With little fanfare, most aspects of the U.S. energy system seem to have settled into a fairly stable, predictable pattern. To my mind, we have reached an "energy plateau" likely to persist for maybe a decade or more into the future.
Energy is not now high on the radar screen of the general public, so there is little public pressure for significant change in the U.S. energy system. (Electric utility deregulation, which is government-driven, I discuss below.) The low level of public interest reflects the availability of abundant, reliable, and low-cost energy supplies. In addition, the general public feels that the environment is in fairly good condition in most places, so energy-related environmental concerns have abated significantly. All in all, the U.S. public seems generally happy with its energy system and has focused its attention on much more pressing issues.
Fuels: Expect Current Trends to Hold
Oil. The world oil resource base is widely believed to be large and adequate for many more decades of increasing global demand. Prices are low because a competitive industry has been doing its job well and OPEC has been relatively well behaved (em trends that show every indication of continuing for quite some time.
On the downside, oil production in the United States is declining. Imports have passed the 50-percent level and will certainly continue to increase. Imports drain high levels of capital from the United States, forcing further expansion of U.S. exports to maintain a reasonable economic balance. However, since this issue does not excite the public or policymakers, these trends will likely continue.
Natural Gas, Coal, and Nuclear. Natural gas has emerged as a desirable fuel for a variety of domestic applications. It burns clean, costs little, and the United States has a large domestic resource base, considered adequate for 50 years or more. Gas-fired, combined-cycle power generation has developed into the least expensive, easiest, fastest to site, environmentally attractive choice for new central station electricity generation. Accordingly, a large portion of new electric power generation is gas-fired combined-cycle. Serious interest in synthetic oil and synthetic gas, the darlings of the late 1970s and early 1980s, will have to wait many decades before any revival.
In electric power, generation choices have narrowed to natural gas and coal, another abundant and economic domestic fuel. U.S. coal resources appear adequate for 100 years or more, while modern technology has dramatically reduced coal's environmental problems. Nuclear power is at a standstill for a host of reasons, including high costs, intense regulation, public unease, and our inability to resolve the nuclear waste problem. Unless global warming becomes a critical factor, the role of nuclear power will continue slowly to erode.
Photovoltaics. As renewable energy costs continue to decrease, renewables are being increasingly applied to more and more attractive niche uses. For instance, photovoltaics (PVs) with batteries offer an ideal electricity source in remote locations, especially in underdeveloped countries. However, just because the quoted costs of renewables are approaching the costs of existing electric power generation options does not mean we can look to renewables to supply much of U.S energy needs because the costs are not comparable.
The costs quoted for PVs are the costs of the electricity produced when the cells operate under ideal, sunny conditions. Consumers, however, require their electricity on demand, 24 hours a day, and the cost of reliable, dispatchable, stand-alone PV power to meet that demand can reach 10 or more times the quoted PV power costs. Here's why. First, the ideal sunny conditions that underlie PV costs occur roughly 8 hours per day. At night PVs produce no power at all, so means must be provided to satisfy load demands during long daily periods of no PV generation. Lastly, when it is cloudy, PV power output can drop to 20 to 40 percent of name-plate ratings, again requiring additional means to satisfy electric load requirements.
Storage can provide reliable power at night and when it is cloudy, but storage adds cost. Further, added storage requires additional PVs to charge the storage and maintain the name-plate power level of the original PV array. Since many cloudy days in a row occur at different times in most parts of the country, it is often necessary to multiply the investment in PV cells by a factor of 10 or so to charge the storage during clear days. Thus, the seemingly attractive, quoted PV costs must be increased many fold in most U.S. locations to yield the true cost of reliable, stand-alone electric power. Some argue that conventional power plants could be held in reserve to provide power when PVs operate at reduced or zero power. That idea works in principle, but would increase the cost of power by a factor of roughly two or more, because it forces a costly capital investment to sit idle waiting for periods of clouds or night to provide backup power. Because the public is not likely to accept such cost premiums, stand-alone PVs (as we currently practice the technology) will make a relatively small contribution to national energy needs.
Other Renewables. These arguments apply also to the other intermittent renewables, such as wind and solar thermal. Hydro and biomass electricity, with their built-in storage, have their own particular problems, which will limit their expansion in the next decade or so.
The bottom line? Renewable technologies as we know them today cannot collectively provide more than maybe 10 percent of U.S. electricity production, and I expect even that day will be a long time in coming. These fundamental realities have not been widely recognized and discussed. Many environmentalists and public officials have been oversold and will be disappointed in the years ahead.
Fuel Cells. Decreasing costs due to the development of new technologies, particularly proton exchange membranes, may have poised fuel cells to enter the electric power market as distributed
electricity generators in the next 5 to 10 years. However, because the U.S. electrical power system is so massive, and because distributed generation comes in inherently small packages, it will likely take decades for fuel cells to have a noticeable impact on the U.S. energy system. Notwithstanding these macro effects, fuel cells could cause some important local perturbations on a small scale within the next decade.
Applications: Expect Continued Improvements
The U.S. electric power industry is undergoing dramatic restructuring. Change is already significant and will continue. Some might argue that that situation negates the concept of an energy plateau, but I think not. Restructuring and consolidation will continue to evolve for many years, because the exact form of the new marketplace has yet to be defined, and because government and industry will take time to adapt. The end result is likely to be an agile industry, providing abundant quantities of low-cost, reliable electric power, primarily from gas and coal. While the pain, chaos, and upheaval inside the industry will be considerable, the general public will see little of it and will probably not be very concerned. From the outside, the energy plateau will appear little changed.
Transportation. On the transportation side, oil-based products will continue as the fuels of choice for air travel, heavy transportation, and automobiles. For those applications, oil products are convenient, economical, and safe. Thankfully, they will be with us for quite some time, because worldwide petroleum resources are enormous. Natural gas is making some inroads in transportation, but it seems unlikely to capture a significant portion of the market in the next decade because of cost, convenience, and the sheer size of the transportation fleet.
Turning to personal transportation, electric vehicles (EVs) are generating considerable debate. Some state governments are considering requiring specific levels of EV sales at various times in the future. Nevertheless, EVs will not become a significant factor for a decade or more because 1) batteries do not yet have the cost and performance that most of the public demands, 2) the internal combustion engine can still be further improved; and 3) the pressure to introduce EVs comes primarily from government mandate rather than marketplace pull. What we have is a classic battle wherein some well-meaning people are trying to force an uneconomic option into a market dominated by economics and pragmatists.
In another area of personal transportation, the government is cooperating with the Big Three
automakers in the so-called Partnership for a New Generation of Vehicles (PNGV). Their goal is a mid-sized vehicle with three times the fuel economy that exists today. The participants are making good progress, but production prototypes are not due until 2002, so widespread use will not come for many years thereafter, assuming success. Incidentally, the preferred approach seems to be an electric-drive, hydrocarbon-fueled, hybrid power system with some kind of internal combustion engine to charge and possibly augment electrical storage.
End-use Technologies. Efficient energy end-use technologies will continue to evolve at a moderate rate because improved economics and environmental pressures will continue to make them attractive. New electrotechnologies for existing or new applications will continue to make steady inroads, replacing nonelectric systems because of attractive economics, convenience, and low environmental impact. Increased electrification should continue to evolve for the same reasons. While important, these efficiency improvements taken together will exert no major effect on the nation's energy system in the next decade, because the system is so massive and the drivers are relative mild.
Challenges: Expect No Sudden Shifts
The biggest possible challenge to the relatively stable situation described above is the possibility of global warming. Because the scientific phenomenon is unbelievably complex, many scientists do not expect real clarity for five to 10 years. If the problem is real, the political complexities may make the science look easy. Renewables as we know them today cannot make a big contribution to emissions control because of their inherently high costs. More efficient end-use technologies could clearly help, but would require a decade or two to reduce emissions by 10 to 20 percent. And that's after a government mandate, which will be a long time coming. Real change in greenhouse gas emissions would also require the United States to turn to its only available, reasonably economical, carbon-dioxide-free energy source (em nuclear power. That won't happen quickly, in part because nuclear power opponents will not reverse their positions easily.
The United States will not be the world's primary source of greenhouse gas emissions either; real progress will require the rest of the world to change. Other developed countries could agree and could afford to make the required massive changes, but less-developed countries will not be able to bear the related costs. Since developed countries are unlikely to foot the bill for their less fortunate counterparts, global progress will remain incredibly difficult. All in all, expect "no measurable change" in the U.S. energy system due to a possible greenhouse gas problem for quite some time, surely not in the next decade or so.
The U.S energy system appears to have reached a plateau where a number of technologies and fuels are likely to remain dominant for a decade or more into the future. This situation is dictated by economics, environmental considerations, convenience, reliability, regulation, and public policy. Unless we have a major shock of some sort, the competitive market will probably continue to dominate energy decisionmaking, and we can expect only modest evolutionary changes in the U.S. energy system for a decade, maybe longer.
On a finer scale, our energy system will continue to provide tremendous business and technological opportunities. A system so immense can make small changes very profitable. Change masters will continue to improve the fortunes of existing companies and develop new energy enterprises. It may not be a revolutionary time in energy, but it will be exciting nonetheless. t
Dr. Hirsch has been involved in energy R&D for roughly 30 years (em in fission, fusion, renewables, geothermal, downstream petroleum, synthetic fuels, upstream oil and gas, and broad-scale electric power in government, industry, and the nonprofit sector. He is a member of the Energy and Environmental Systems Board of the National Research Council and was involved in a wide range of Council energy technology review panels. He is currently president of The Energy Technology Collaborative, Inc. in Washington, DC, a competitive-edge R&D brokerage for electric utilities.
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