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Money Talks, Thermal Plants Walk

Why it pays for utilities to be more efficient.

Fortnightly Magazine - June 2007

make billions on the deal, so they’re highly motivated.

This is a small example of the efficiency bonanza that awaits the attentive. My team has lately redesigned $30 billion worth of facilities in 29 sectors. We consistently find savings around 30 to 60 percent in retrofits with paybacks averaging 2 to 3 years. In new installations, we generally find savings around 40 to 90 percent, with almost always lower capital costs. This is across 29 very diverse sectors of the economy. We haven’t found a sector yet where you can’t produce this sort of performance.

Fortnightly: There’s a new openness in the industry to the idea of nuclear power. Have your views on nuclear power shifted any in recent years? Wind energy also is generating great interest. How big a piece will wind be in the green future?

Lovins: Wind is the fastest-growing energy source in the world, other than solar cells, which start from a much smaller base. Wind has over 75 GW installed. Germany and Spain each install 2 GW of wind a year.

The supposed storage problem of variable renewables like wind and solar is actually not a significant problem, even at a very large scale, because the backup needed for grid stability is less than the backup we’ve already installed and paid for to cope with the intermittence of large thermal stations, which have typically a 6- or 8-percent forced outage rate and fail unpredictably for a long time in gigawatts chunks.

All sources of electricity are unreliable—for different reasons, with different degrees of predictability and different scales and durations of outage. If you properly diversify variable renewable technologies and disperse them over hundreds of kilometers, and forecast them and integrate them with your supply-side and demand-side resources, their variability is not a significant issue, even at very high penetrations.

As a student of nuclear issues for about 40 years, I continue to feel more than ever that nuclear power is unnecessary and uneconomic, so we don’t even need to argue whether it’s safe and nonproliferative. Micropower—cogeneration and renewables other than big hydro—in 2005, the last full data year we have, added worldwide four times the output and 11 times the capacity that nuclear added worldwide. Micropower in 2005 provided one-sixth of the world’s electricity and one-third of the world’s new electricity. In fact, in 2006, micropower surpassed nuclear power in global kilowatt-hours produced, as it had surpassed nuclear in installed capacity in 2002.

For those who think that the real competitors to nuclear are coal plants: Sorry, the revolution already happened, and you missed it. All kinds of central thermal plants are uneconomic, and the market is telling us that very clearly by buying other stuff instead for the majority of its service needs.

Fortnightly: This is the 25th anniversary of your co-founding Rocky Mountain Institute. What has been the institute’s crowning achievement?

Lovins: I think we’ve substantially shaped a shift toward energy and resource efficiency in thought and action, especially in the private sector. We will see a lot more of that at a rapidly accelerating