POWER January 2011 - 24

2011 INDUSTRY FORECAST
2. Slow future growth. The EIA predicts that electricity growth, though stagnant in 2011,
will resume long-term growth of about 1.5% per year. The data are based on a three-year moving
average. Source: EIA, Short-Term Energy Outlook, November 2010
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10
8
6
4
2
-2
1950
1970
1990
2008
2020
2035
History
Projections
efficiency appliances and vehicles reduced
energy use even further, " said A.J. Simon,
an LLNL energy systems analyst who develops
the energy flow charts using data
provided by the Department of Energy's
(DOE's) Energy Information Administration.
" As a result, people and businesses
are using less energy in general. " Simon
elaborated: " Simply said, people are doing
less stuff. Therefore, they're burning
less fuel. "
3-year moving average
Trend line
NERC: EPA Regulations Impact System Reliability
The U.S. Environmental Protection Agency
(EPA) is moving to regulate coal-fired
plants beginning in 2011 as never before.
Beyond regulation of carbon dioxide
through the Clean Air Act, which begins in
January 2011, four other rules are under
active development:
■ Clean Water Act Section 316(b), Cooling
Water Intake Structures
■ Coal Combustion Residuals Disposal
Regulations
■ Clean Air Transport Rule
■ Title III of the Clean Air Act; National
Emission Standards for Hazardous Air
Pollutants (NESHAP) for the electric
power industry or Maximum Achievable
Control Technology (MACT) Standard
The North American Electric Reliability
Council (NERC), in its recent Long-Term
Reliability Assessment, noted that the
proposed rulemaking adds another element
of uncertainty to future planning
of generation capacity needs. When considering
the impact of these regulations
on existing and planned generation
capacity over the next 10 years, NERC
found that, " Depending on the outcome
of any or all of these regulations, the
results may accelerate the retirement of
January 2011 | POWER
some fossil fuel-fired power plants. The
EPA is currently developing rules under
their existing regulatory authority that
would mandate existing power suppliers
to invest in retrofitted environmental
controls at existing generating plants
or retire them. In particular, [these]
four active EPA rulemaking proceedings
could have significant effects on grid
reliability as early as 2015. "
NERC went on to note: " As a result of
these accelerated retirements, capacity
reductions may diminish reserve margins
and could impact bulk power system reliability
in the near future. Potential impacts
of EPA regulations on bulk power system
reliability include not only retrofitting existing
generation but also constructing or
acquiring replacement generation or other
resources. Bulk power system planning
and operation approaches, processes, and
tools will require sufficient time for changes
to be made, otherwise either reliability
will suffer or aggressive environmental
goals may not be attainable. Therefore,
the risk to reliability is a function of the
compliance timeline associated with the
potential EPA regulations. "
Will the potential reduction in system
reliability have any impact on the EPA's
rulemaking in the future? Not a chance.
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Coal Remains Number One
The generating story for 2011 starts with
coal, the fuel that just won't quit. During
2010, green forces again tried, and failed,
to commit energy regicide, but Old King
Coal again survived. It's dirty to burn, it's
hard to handle, its extraction disrupts the
earth. But coal packs a wallop in terms of
energy density, and it is relatively cheap,
meaning that coal is still the dominant fuel
for baseload generation of power. This
year shapes up as offering no reason for
coal plants already in operation or in the
construction pipeline to disappear wholesale,
although some retirements and plant
cancellations are likely, due to specific
business conditions (Figure 3).
Look for coal to continue its hegemony
well beyond 2011. Few new projects
are likely to be announced this year
or next, but a large group of projects are
under way. Most are likely to get finished
and enter service. A year ago, the DOE's
National Energy Technology Laboratory
(NETL) southwest of Pittsburgh updated
2002 and 2007 reports on coal-generating
plants with conclusions drawn from its
extensive plant database. The key finding
of last year's NETL report was the growing
gap between announced projects and
commissioned plant capacity. The NETL
report, " Tracking New Coal-Fired Power
Plants " (available on the NETL website)
noted: " Actual plant capacity, commissioned
since 2000, has been far less than
new capacity announced. " The 2002 report
showed over 36,000 MW of new coal-fired
capacity scheduled to be installed by 2007.
Only about 4,500 MW actually got commissioned.
This
trend continued last year and is
likely to continue in 2011 and 2012, according
to NETL's Erik Shuster, who wrote the
NETL reports. Shuster told POWER in an
interview that he expects fewer announcements
of new projects in the next couple
of years, driven by uncertainty about the
economy and the political environment.
There will also be some retirements, such
as the one announced last year by the Tennessee
Valley Authority, which is retiring
23
Percentage electricity demand increase

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POWER January 2011

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