By Magen Howard

Tighter government regulations—and the high cost to comply with new rules—may signal lights-out for many of the nation’s older coal-fired power plants at a time when forecasters predict energy demand will eventually outpace supply.

“Americans could see power shortages by the end of the decade if new generation sources don’t materialize,” cautions Glenn English, CEO of the National Rural Electric Cooperative Association, the Arlington, Virginia-based service organization of the nation’s more than 900 not-for-profit electric cooperatives.

To meet the challenge, public utilities are using energy-efficiency measures and innovative technology to reduce electric demand. But these measures will go only so far. Eventually, the need to build new generation to keep the lights on will take center stage.

An Investment of Time and Money

The North American Electric Reliability Corp.—the bulk power grid watchdog for the United States and most of Canada—estimates the country will need to build 135,000 megawatts (MW) of new generation by 2017 to meet demand. However, facilities on the drawing board will deliver only 77,000 MW. That will leave an energy gap.

Planning, building and launching a baseload power plant is no small feat. Even if the permitting process is noncontroversial—meaning there are no significant objections to a facility—a coal-fired generating station takes six to seven years from start to finish, a combined cycle natural gas plant three to four years, and a nuclear plant 10 years at minimum, says John Holt, NRECA senior manager for generation and fuels.

While wind farms and large solar projects often require less time to complete—about two years total—they are handicapped by intermittency issues.

Even with a good location, wind generation is available no more than 40 percent of the time. It seldom operates during periods of peak consumption: hot, humid summer weekday afternoons or weather below minus 22 degrees Fahrenheit.

Solar systems operate only during daylight and are affected by cloud cover.

Wind and solar resources must have back-up “firming” generation—such as natural gas plants—ready to come on-line when the wind stops blowing or the sun stops shining. That adds extra expense.

Federal Rules Impact Energy Prices

U.S. Environmental Protection Agency rulemaking will affect electric bills and put affordability and reliability at risk.

According to a report commissioned by NERC, four pending EPA rules would place new and costly hurdles on power generators. In fact, regulations impacting cooling water intake, coal ash disposal, interstate transport of air pollutants and using Maximum Achievable Control Technology to curb emissions from power plants could force electric utilities to retire or retrofit 33,000 MW to 70,000 MW of generating capacity by 2015.

A fifth hurdle—reducing power plant emissions of carbon dioxide—presents an even greater challenge since no viable, commercially tested solution exists.

The Electric Power Research Institute, an electric utility research consortium, contends if EPA designates coal ash—a residue produced by coal-fired power plants that is used as a Portland cement substitute—as hazardous, it could cost utilities and consumer electric bills $5.32 billion to $7.62 billion a year.

“Because of these new rules, we’re expecting a number of existing coal plants be shut down,” says Kirk Johnson, NRECA vice president of energy and environmental policy. “The cost of compliance will simply be too much.”

Only two alternate baseload generation options currently are available to meet America’s demand for safe, reliable and affordable electric energy: natural gas, which is priced in a volatile commodities markets; or nuclear power, which requires a long lead time for construction and continues to bump up against ghosts of the Three Mile Island accident in 1979 and issues involving disposal of spent fuel.

At present, natural gas seems like an attractive option to satisfy the nation’s energy appetite. The fuel is relatively cheap, plants that use it can be brought on-line more quickly, and burning gas produces less carbon dioxide than coal.

“But right now, we’re in a natural gas price bubble,” Holt cautions. “While economics today favor natural gas, my concern is just two or three years ago natural gas was three times as expensive. So it could easily and rapidly go up in cost. Over the long term, I expect nuclear power—since it only emits water vapor into the atmosphere—will make a comeback. But there are a lot of ifs.”

Working to Keep Bills Affordable

To reduce the need for new power plants, electric co-ops are fashioning a variety of innovative solutions to reduce load during times of peak demand. That is the electric utility industry’s equivalent of rush-hour traffic, when wholesale power costs skyrocket.

The strategies include:

• Direct control of electric water heaters, air conditioners, electric thermal storage units and other appliances in the homes of volunteer consumers.
• Interruptible contracts with commercial and industrial accounts—such as irrigation pumps, large retailers and factories—that are able to temporarily shut down or run emergency generators.
• Calling on consumer-owned (distributed) generation to start up.
• Personal energy management—notably in-home displays, web portals and smart thermostats—that inform consumers, in real time, when load peaks are happening, allowing them to voluntarily decide when and how to curtail electric use to save money.

Most co-ops also are ramping up energy-efficiency programs. According to NRECA Market Research Services, nearly all electric co-ops offer efficiency educational resources, and 77 percent offer residential energy audits.

To find out about energy-efficiency programs in your state, visit your utility’s website or the Database of State Incentives for Renewables and Efficiency at www.dsireusa.org.

Magen Howard writes on consumer and cooperative affairs for NRECA. Her colleague, Megan McKoy-Noe, contributed to this story.