Energy Policy is putting both Electric Reliability and the Economy at Risk. Frank Clemente Ph.D. Senior Professor of Social Science & Energy Policy Penn State University [email protected] 1. Reliable Electricity and the Economic Growth:.
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Energy Policy is putting both Electric Reliability and the Economy at Risk
Frank Clemente Ph.D.
Senior Professor of Social Science & Energy Policy
Penn State University
“Electricity use and gross national product [are] strongly correlated. The relationship … is so important that it should be considered in developing … energy and economic policies … to promote electrotechnologies … to lower the real cost of electricity ” National Academy of Science, 1986
(a) limited, (b) expensive and, (c) vague
By 2016, only one in four states will be in a reliability region meeting NERC’s minimum acceptable standards
Number of contiquous states in reliability regions where available capacity margin meets minimal accepted level reliability -- 15%
The Rising Tide of Electricity Demand in the U.S.
Source: EIA, 2008
“North American gas production is inadequate to meet demand. We are in competition with other importing regions for LNG supplies. And we are not predestined to prevail in that competition”
–Joseph Kelliher, Chair of FERC, 2007
NG has 4 times the price and 20 times the price volatility of coal
Using NG for electricity drives up the price of both electricity and NG for families and businesses.
North American NG production has peaked. Thus, LNG imports from risky sources (e.g. Russia, Iran) must balance future supply—at high cost.
From 1993-2007, the amount of NG
for electricity increased 92%
The U.S. Bets On A Brave New World
Where new supply is projected to come from 2006-2019
Where new NG supply came from 1993 - 2006
“Importing LNG from abroad opens the U.S. fuel supply to the global market and all the economic and political risks associated with it” –NERC, 2007
Emerging Competition for LNG
Reality Sets In: The Steady Decline in
EIA Forecasts of U.S. Imports of LNG in 2008
Year Forecast Made For 2008 Imports
The Long Run Price of NG/LNG
in a Peak Oil World
Source: Adapted from "The Relationship Between Crude Oil and Natural Gas Prices," Hartley et. al, Rice University, 2007
Actual 2007 Consumption for Generation
EIA’s forecasts for 2007 were off the mark every time in the same direction. Clear evidence of systematic bias.
“Disruptions in the supply of natural gas could have a significant impact on the availability of electricity”
Coal Is the Cornerstone Of Electricity Generation In The U.S.
Coal has Buffered Millions of Consumers from Even Higher Electricity Prices
When California’s Daily Peak exceeded 45,000 MW, in no case did wind provide more than 325 MW despite rated capacity of 2500 MW.
Wind Generation’s Performance During 2006 California Heat Wave
* Adapted and estimated from Dixon, U.S. DOE (2006)
High Level Waste management, transportation and storage
Entrenched Opposition at both national and local levels
Supply chain issues
(a) availability and cost of fuel,
(c) global competition for nuclear grade components
4.Societal inertia, litigation and bureaucratic creep –we have not built a nuclear plant for decades.
New Reactors which will come online by 2015
Source: World Nuclear Association
Lest We Forget :
US Coal Reserves vs. Oil and NG Reserves
Source: EIA, 2008
Source, Platts, 2007
*Note: The Platts survey is the most recent available but does not include many recently proposed NG Plants or many recently cancelled coal plants
Actual 2008 Price of NG for Generation
–Joseph Riva, Colorado School of Mines
-Credit Suisse Bank
loom on the horizon” (AP, 6/08)
second prices this summer” (WSJ, 6/08)
in electric bills this summer” (AP,2/08)