My first job in the power industry focused on evaluating the impacts of demand-side management (DSM) programs on the efficiency of electricity usage, overall electricity demand and the economics associated with both. At that time, power companies were not particularly thrilled with the idea of programs that promoted less power consumption.

Fast-forward 25 years: DSM has become a large and growing industry. Today, both the power industry and regulators are pinning their hopes on DSM as a means of maximizing the utilization of existing plants and minimizing the need for new plants. Electricity providers are promoting DSM in concert with new regulatory arrangements that provide financial incentives to increase the efficiency of electricity use, and shift loads from peak demand periods to periods of lower demand. While DSM is essential for addressing our Nation’s increasing energy demands, I question having an exclusive focus on the demand-side of the electricity meter. Cost-effective solutions exist for improving efficiency, reducing emissions, and increasing the capacity of our existing fleet of fossil-fired power plants.

Everything Has Changed
How did power producers become advocates for selling less electricity? To summarize the situation: “everything has changed.” Fuel prices have increased dramatically.  New environmental regulations affecting NOx, SO2, mercury, and most recently CO2 have been put into place.  These developments – what NeuCo refers to as “the perfect storm” – not only mean that the costs of operating existing fossil-fired power plants has skyrocketed; there are now also difficult obstacles to building the new generation required to meet our Nation’s growing demand for electricity.
Clean and efficient gas-fired combined cycle plants (CCCTs) were considered the de facto new generation source in the late 1990s and the first half of this decade. But dramatic price increases for natural gas rendered even the most efficient CCCTs economically infeasible, and “clean coal” became the favored source of new generation. Dozens of new pulverized coal plants were planned throughout the U.S. – all designed with state-of-the-art post-combustion emissions removal equipment for NOx, SOx, and Hg.

No sooner did the first few of these coal-fired plants get under construction when a new set of circumstances arose, which together threatened both the economics and regulatory approval of new coal-fired plants. The biggest change was the acknowledgement that climate change was real and CO2 from coal-fired power plants was the single largest culprit. While federal legislation is still being debated, state and regional cap & trade regimes are about to be implemented affecting existing and new power plants in at least 31 states. Increases in coal prices have been exacerbated by tremendous increases in the costs for materials and craft labor, in part driven by dramatic increases in electric power needs in developing countries such as China and India. As a result, many new coal-fired plants have been cancelled or put on hold.

No Clear Path for Meeting Demand
Power providers, regulators, and all of us electricity consumers are between the veritable rock and a hard place. Electricity demand continues to grow. Reserve margins are diminishing at an alarming rate. There is no clear path for keeping up with demand growth and continuing to provide affordable reliable electric power upon which our economy and way of life depends.

Opinions vary, but include reviving the nuclear power industry and making massive investments in renewables. Any astute observer understands that building 40 gigabytes of nuclear plants to meet projected electricity demand growth over the next 25 years is a pipe dream, given the shriveled capacity of the nuclear supply chain, and that’s even if the political hurdles could magically be overcome.  Due to costs, FutureGen – a planned zero emissions gasified coal combined cycle plant with CO2 capture and sequestration – has been abandoned by the DOE and the industry coalition that planned to demonstrate it.  While hopes are high about the slipstream scale chilled ammonia CO2 removal technology now being field tested on existing pulverized coal plants, sequestration is more difficult and involves many more unknowns.   

“Supply-Side Management”
The power industry and regulators are pinning hopes on DSM as a means of maximizing the output of existing plants and minimizing the need to build new plants. But I wonder about the exclusive focus on the demand-side of the equation, especially when cost-effective solutions exist for improving efficiency, reducing emissions, and increasing the capacity available through our existing fleet of fossil-fired power plants. It is clear we need every mechanism available to meet the challenges that loom ahead.

Power providers and regulators should embrace contemporary optimization technologies as vigorously as DSM. Accordingly, I am coining the phrase “supply-side management” (SSM) as a means of promoting awareness of the optimization tools that can simultaneously increase efficiency and capacity, while also reducing emissions and/or the costs of operating emissions control systems such as SCRs, SNCRs, FGDs, and mercury removal technologies.

www.neuco.net

www.theoptimizationblog.com