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CEO FORUM: Dealing with Disruption

Leaders adapt to strategic shifts in the utility landscape.

Fortnightly Magazine - June 2010

of any new technology tends to be very expensive, and the price comes down after the 10th or 12th plant. Certainly the learning process with the first several units will translate into cost savings for customers later on.

In Mississippi we’re working to build a coal-gasification plant. We went through the process of estimating need, then the decision to build IGCC [integrated gasification combined cycle] with technology that we perfected at our facility in Alabama, for state-of-the-art gasification on low-grade fuel. The DOE has been very supportive of that project with funding. We’ve proposed to capture CO 2 emissions and use it for enhanced oil recovery. The Mississippi Public Service Commission decided we should go forward and issued a certificate of need. However we don’t like the original draft of the order and at this moment we’re suggesting some changes. Hopefully we can get it committed and move forward.

We’re also working on other renewables. You may have read about our [100-MW wood waste-fired] biomass project in Nacogdoches, Texas, with offtake contracted to the city of Austin. Also, we have a 30-MW solar photovoltaic plant in New Mexico in partnership with Turner Renewables.

I think renewables will be important because the public wants more renewables in some form. As we educate them about the cost and scalability of renewables, they will have to understand that if we’re faced with a 20-percent increase in demand over the next 20 years, we’ll have to build something much larger; witness early decisions about new nuclear, coal and renewable technologies. Renewables will play a part, but even in a very aggressive deployment it will be a small portion of the overall supply.

We’re an ongoing major contributor to R&D in these areas. We do as much or more than almost anybody in the industry. We manage more than $500 million in technology research. Something we’re proud of is having DOE designate Southern Company to manage and operate the National Carbon Capture Center [near Birmingham, Ala.].

 

Spence, PPL:  The main things that will drive investments in supply are the price of natural gas and the policy landscape. Gas is on the margin and sets the price of power 60 percent of the time. If you have a healthy gas price, and you have legislation around climate change and renewables, that will dictate how people invest. There’s a lot of uncertainty around energy policy, so it’s a struggle.

In the long term, new supply investments also will depend on how the economics work out for new nuclear and renewable energy development.

 

Boston, PJM:  Transmission and storage capacity are key issues for energy resource planning. If you like wind power, you have to love transmission and storage. I like the fuel price on wind, and those resources are coming in very fast with production tax credits. But we need storage and we’ve been working to convince policy makers that in order to continue growing renewable resources, we need storage technology and a system that makes it work. Storage ties the whole resource plan together.

In addition to

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