Response from Readers of EnergyBiz

We should be clear that the need for new power plants is a driven not by a need for capacity, but fuel hedgi ng. Since the early 1990s, we've built lots of new gas plants while simultaneously seeing the capacity factor on the US gas-fired fleet collapse, down to just 10 - 20%. New load during the same period has been served by driving up the capacity factor on the coal and nuclear fleet, which is now getting very close to the practical limits given the need for periodic maintenance (e.g., 80 - 90%). In effect, we have served our new load growth over the last decade by adding the equivalent of 300+ GW of new coal and nuclear capacity, but done it by driving up capacity factor -- and not insignificantly, avoiding new permitting hassles. This trend is now just about maxed out, so we have a devil's choice if we only focus on the supply side of the equation: We can either start driving up capacity factor on the gas fleet (with resulting increases in gas demand, prices and ultimately power costs), or else we can fall in love with coal and nuke and ease up on the permitting (with resulting politic al and environmental challenge).

Far and away the best option -- and the one that is too often overlooked -- is to focus more on the demand side of the equation, both through traditional energy efficiency programs and through on-site generation. According to recent estimates from ACEEE, "energy efficiency (defined as the decline in energy intensity) has provided almost two-thirds of the increase in the nation's 'energy supply' since 1990". Continuing regulatory barriers to any measures that reduce utility kWh sales make the vast potential for further efficiency gains largely unrealized - especially for on-site generation. With no good options on the supply side, we ought to be focusing on those demand side options that have the added benefit of being economically and environmentally beneficial.

Sean Casten
Turbosteam Corporation

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