Solving the Challenges of Growing Energy Demand

The electric power generation landscape in both America and the rest of the world is poised to undergo a fundamental transformation in the next several decades. Global energy consumption is projected to rise dramatically by 2035, and the methods by which we generate electricity and the fuels we choose to use will begin to change as well.

Richard Newell, the U.S. Department of Energy’s (DOE) administrator of the Energy Information Administration, testified in February 2011 before the Senate Committee on Energy and Natural Resources, predicting that global energy consumption—including electricity and oil for transportation—will grow by 50% over the next 25 years, with much of that growth occurring within developing nations.

America’s energy demands will also increase, and while the U.S. will continue to rely on fossil fuels for power generation, Newell pointed out that America will increasingly turn toward using cleaner sources of energy such as nuclear power, renewables, and natural gas. Meanwhile, large developing nations such as China will increase their use of coal and other fossil fuels dramatically.

These predictions create some distinct challenges in meeting the rapidly increasing power demands of the world. Among those include managing global competition for limited energy resources and developing alternative and affordable methods for power generation while safeguarding our environment. The approach we take to confronting energy challenges in the next several years will shape our future for generations to come.

Key Solutions: New Technologies and Policies

In the U.S., technology and policy are two key mechanisms that can help us meet these challenges. Maximizing the impact of new, innovative energy technologies, and developing energy and environmental policies that are effective, affordable, and practical, will require significant cooperation between the public and private sectors.

The Babcock & Wilcox Co. (B&W) and other businesses have invested millions of dollars over the years researching and developing solutions to meet the power generation needs of the future. We made this investment because we believe that nuclear power, clean coal technology, and renewable energy sources all play important roles in helping utilities cleanly and efficiently generate and deliver electricity to the grid.

Even though we can foresee the benefits of these clean power generation options, the development and commercial deployment of any new technology is inherently expensive and risky. This is particularly true in the energy business. Support through policy, regulation, and funding derived from the public sector, however, can help mitigate these risks.

For example, several of the small modular reactors (SMRs) receiving attention in the industry are based on proven nuclear technology and have improved designs that more effectively address safety, security, and environmental requirements. Still, it’s essential that companies developing SMRs have a clear path to obtaining regulatory approval through the rigorous Nuclear Regulatory Commission design certification and licensing process, and a sharing in the cost of further development and licensing efforts.

Few U.S. utilities are in a position to shoulder the entire cost as well as the risk to deploy first-of-a-kind commercial applications, such as SMRs or coal-fired generation with carbon dioxide (CO2) capture and sequestration (CCS). Although CO2 capture has been proven feasible in the lab and at limited scale, a full-scale project is essential to showing commercial viability at a reasonable cost. Utilities’ obligations to investors and ratepayers limit the financial and technological risks they are able and willing to assume.

The Importance of Public-Private Partnerships

In the cases of both SMRs and CCS, the success of these programs depends on the willingness of the U.S. government to share in the risk and cost burden to develop, license, secure regulatory approval for, and deploy these technologies. Federal and state governments also have a role in the successful deployment of these technologies through the energy and environmental policies they create.

FutureGen 2.0 is an example of a public-private partnership that will help take a clean energy solution from research to reality. Ameren Energy Resources, B&W, Air Liquide Process & Construction, and the FutureGen Alliance have teamed with the DOE to repower a plant in Illinois, equipping it with oxy-coal combustion technology to capture and store 90% of its CO2 emissions. The DOE is providing substantial support for this project in the form of a cooperative agreement grant, which reduces the capital risk for the developers and makes it more feasible than with private financing alone.

Large-scale innovations like FutureGen 2.0 and SMRs are important to America’s energy future. The knowledge and lessons learned from the development and deployment of projects like these have the potential to benefit utilities and ultimately consumers, thus making public investment a worthwhile economic endeavor.

It is critical that industry and government are aligned and work together to implement clean energy technologies and energy legislation that will ensure energy security, demonstrate environmental stewardship, and drive economic growth. The technologies, policies, and regulations developed from such cooperation will set the stage for addressing energy challenges we face in the future. With sound input from industry, utilities, and the public, a public-private approach can blaze a path to the broad deployment of clean energy and emissions reduction technologies that are both environmentally sound and affordable.

Brandon C. Bethards is president and chief executive officer of The Babcock & Wilcox Co.

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