POWER January 2011 - 23

2011 INDUSTRY FORECAST
The U.S. Power Industry 2011:
The Sequel
If Hollywood were scripting the power industry story for 2011, it
would be a sequel to 2010-more of the same, but just not quite as
good. Natural gas gets top billing and the accolades, wind power
drops to a supporting role, and new nuclear answers the casting
call but has yet to get a speaking part. Coal is like Mel Gibson-a
talented Oscar winner unlikely to get another leading role. In this,
our fifth annual industry forecast report, the story may be familiar,
but the price of admission is going way up.
By Kennedy Maize and Dr. Robert Peltier, PE
D
ull. Boring. Yawn-inducing. Soporific.
Bland. More of the same. Welcome to
the world of energy, 2011.
For a change, the coming year in energy,
at least in the U.S., looks like a year of few
surprises and no real excitement. Compared
with previous years, 2011 could shape up
to be business as usual, and a breather after
2010 is probably welcome.
Looking back, 2010 was filled with spills,
thrills, and chills. A mammoth deepwater
drilling rig in the Gulf of Mexico blew up and
spewed out millions of gallons of crude, occupying
the front pages of U.S. newspapers
and providing endless footage for TV broadcasts
for a third of the year. Climate legislation-threatening
game-changing impacts on
the generation of electricity, particularly for
coal-crashed and burned in the U.S. Senate
amid cheers from many in the industry
and jeers from environmentalists. The U.S.
nuclear renaissance again promised to make
an appearance, and Uncle Sam dropped an
$8.3 billion loan guarantee on a proposed
two-unit project, but nuclear exited the year
with a whimper.
Electricity Demand Rebounds
So what's ahead? Let's start with demand for
electricity, the major driver of business decisions
about generation, including whether to
build new plants, retire old ones, or change
the mix of technologies used to make power.
The dominant factors in electric demand
are the state of the U.S. economy and the
weather. The " Great Recession " is still being
felt, and annual economic growth is
likely to be around 2% for 2011, according
to many estimates.
As for the weather, last summer was unusually
hot (following an unusually cool
summer 2009), which drove increased use
22
of air conditioning, causing the U.S. Energy
Information Administration (EIA) in its November
2010 Short Term Energy Outlook
to raise its 2010 yearly electricity forecast
to a 4.7% increase, up from 4% in August.
Assuming that temperatures in 2011 will return
to normal, the EIA is forecasting electric
demand growth for the year to drop to
-0.1%, down from a modest 0.4% predicted
in August (Figure 1).
Long-term EIA assessments predict that
2011 will be the last year of about zero
growth in electricity generation; future
predictions trend back to 1% through 2035
(Figure 2). The North American Electric
Reliability Corp. (NERC) 2010 Long-Term
Reliability Assessment released in October
is consistent with the EIA predictions that
summer peak demand will grow by 1.34%
per year and annual net generation will
grow by 1.57% through 2019. That means
no bubbling economy to spur electric demand.
Another concern: NERC recently
concluded that the Environmental Protection
Agency's (EPA's) preoccupation with
regulating coal-fired power plants will
likely reduce the reliability of the nation's
grid (see the NERC sidebar).
The slow-as-Venezuelan crude economy
influenced energy use across all sectors.
Lawrence Livermore National Laboratory
(LLNL) in September reported that total
U.S. energy consumption in 2009 (the latest
year for which data are available) was
94.6 quadrillion Btu, down from 99 quads
in 2008. " Energy use tends to follow the
level of economic activity, and that level
declined last year. At the same time, higher
1. Electricity consumption grows. Total U.S. electricity consumption grew in 2010
after two straight years of decreases. Electricity consumption in 2011 is predicted by the Energy
Information Administration (EIA) to be approximately the same as in 2010. Source: EIA, ShortTerm
Energy Outlook, November 2010
11
Consumption
10
9
Annual growth
1.7%
2.8%
-0.7%
2.1%
2.8%
0.8% 1.2%
0.2%
-0.7%
-4.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
www.powermag.com
2011
-0.1%
2.8%
4.7%
8%
6%
4%
2%
0%
-2%
-4%
-6%
POWER | January 2011
Billion kWh/day
Percentage change from previous year
http://www.powermag.com

POWER January 2011

Table of Contents for the Digital Edition of POWER January 2011

Contents
POWER January 2011 - Cover1
POWER January 2011 - Cover2
POWER January 2011 - Contents
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