Engineering, procurement and construction (EPC) contracts are evolving as utilities seek to spread risks, contain costs, and execute their business strategies. As a result, turnkey contractors are...
2025: A Murky Mix
Which power technologies will dominate?
Also, after spending many years on the horizon, renewable energy now is cost-competitive with conventional power generation technologies. At the state and national levels, renewable energy is benefiting from discussions about energy diversity, reduced pollution, and, in particular, GHG emissions offsets.
In recent years, renewable energy has become the fastest growing source of new power-generation capacity in the United States. The windpower market in particular has shown tremendous growth, increasing at an average 24 percent annual rate between 1997 and 2006, with total generation capacity at 9,149 MW in 2005 and 11,603 MW in 2006. 9
Several factors are driving this growth, including declining wind-turbine installation costs, available financial incentives ( e.g., federal production tax credits), the high cost of competing fuel sources, and significant interest from private investors looking to provide equity and debt financing for renewable energy projects.
Satisfying the renewable portfolio standards (RPS) already established in 28 states could require more than 110 GW of installed capacity by 2030 (see Figure 3) . Additionally, a national RPS requirement would build upon state targets, although continuing policy debates make predicting the outcome impossible.
Meeting future RPS requirements will spur development primarily of wind, solar and biomass facilities. But similar to conventional generation technologies, renewable energy options each face their own challenges. Solar technologies are intermittent and limited by high capital cost. More significant quantities of wind, also intermittent, will require new transmission lines to bring power generated in remote locations to load centers. Biomass is limited by the availability of low cost and reliable fuel sources (see “ Biomass Fuel Foibles ”), while many of the best hydro opportunities already have been exploited. Also, hydro power is often complicated by environmental challenges, making any significant new hydro plant additions unlikely.
Based on the myriad issues facing the electric utility industry, GTCC plants likely will continue to be the dominant form of new capacity over the next 15 years, supplying more than 50 percent of new capacity. This amount probably will be limited by natural-gas cost and availability over the coming years. Renewable energy capacity will continue to grow in importance and could account for 21 percent of new capacity additions or more, based on a national RPS or regulations limiting GHG emissions. Coal will supply a smaller portion (20 percent) of additions relative to recent expectations, with GHG regulations likely paring this percentage even further.
Nuclear capacity could comprise up to 5 percent of new capacity additions, but that will depend significantly on federal loan guarantees or other subsidies to offset the current risk premium.
Given the scenarios outlined above, the future U.S. power industry may find itself heavily reliant on natural gas and renewable energy. Under most scenarios, these technologies offer the lowest risk and are likely to face the least opposition (see Figure 4) .
On the other hand, developments in public policy and generating technologies are difficult to predict. Coal might return as a dominant form of new power-generation capacity, and a nuclear surge might result from budding climate-change policies and growing energy-security