The following observations on issues before the public dealing with the evolving US energy economy reflect my 50 years of experience in the electric power industry both nationally and internationally. This includes seven years as an energy analyst with the OECD (Organization for Economic Cooperation and Development), 12 years with Edison Electric Institute as a VP for Economic Policy, 13 years with Gulf States Utilities retiring as CFO upon the company’s merger with Entergy and six years as a consultant for USAID on electric utility restructuring in the former Soviet Union.

Summary Review

A cursory review of national discussions underway about the U.S. energy economy reveals confusion in the public’s understanding of the real issues involved. The extraordinary safety record of nuclear power over its half century of history is too often ignored while electric vehicles are touted as solutions to the CO2 problem even though 70% of the U.S. power supply is generated from fossil fuels and will remain primarily dependent on these fuels without additional nuclear generation. The space extensive nature of renewables is only beginning to weigh in serious policy discussions while the enormous potential of shale resource development is portrayed in some sectors of the media as just another threat to the environment. The eventual elaboration of an energy policy serving both the national security and the curtailment of global warming will require a more learned and balanced debate than the one conducted to date

The Role of Nuclear Energy

A serious analysis of the greenhouse gas problem leads to the conclusion that nuclear power must be a key component of any solution. The recent Fukushima disaster in Japan must be seen for what it was, a monstrous natural catastrophe, not a failure of a nuclear plant per se. True, painful lessons have been learned from the event, but these involve matters of plant sites and emergency power provision rather than the fundamental safety of nuclear power.

A testament to the role of nuclear energy in curbing CO2 emissions is the experience of France compared to that of the U.S. or other major European countries. In 2008 France had carbon dioxide emissions of 6.2 metric tons per capita vs 19.3 tons for the U.S. and 9.8 tons for Germany, a country already heavily emphasizing renewables.[1] France’s performance is essentially the result of nuclear and conventional Alpine hydro power producing approximately 90 percent of the nation’s electricity. The country has only recently begun a modest wind development program, although to its credit, France was a true pioneer in renewable energy when it constructed the La Rance tidal power project nearly 50 years ago.

Electric Vehicles

The current media and public enthusiasm for electric vehicle propulsion tends to overlook some key considerations in the normal use of automobiles. While much attention is given to the cost of these vehicles and the resulting need for government subsidies, the real cost metric posing an obstacle to their adoption is not measured with money, but with time. Currently, the best battery technology requires a few hours of charging per hundred miles of range. A typical gasoline powered car of the same size can be “charged” for 100 miles of range in less than a minute. The ability to charge an electric vehicle over night at a residence does not alter the fact that once on the road, it is virtually paralyzed in terms of flexibility compared to a normal car. This reality has implications not just for electric vehicles alone, but for any large scale charging infrastructure that might be envisioned to service them. The continued improvement of internal combustion/hybrid technology seems certain to limit the potential of pure electric propulsion for the foreseeable future.

Energy from Shale Development

The dramatic transformation of the natural gas economy in the U.S. resulting from the hydraulic fracturing of shale formations and the U.S.e of horizontal drilling may portend a revolution in global energy matters as well. The ubiquity of shale formations potentially holding large reserves of hydrocarbons in major energy markets like Europe and China could have game changing impacts on geo-political relations. Most important could be the demotion of the Middle East as a focal point for concern over world energy supplies. In general, it could also reduce the monopoly currently held by a few major national oil companies over known petroleum and natural gas resources. Finally, recent heightened concerns about deep water offshore drilling may make shale resources even more essential to national security.

Renewable Energy Sources

A key factor missing from the enthusiastic promotion of renewable energy is a realization that all renewables are “space extensive”. In other words they require extraordinary amounts of space per unit of energy produced. When they are only a tiny portion of total supply, this characteristic may be of little importance, but when their share becomes significant, they encounter a rapidly growing opposition from alternative claims on space. Already two prime examples of this exist in the form of classic hydro electric resource development and in the U.S. of arable land for ethanol production.

In the U.S. substantial amounts of large scale unharnessed hydro potential exist, but none has been developed in more than a quarter century because of a host of reasons ranging from the protection of fish migration pathways to the preservation of treasured historical and natural sites. Elsewhere in the world, development of the huge Three Gorges hydro project on the Yangtze River in China has caused public condemnation in many quarters because of the several millions of people it displaced. Resistance to the financing of such large projects by the World Bank has halted their construction in some emerging countries.

The recently legislated goal of having ethanol eventually account for 20% of U.S. motor fuel has raised the specter of food supplies being threatened. Hope persists that the eventual production of biofuels from non food plant sources grown on non arable land will obviate any threat to food production. However, resistance to the U.S.e of forest based material because it may encourage logging has already appeared leaving any reliance on this source in doubt.

The two major renewable technologies currently being stressed are wind and solar electricity production. In both the question of predictability and the related need for fossil fuel backup power compounds the problem of space required per unit of energy produced. An appreciation of the space–energy output problem can be had from some examples cited in a recent Public Utilities Fortnightly article.[2] A combined cycle gas plant of 630 MW might require a site of from 50 to 300 acres while the requirement for a 75 MW wind farm could be anywhere from 5,000 to 20,000 acres. Moreover, the combined cycle facility could probably operate at a capacity factor three times that of a wind complex. For wind, off-shore installation is seen as an eventual answer to the space problem, but in the case of some European off-shore projects objections have been raised by commercial fishing and tourism interests. Large on-shore projects sited in sparsely populated areas such as West Texas avoid some of the space problems, but their distance from load centers creates an entirely separate set of objections associated with high voltage transmission right-of-ways.

Solar energy shares the same basic “space extensive” handicap as wind as well as the reliability issue. Concentrated solar projects where reflectors focus solar rays on a steam raising mechanism tied to a classic turbine generator facility are also normally relegated to areas far from load centers where conflicts with human populations are minimal. However, even projects in western US deserts have encountered resistance from native American groups and conservationists concerned about their impact on desert animals. Solar voltaic farms have similar extensive land requirements. An example is the Cimarron Solar Facility in Colfax County, New Mexico. Occupying 250 acres, some 500,000 panels produce a maximum of just 30 MW operating at only a 25% capacity factor.[3]

Solar voltaic technology, however, may be the one renewable with a significant future in the United States thanks to a unique set of circumstances. First, the U.S. is a southern country with most of its territory lying below 45 degrees north latitude (as is China) and with a population center slowly drifting toward the so called sunbelt. This is obviously a plus for solar development. Secondly, the U.S. is blessed (some would say cursed) with a penchant for large single family houses. According to U.S. census data for the year 2000 (the latest available), the U.S. has some 60 million single family dwelling units of 1,000 square feet or more. The vast majority of these are single storey meaning roof space approximates floor space.[4] As a result, the U.S. probably has more square feet of house roof space per capita than any other country. In addition, the “urban sprawl” that has characterized real estate development since World War II has led to large numbers of low rise commercial buildings resulting in large quantities of roof area. Exploitation of this “roof area” resource may ultimately be slowed not so much by economic or technical factors as by institutional issues such as who should own these facilities and who should determine their design and installation standards.

One final plus for solar voltaic is that ongoing research in micro technologies related to computers and cellular communication equipment may produces advances that can be useful in the refinement of solar panels. Wind generation, being essentially a mechanical technology, is unlikely to experience significant dramatic development.

Jack L. Schenck is Retired Senior VP and CFO of Gulf States Utilities Member of USAEE and Houston, Texas Chapter. His work appears here through the consideration of the United States Association for Energy Economics.

The United States Association for Energy Economics is a non-profit organization of business, government, academic and other professionals that advances the understanding and application of economics across all facets of energy development and use, including theory, business, public policy and environmental considerations.

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[1] The Little Data Book – 2010 World Development Indicators, World Bank Publications.
[2] Article by Harker and Hirschboeck, Public Utilities Fortnightly, May, 2010.
[3] Enchantment, the publication of the New Mexico Rural Electric Cooperative Association, February, 2010.
[4] U.S. Department of Commerce – 2000 U.S. Census – American Housing Survey 2005.