Power Industry Sees Pigs Fly

“When pigs fly” is a figure of speech used to express disbelief that a particular situation will ever come to pass. For the power industry, several recent and emerging developments are the equivalent of pigs flying. As January is our forecast issue, this is a good time to see where those pigs are taking flight. Given the number of sightings and limited space in print, each can only receive brief mention, though many have been covered in recent POWER print and online stories.

Renewables Win on Price

The International Energy Agency’s World Energy Outlook 2014 projects that renewables (including hydro) will supply nearly half the growth in global demand through 2040, while the U.S. Energy Information Administration’s Annual Energy Outlook 2014 foresees 25% of the overall 29% U.S. demand growth between 2012 and 2040 being supplied by wind and solar.

When pigs fly? Consider that the southern, conservative state of Georgia is now the fastest growing solar market, according to a Pew Charitable Trusts report. As recently as 2011, Lee Peterson, an Atlanta advisor to renewable energy projects, was quoted as saying, “we’re dealing with $500-million solar projects that have no chance of coming here because of systemic problems that keep Georgia from participating in the 21st-century economy, which has renewable energy as a major component.” Then, in 2013, the Georgia Public Service Commission (whose five elected commissioners are all Republicans) directed Georgia Power to add 525 MW of solar power between 2013 and 2016.

As for the larger trend, a Nov. 24 New York Times feature noted that several utilities have signed power purchase agreements for solar or wind at prices lower than natural gas. Even historically coal-heavy American Electric Power tripled the amount of wind power it had originally sought for Oklahoma (which does not have a renewables mandate) “after seeing how low the bids came in last year.” Even without subsidies, a study by investment banking firm Lazard showed that “the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kilowatt-hour on the low end and coal at 6.6 cents. Without subsidies, the firm’s analysis shows, solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.”

Storage Matures and Marries DG

For decades, solar and wind proponents have argued that variable resources just need affordable energy storage to make them as reliable as conventional generation. Today, technology improvements, policies that have developed a market for storage, and prices roughly half of what they were five years ago are making storage a desirable partner for distributed generation (DG). Some industry analysts even see storage ousting gas peakers by 2017 or 2018. I’ll admit I said the equivalent of “when pigs fly” when I first heard that claim, but when I saw in November that Southern California Edison signed contracts for more than 260 MW of storage resources and Oncor said it wants 5 GW of storage for Texas (which has no storage mandate) to lower residential rates, I reconsidered.

The Middle East Goes Low Carbon

Although the Middle East has been synonymous with oil and gas resources, several countries and emirates are pursuing zero- and low-carbon projects for both energy security and environmental reasons. Just two examples: Saudi Arabia plans to build 16 nuclear plants in 20 years, and Masdar (Abu Dhabi’s renewable energy company) has an agreement to build the first large-scale wind farm in the Gulf Cooperation Council, a 50-MW facility in Oman, and is developing a 117-MW wind farm in Jordan. Possession of a particular energy resource no longer necessarily determines generation choices.

China Commits to GHG Limits

Industry pundits have long said China would never limit coal combustion because it cannot grow its economy except by using more coal. But if you’ve been reading our coverage of China, you’ll have noticed major developments in nuclear, wind, and solar generation in pursuit of lower greenhouse gas (GHG) and other fossil plant emissions. In November, China agreed to cap carbon emissions by or before 2030, set a goal of 20% non-fossil energy fuels by 2030, and announced a cap on coal consumption. Coal accounted for 66% of China’s energy consumption in 2013 but is set to total less than 62% by 2020.

Zero-Emission Fossil Plants Take Wing

The SaskPower Boundary Dam project I wrote about in our November issue is designed to capture 90% of carbon dioxide and 100% of sulfur dioxide. That’s not zero emissions, but it’s getting close. In the wings is an actual zero-emissions gas-fired plant to be built in Texas by NET Power using technology based on the Allam cycle. A supercritical CO2 turbine is being developed by Toshiba Corp. to use the captured gas for power generation. NET Power says the system will match or beat the current cost of electricity from natural gas while significantly reducing, or eliminating, water usage compared to conventional plants.

Coal Users Ask for Regulatory Intervention

Given the fossil fuel industry’s antipathy to federal regulations, you might think that generators would never call for federal regulatory action, but they have.

In November, prompted by concern about winter fuel supplies, the Western Coal Traffic League, representing coal customers and supported by major utility trade groups, wrote the Federal Energy Regulatory Commission asking for hearings on delayed coal deliveries and low stockpiles. Rail traffic is on the rise for traditional freight like grain and coal but also for crude oil. Some large coal customers even called for the federal Surface Transportation Board to force railroads to prioritize coal shipments over others.

More Takeoffs Ahead

If these developments come as a surprise, it may be because the pace of change everywhere has accelerated. These figurative flying pigs are getting off the ground largely thanks to technology innovation, though some also have benefited from policy support. That doesn’t mean conventional generation will disappear, but it does suggest that we should get used to seeing pigs fly. ■

Gail Reitenbach, PhD is POWER’s editor.