tough choices
"I have seen the future, and it doesn't work."
Journalist Robert Fulford wasn't thinking about the power-generation industry when he coined this oft-quoted expression. But he almost could have been.
Generators are being squeezed by an array of powerful forces, including the country's insatiable thirst for energy, rising concerns about global warming and other environmental issues, and an increasingly volatile world stage. No silver-bullet solution exists to deal with this array of forces, but companies and policy-makers are pursuing a combination of policy and technological measures that show promise.
Which solutions will be most effective is a subject of great controversy, and provides the context for 2004 Generation Roundtable. We assembled a group of executives and analysts representing various perspectives on power generation, and asked them to predict the future for readers. Their insights suggest that the future indeed will work because it must, but making it work well-i.e., affordably, cleanly and reliably-won't be easy.
Fortnightly: What are the prevailing trends regarding demand growth? How long will the current oversupply situation persist?
John Young , President, Exelon Generation: The entire economic evaluation of generation in the United States is coming to a head over the next few years. Following 9/11, the country and the industry experienced low single-digit growth, from 1 percent to just under 2 percent. Now some regions are seeing 2 percent to 3 percent growth. That's a big improvement. Along with that, in the generation business we are seeing a good number of retirements of old, inefficient or environmentally challenged assets. So the supply side is starting to shrink, and we are starting to see growth return.
We now expect the average reserve margin to come back into equilibrium by 2007, rather than after 2010 as some previously projected. On a national basis, we might see reserve margins return to their old 15 percent mark over the next four to five years.
But where and when generation needs to be built will continue to unfold on a regional and sub-regional basis. Various regions will return to equilibrium earlier, and some a lot later. The further south and west you go, the stronger the economic recovery has been. The Northeast has been growing slower than the Southeast and Southwest. Texas is growing faster than Chicago, but Chicago is growing as well.
Norrie McKenzie, Vice President of Business Development, Southern Co.: Entergy's region has a significant overbuild situation, with probably 35 percent or higher reserve margins. For it to come back any time in the foreseeable future, you need 5,000 MW to 10,000 MW of retirements. Will that capacity be retired? I don't know.
John Buehler, Managing Director, Energy Investors Funds: We see steady demand growth in the United States over the next 15 years, out to 2020. We're buying time by building new transmission systems, but some opportunities are opening up for what we used to call IPPs, and that we now just call energy companies.
Pete Cartwright, CEO, Calpine: We have more bidding opportunities today than we have ever had,