US utilities see future for solar and wind
Feb 23, 2010 - Renewable Energy Focus.ComWind energy projects are underway or planned by 79% of utilities in the USA within the next five years, while solar energy is planned by 73% within that time horizon.
"Wind and solar are the leaders in sources that will satisfy renewable energy portfolios,” says Black & Veatch in its annual survey Strategic Directions in the Electric Utility Industry Survey.
“With the cost of wind and solar generation in most cases still being higher than the cost of base generation, our respondents see renewable energy costs as the major barrier to significantly increasing renewable generation.”
The survey polled 329 participants, of which 147 were investor-owned utilities (IOU), 78 were public utilities (PPU) and 104 were non-regulated generators, architects, engineers, etc. This fourth annual survey was conducted in September 2009, and Black & Veatch notes the self-selection bias makes it impossible to provide a statistically valid error rate.
Industrial and commercial sales for many utilities have been severely eroded by the economic recession, and only one-quarter of respondents think power consumption in their area will grow by more than 1.5% annually over the next decade. Nuclear was selected as the generation technology that is best suited to help the USA meet environmental standards, followed by wind and natural gas.
Wind and solar are popular
Wind power projects are underway or planned within the next five years by 79% of respondents, with solar technology underway or planned by 73% within that period.
“Integrating the growing wave of renewable generation - most of it intermittent - also raises reliability issues,” the report explains. “Generation flowing out of wind and solar projects can surge or drop by large percentages in short order. Sometimes it’s not there at all.”
“As renewable generation capacity multiplies and accounts for increasing shares of the regional resource mix, the integration requirements become more onerous,” it adds. “Integrating renewables in real-time operation poses some tricky challenges, with larger needs for fast response reserves.”
Better short term forecasts of renewable generation such as wind and solar would help and, although the electricity industry is up to the challenge, “new solutions don’t have the same reliability comfort for utility managers as the tried and true,” it notes.
The increasing penetration of small rooftop solar electric systems is helping to address reliable system operation but electric vehicles could be a growing generation resource (and load) in coming years.
“No doubt inspired by doing the right sustainable thing, as well as considerable regulatory and political pressure, utilities have adopted renewable generation resources in lieu of carbon-based generation” with an emphasis on wind, solar and biomass for both PPUs and IOUs.
Utilities list their problems
Capital spending on new electric infrastructure has declined for two years in a row, for the first time since the 1930s, and generating plants are the asset group in greatest need of replacement, the respondents agree. Information technology systems follow close behind, reflecting the priorities placed on the Smart Grid and the need for improved security against cyber attacks that have crippled power grids in other countries.
Carbon emissions remain as the dominant environmental concern for the power industry, with water supply in second place. When asked if there is a future for coal generation, 75% said yes when fiscal realities are fully considered.
A majority of respondents expect some form of carbon legislation to be in place by 2012 in the USA, but 70% do not favour the cap and trade system in current legislative proposals. Also, 52% of respondents believe the USA cannot afford carbon legislation.
“Utilities are facing increasing demands to spend more money on basic infrastructure, energy efficiency, the Smart Grid, and cybersecurity. Their expected leading role in curbing carbon emissions would hit utility costs very hard,” says Bill Kemp of Black & Veatch. “Electric utilities will be hard pressed to satisfy both customers and investors over the next few years.”
Black & Veatch is an engineering and construction company that specialises in infrastructure development in energy, water and telecommunications. Founded in 1915, it has US$3.2 billion in annual revenue from 100 offices around the world.
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