solar

Marcellus shale gas-drilling site in Pennsylvania.
Photo: Nicholas A. Tonelli.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Prediction is very difficult, especially if it is about the future.” Niels Bohr, the Nobel laurate in Physics, is credited with this line. It is always possible to develop a model that fits the past, but much more difficult to have the same model to correctly forecast the future.

Recent analysis by EIA (Energy Information Agency) and Lazard find that the lowest cost power generation is natural gas, wind and solar. It looks clear, going forward, what to invest in, but before doing so, there may be some lessons to be learnt from the past about making predictions.


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What looked like a start of a U.S. nuclear renaissance in 2008, when the first new nuclear units to be built in 30 years were announced, now, 9 years later, looks like a renaissance on hold.

The supplier of the four units, Toshiba/Westinghouse is in bankruptcy. Two units at Summer, South Carolina, have ceased construction and the owner consortia, SCANA/South Carolina Electric & Gas (55%) and Santee Cooper (45%) has announced they are abandoning the project. The two units at Vogtle (Vogtle 3 and 4), Georgia, will continue to be built with the owner consortia Southern Co./Georgia Power (45.7%), Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton Utilities (1.6%) taking over the completion. However, instead of the originally planned start of operations in 2016/17 at a cost of $14 B the start of operation has moved out to 2021/23 and at a cost estimated to reach $28-29 B.



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In the electric industry, baseload refers to the minimum level demand over 24 hours. The baseload is generally about 30 – 40 % of the peak load. Traditionally the baseload has been served by low cost power generators, operating steadily and continuously.

Coal fired power plants, nuclear, and (depending on geography) hydro have been the backbone of baseload generation. Operating in “baseload mode” is more or less a prerequisite for nuclear and coal-fired power plants. That is because of their high fixed costs and need to run due to long start-up times and limited ability for load-following.

This paradigm has started to change.

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The U.S. electric industry is undergoing an unprecedented transformation, in terms of magnitude and speed, from a dominance of coal to more natural gas, wind and solar.

Natural gas fired combined cycle generation has among the lowest levelized cost of electricity (LCOE). Between 2006 and 2014 natural gas prices fell by 34 %. Meanwhile the average retail electricity price rose by 17%, which is about the same rate as consumer price index during this period. Only one state, Texas, saw a significant decrease, 13 %, in retail electricity prices.

It triggers the question: Do lower energy costs also mean lower electricity prices for the consumers? The question is straightforward. The answer is more complicated. It is “Yes and No”. Let’s elaborate by looking at available data for the last 10 years.

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The German Energiewende is the largest undertaking in the world to transition to renewable energy. Rightfully it is getting a lot of attention.  There already many lessons to be learnt of what to do and also some of what not to do.

Smaller in magnitude but also well worth paying attention to are two American versions of Energiewende. One is a state, Hawaii, and the other is a city, Fort Collins, Colorado.



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