Two Washington events this week highlight that innovation will play an essential role in achieving energy and environmental progress.  Though they also underscore that predicting the future is perilous.

Michael Howard, Senior Vice President of Research and Development at the Electric Power Research Institute, was busy this week in briefing the D.C. community on the findings of the 2009 Update of EPRI’s PRISM and MERGE Analyses.  The analyses seek to assess the feasibility of different technology areas in reducing carbon emissions and identify the economically optimum technology portfolio to achieve emissions reduction goals.  Howard made a point of stressing that decisions made over the next decade will shape the electricity future of 2050.

According to the PRISM analysis, advances in efficiency, renewables, nuclear, fossil energy, carbon capture and sequestration, electric transportation, and electro-technologies can result in a 58% reduction of CO2 emissions relative to 2005 levels in 2030 if EPRI’s assumptions for future technological achievement are realized.  Some of these assumptions, such as 90% CO2 capture for all new coal and natural gas plants built after 2020, will be considered big leaps by many.  Under this scenario CCS will account for an 11% reduction in 2030 CO2 levels.

EPRI also foresees that electric vehicles will gain considerable market share and contribute significantly to reducing carbon emissions: accounting for 40% of new vehicle share by 2020 and reaching 100 million PHEVs in the automotive fleet by 2030.  This would result in reducing CO2 emissions by 9.3%.

Energy efficiency would also be indispensable.  EPRI estimates that efficiency gains can reduce emissions by 6.5% in 2030.  Smart grid enhancements will also produce transmission and distribution efficiencies.  In its MERGE analysis EPRI emphasizes that aggressive energy efficiency will be required to meet CO2 reduction goals.  This analysis evaluates the economic consequences of proposed carbon reduction policies by examining two scenarios.  Both scenarios involve emissions targets of 80% below 2005 levels by 2050.  In the “limited portfolio” advancements such as CCS, expansion of nuclear power and electric vehicles are not realized, while in the “full portfolio” they have been achieved through extensive research, development and demonstration. 

EPRI finds that development and deployment of the full portfolio of technologies will achieve CO2 reduction goals at a considerably lower economic cost.  According to Howard’s presentation, solar power will not be a significant part of the U.S. energy portfolio in this scenario because it will be more expansive relative to CCS and other technologies, another assumption that many will take issue with.

The EPRI vision is not the only vision of our energy future.  An event the next day convened by The Energy Conversation envisioned energy storage potentially as a key element of America’s future energy policy.  Storage is not prominent in EPRI’s analysis or in many other proposals in Washington.  However, the presentation of Dr. Imre Gyuk, Director of Storage at the U.S. Department of Energy, offered convincing grounds for serious consideration of its future role.  Dr. Gyuk discussed some major storage projects already underway, such as the world’s largest battery in Anchorage, Alaska, which at 40 MW is a more effective reserve than back-up generation.  He also provided an overview of other projects in places such as New York, West Virginia, Ohio, and Indiana.  According to Gyuk, energy storage can enable increased asset utilization by storing power during off-peak hours when demand and prices are low and providing it during peak hours when it is most needed.  This helps to regulate the system and is a cleaner alternative to additional generation. 

Storage can also aid the wider use of alternatives that are intermittent like wind and solar.  Power generated when the wind is blowing and sun is shining can be stored and transmitted when those resources are not available.  Hyuk ended his presentation by stating that energy storage is a disruptive technology whose adoption will cause a paradigm shift in the energy sector.

Arnie Quinn of FERC was also a part of the panel.  He mentioned that FERC staff are talking to stakeholders and identifying regulatory barriers to storage competing in wholesale electricity markets: such as difficulty in market planning and modeling for storage, and trouble in placing value on storage.  Ken Lutz, with the Office of Senator Ron Wyden, also discussed the Senator’s legislation, S. 1091, the STRORAGE Act, which will provide incentives for the deployment of energy storage systems.

Fostering innovation and a diverse energy portfolio will indeed be critical to finding solutions to our energy challenges, but the divergent presentations this week also underline that government policy should not try to pick the winners.  That was also a message at the Reform Institute’s April national energy symposium.  A forthcoming post-symposium report will examine the issue as well.