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How will large utilities companies invest their money over the next 20 years?
Answers to relatively short term questions like this, will also have long-term impacts on energy supply choices, costs to generate power and whether or not goals for stabilizing global carbon emissions can be met in time.
A small group of people were invited recently to hear a high-level overview of what’s driving electric policy issues these days.
The talk was hosted by the Los Alamos Education Group, a local study group closely associated with nuclear issues, including nuclear energy.
The presentation was given by Frank C. Graves, who graduated from Los Alamos High School in the 1970s, went on to an MBA at the Massachusetts Institute of Technology and is now a principal and energy consultant at the Brattle Group in Cambridge, Mass.
The company is made up largely of professional economists who are mostly involved with energy policy, long-range planning, forecasting, financing, timing and scaling of electric energy investments.
“My work is to help analyze and screen those kinds of things and appear as a witness at public hearings,” Graves explained.
Among his conclusions was that gas-fired electrical generation, boosted by discoveries of large new gas shale fields, is likely to be the electrical power source of choice for at least the next 10 years.
Graves, the son of Los Alamos National Laboratory retiree Glen Graves, took a circumspect route reaching that conclusion, taking into account a large number of global variables, including accelerating growth in the developing world, the problem of climate change and the increasingly acute imperative to control carbon dioxide emissions, along with the desirable but still fairly feeble potential role of renewable energy sources and conservation.
Graves borrowed from Robert Socolow and the Energy Group of the Princeton Environmental Institute a suggested plan for attaining carbon reduction goals with seven “wedges” of 1 billion tons of carbon each between now and 2055, in order to stabilize emissions at within a barely tolerable increase in global temperature of about 3 degrees C.
But even to break even in 45 years, will require an enormous stretch, according to climatologists, mostly in the area of energy generation.
For example, one of those “wedges” of carbon reduction commonly proposed would come from replacing relatively high carbon-emitting coal power with nuclear plants that would operate with closer to zero carbon dioxide emissions.
That one wedge, according to this line of thought, will require 500 nuclear power plants at about 1 Gigawatt each, more than doubling current capacity, by adding more than 1 new plant a month for forty years at a likely cost of $2 trillion to $4 trillion.
“This is way more than anyone imagines we can do,” Graves said.
In the near term, despite claims of progress in developing new technologies, nuclear power faces continued public fears and unsolved technical and political issues, including disposal of spent fuel from the first 40 years of operations.
There is also the problem of the current financial situation which has a bearing on building nuclear power plants, which require a large percentage of up-front capital.
“We’re in more than a recession,” said Graves. “It’s hard to raise money right now, unless it can be repaid right away.”
On balance, Graves sees a number of short term advantages in reduced carbon-emitting natural gas-fired electrical generation based on significantly new volumes of gas identified in shale fields in Arkansas and western New York State.
He said that will change the energy complexion in the U.S. Gas plants take only 2-3 years to bring on line, compared to 6-8 years for coal plants and an unknown period of something more like ten years for nuclear.
After the talk John Hopkins, a former nuclear weapons manager at the lab, said it was one of the best presentations on the energy situation he had heard.
Considering the enormous challenges ahead, Don Peterson said, “It’s good to be old.”
A “short term energy outlook” report by the Department of Energy issued in May 2009, on “The implications of Lower Natural Gas Prices,” supports Grave’s view about the current advantages of natural gas, but underlines some of the uncertainties he raised.
“The extent of potential increased natural gas consumption in the electric power sector because of lower natural gas prices relative to coal still remains highly uncertain,” the report states, citing factors like contractual obligations for coal and constraints in the capacity of natural gas pipelines, among other factors.