Kevin Sullivan, Vice President, KEMA

The road to a sustainable energy future is paved with profound and unpredictable change. Of these changes, one of the greatest sources of uncertainty— at least in the US—is the direction of carbon policy.
Over the last few years, the prospect of comprehensive federal climate legislation has evolved from highly unlikely to reasonably probable, with the potential for commensurate far-reaching effects on the US electric power industry.
Federal climate legislation has the potential to signifi cantly alter the regulatory and business landscape for energy utilities. A carbon cap and combined effi ciency and renewable electricity standard, favored by many legislators, will create signifi cant new compliance costs for energy producers. There is also support for major cost-containment features, including free allocation and offset substitutions for allowances, further contributing to potential growth in utility compliance costs.
Innovation: New Technology and Ideas Global ambitions to build a clean and renewable energy future have fueled technological innovations leading to new options for repowering or refueling with diversifi ed fuel sources.
As these innovations are being studied and tested, new ideas for planning and managing energy technologies are also gaining favor. Utility executives are beginning to take a portfolio approach
to planning and managing their generation assets, enabling them to weigh and balance the capital costs, carbon impacts and operational effects of new technologies, and build a long-term plan to mitigate the risks associated with any future carbon policies.
As smart grid technologies and innovations in energy storage take hold, and as renewables become cost competitive with traditional generation sources, the opportunities to mitigate carbon and optimize a resource portfolio become greater. The benefi ts of integrating renewables, storage and smart
grid technologies into a portfolio gives resource planners and executives more options and fl exibility as carbon control and environmental policies and standards evolve.
Portfolio optimization and risk evaluation are at the heart of defi ning carbon and environmental strategies. Integrated resource planning is increasingly becoming a part of the utility roadmap through the yet-to-be-defi ned carbon future.
A portfolio approach can help build a better asset investment and resource planning strategy—from fi nancing a renewable portfolio, to power purchase agreements, to owning and developing electricity is equally scant. Part of the challenge facing global sustainability is that billions of global citizens have an insatiable demand for these scarce natural resources to fuel their livelihood and economic development. Meeting this demand will put further strain on the earth’s resources as the global population reaches 9 to 10 billion by the year 2050.
Therefore, effi cient and smart use of world resources is paramount for sustainability. Effi ciency gains can be made by smart production, delivery and consumption of water, energy, information and food. The underlying processes for each commodity are tightly coupled, such that the impact of their interdependencies on global sustainability must be studied carefully.
Worldwide, more and greater levels of intelligence for sensing and reacting are embedded in our critical infrastructures with the express objectives of increasing effi ciency, operational performance, security, economics and bringing more value to customers. If met, these objectives will contribute to sustainability.
However, it is important that the individual contributions, positive and negative, of each subsystem be investigated and quantifi ed. For example, while information and communications technologies (ICT) are enabling the development of smart grid, smart transportation and smart water systems that can play a signifi cant role in enhancing sustainability, the ICT sector can also lead to an increase in GHG, according to the report “Smart 2020: Enabling the low carbon economy in the information age” by The Climate Group and the Global eSustainability Initiative (GeSI).
In every corner of the world, countries are investing in enabling technologies as part of their strategy for sustainable development. This is perhaps most apparent in the case of smart electric grids which have seen signifi cant investment from both the public and private sectors. Similarly, the world’s transportation sector is about to undergo major transformation in response to the anticipated mass-scale adoption and use of electric vehicles in coming decades. On the energy supply side, investment in renewable energy, especially wind and solar, have surpassed those for any other form of electricity generation. One clear piece of evidence that wind energy has come of age was the attendance of over 20,000 people from around the world to the American Wind Energy Association’s WindPower 2010 conference.
In our quest to achieve sustainability by developing smart infrastructures, let us invest the necessary time and resources to push our imagination and try to predict and defend ourselves against potential Black Swans—those surprising events which could make life on this planet more unsustainable for us and future generations. One thing is certain, as complexity looms in our world today due to virtualization and tighter integration of many network systems, corporations, institutional investors, regulators, researchers and engineers must continue to seek out Black Swans before they spring upon us. While the 20th century was much about the cold war and the race to the moon, the 21st century is about how fast we can transition to the path toward a sustainable future. Who wins that race will have the competitive edge and be the global leader of tomorrow.
Now is the time to act decisively to mitigate and adapt to climate change. Sustainability is indeed a global imperative.
In our quest to achieve sustainability by developing smart infrastructures, let us invest the necessary time and resources to push our imagination and try to predict and defend ourselves against potential Black Swans—those surprising events which could make life on this planet more unsustainable for us and future generations.
It All Begins With A Nomination... We are pleased to announce the Call for Nominations for the 12th Annual Platts Global Energy Awards. Over the past eleven years our goal at Platts has been to honor and recognize those that have transcended the status quo in the name of excellence in leadership, innovation and performance. In 2010 we will continue that tradition.
 

Curve Ahead:
Navigating Carbon
Uncertainty on the Road to Sustainability
Kevin Sullivan, Vice President, KEMA