POWER January 2011 - 33

2011 INDUSTRY FORECAST
Grading My 2010 Industry Projections
In my January 2010 " Speaking of Power "
editorial, I made predictions for the power
industry in 2010. A few were obvious, and
I admit that a few were wishful thinking.
In either case, it's time to judge the accuracy
of my crystal ball. Here goes, in the
order they were originally presented.
10.New Nuclear Will Progress Slowly. I
suggested that sticker shock and the
slow regulatory process would produce
little progress for new nuclear projects
in 2010. Although it was an easy prediction,
and one I'll surely keep on my
list for 2011, I get an A.
9. The Smart Grid Will Mature. Again, an
easy one. I suggested that a uniform set
of standards would begin to emerge, and
they did in October, with the National
Institute of Standards and Technology
releasing the five " foundational " smart
grid standards and putting many more
in the queue. I get an A. In anticipation
of the rise of the smart grid, you
may have noticed that our coverage of
it increased, a trend that will continue.
(See " Smart Grid 2011: More than Meters, "
an online exclusive for this issue
at www.powermag.com.)
8. Electricity Growth Will Resume. I said
that I expected U.S. electricity usage
growth in 2010 to return to its decade average
ending in 2008, or about 1.4%. As
noted in this article, the Energy Information
Administration projection for 2010 is
4.7%, the first increase in two years. My
direction was good, but the magnitude
came up short. I get a weak B.
7.Transmission Planning Will Stall. I
predicted that there would be a big
fight in Congress over transmission
siting authority and that Sen. Harry
Reid (D-Nev.) would face his toughest
reelection campaign in November
and would be defeated. There was no
congressional transmission line fight,
and Sen. Reid won, although it was a
tough campaign. That leaves me with
only a D.
6. Unconventional Plants Will Be Built.
In other words, we would see strong
growth in gas plants used for grid stabilization
for large amounts of nondispatchable
wind and, to a lesser degree,
solar projects. An easy A.
32
5. The Real Cost of Renewables Will
Grow. My premise was that the real cost
of renewables would raise consumer
voices, thereby slowing new projects.
Though a number of state commissions
have shown some restraint in approving
new projects (especially offshore projects),
many have also been approved.
As history has shown, the adoption of
wind projects is all about the tax benefits.
The very slow 2010 showed much
moderation in new wind projects. I was
mostly right, but for mostly wrong reasons.
I'll take a C on this one.
4.More Coal Plants Will Be Decommissioned.
Not a big surprise, another
easy A.
3. Carbon Control Legislation Will Die. I
said last January that " The start of the
2010 campaign season will seal its fate. "
It's dead and gone, so I get an A.
2. Prince Gas Will Challenge King Coal.
I said at the time that " I don't expect
any new coal plant announcements in
2010 (I don't recall any new announcements),
although a number of [gas]
plants will be added to the grid. " The
real story in 2010 has been the resurgence
of the construction of natural
gas-fired combined-cycle plants. Another
A.
1. The " Climategate " Scandal Will Explode.
At the time I prepared my predictions,
the Climategate scandal was
news, and I predicted the scandal would
grow. It did grow, but not as much
as I expected, and it remains in the
news today. I also predicted that the
bad science behind the Environmental
Protection Agency's (EPA's) Endangerment
Finding would be exposed. It's
my opinion that the bad science has
been exposed, although it will require
the many lawsuits contesting the EPA's
findings and rulemaking to be resolved
before closure occurs. For my bad timing,
I am left with a D.
Overall, my report card averages out to
a B+, a pretty good overall score for 2010.
I have prepared my predictions for 2011
in this month's " Speaking of Power. " Let's
see if I can improve my grade for 2011.
-Dr. Robert Peltier, PE is POWER's
editor-in-chief.
www.powermag.com
work. Even one of the finalists, Baltimorebased
Constellation Energy, is putting its
Calvert Cliffs project in Maryland into
slow motion. S&P said that with gas prices
in the $4 to $5 range, new nuclear plants
make little economic sense. " Capital costs
of $6,000 to $6,500 per kilowatt, which
appear to be a reasonable estimate of the
construction costs for nuclear plants in the
U.S., would require gas prices of $7.60 to
$8.20 per MMBtu [for nuclear to be costcompetitive,] "
says the S&P report.
An NEI " fact sheet " purporting to demonstrate
that Wall Street is salivating to
invest in new nuclear plants quotes positive
remarks from Fitch Ratings, Merrill
Lynch, Prudential, and Moody's Investors
Service. All are dated from 2004 to 2006.
It's unlikely that the NEI could demonstrate
evidence of such enthusiasm today.
With no new U.S. plants under construction-or,
to be honest, even shovelready-one
way to gauge whether the
promises of the nuclear industry for version
2.0 hold water is to look abroad. In
Finland, TVO, the state utility, is supervising
the building of the 1,600-MW Olkiluoto
nuclear plant, featuring AREVA's EPR
reactor. The project has a €570 million
loan guarantee from the French government.
In late June, AREVA installed the
reactor pressure vessel and said the plant
should be in service at the end of 2012.
The website Power-Technology.com reported
last summer, " The project has been
delayed by three years and is now expected
to be operational by the end of 2012,
resulting in a loss of $2.8 billion. "
AREVA has also had problems with its
EPR project at Flamanville in Normandy,
which is being built for Électricité de
France (EDF). Former EDF chief Francois
Roussely has cast doubts on the EPR,
writing, " The credibility of both the EPR
model and the ability of the French nuclear
industry for success in new construction
have been seriously undermined by the difficulties
encountered on the Olkiluoto site
in Finland and at Flamanville. " The project
schedule has slipped by two years and
projected costs have escalated by 25%, to
$6.4 billion.
EDF plans to build four new reactors in
Britain and to have the first unit in service
by 2018. Charles Hendry, the UK minister
of state for energy, said new reactors are
likely to come in at $9.3 billion per unit.
Some nuclear power advocates argue
that Wall Street investors are short-sighted
and uninterested in the needs of society.
Rod Adams, a former Navy nuclear submarine
engineering officer and proprietor
of the Atomic Insights blog, commented
POWER | January 2011
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POWER January 2011

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