This newsletter usually has interesting "Near Future" content.
-DonW-
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From: Whiskey & Gunpowder [mailto:[EMAIL PROTECTED]
Sent: Tuesday, November 04, 2008 11:30 AM
Subject: The Coming Electricity Crisis
Greg's Note: As unpleasant as it is to contemplate, we have to face the
likelihood of future energy shortages resulting in frequent brownouts and
blackouts. Scarcer energy also means much more expensive energy when it is
available. Byron King faces the challenges and offers some answers. Send all
questions and comments to [EMAIL PROTECTED]
Whiskey & Gunpowder
By Byron W. King
November 4, 2008
Pittsburgh, Pennsylvania, U.S.A.
~~ The Coming Electricity Crisis ~~
OK, so I don't have a copy of the Sunday business section from next March.
But I think I know what at least one major issue will be within the next 24
months. The headlines will scream, "Power Failures, Price Spikes Plague
Northeast U.S."
And the same thing will also hit the Western U.S. And the Southeastern U.S.
And parts of the Midwest.
They sure did not talk about power failures in the presidential debates, did
they? I don't know why not. All the insiders know about it. Indeed, power
failures and price spikes are baked into the national economic cake. People
who follow these things are quite sure of it. It's just a question of when,
exactly, the lights will start to flicker.
We already had one experience with a regional blackout. Do you remember the
power failure of Aug. 14, 2003? Almost the entire Northeast U.S. went dark,
except it occurred in the middle of the day. The effects were immediate on
over 50 million people in the U.S. and Canada.
Skyscrapers just stopped working - no elevators, no lights, no water, no
nothing. Hospital operating rooms went dark. Traffic signals stopped
functioning and people were in the midst of instant gridlock. If you ran out
of gas, there was no power for the pumps at the gas station. Refrigerators
stopped humming and large amounts of food spoiled. Rail systems stopped
running - from streetcars in Toronto to subways in New York and Amtrak and
freight trains in the middle of nowhere. FAA flight controllers had to
communicate with airborne pilots via battery-powered walkie-talkies. Sewage
systems shut down, and a lot of you-know-what backed up in many low-lying
areas.
The 2003 power failure was bad news, although short in duration. And then it
was back to business for the U.S. Things became (if you will excuse the
expression) "normal" again. Just like in Amity.
Looking back, the utility companies got the power back up and running,
right? And the experts investigated the origins of the problem, right? The
people who know all about power grids fixed the problem, right? It could not
happen again, right? The U.S. power grid has ample electricity-generating
capacity, right? And there's plenty of transmission to move power from one
region to another, right?
Well, no.
Earlier this week, I attended a privately sponsored presentation on U.S.
energy policy. The main speaker was a senior faculty member from Carnegie
Mellon University. This guy has been "doing electricity" for about 40 years
or so. He has written reports for the National Academy of Sciences. When the
people at the U.S. Department of Energy have a question about electricity,
they call this CMU professor.
The news is not good. In 2007, there were about 144 new coal-fired power
plants on the drawing boards of the U.S. energy utilities. But, said the
professor, "We will probably build none of them." Indeed, "The electric
industry in the U.S. is in terrible shape," said the CMU man. So we should
expect local and regional brownouts and blackouts to become common
occurrences "within five years." But the first isolated instances of
brownout and blackout will hit us much sooner than that.
Why is there such a gloomy forecast? Because essentially, the deregulation
of the 1990s was botched. According to the CMU electricity expert, botched
deregulation "slowed investment, raised prices and led to more and more
uncertainty." So now few utilities or their executives want to take
political, regulatory, technical or financial risks. Hence, the entire
long-range planning cycle has broken down.
It's almost impossible to decide what to build, and at what scale. Costs are
exploding, particularly for new construction. It's safe to say that most
power plant construction cost projections have doubled within the past 18
months. The prospect of fast-changing environmental regulations also adds to
the uncertainty. No one wants to build a power plant and learn in five or 10
years or so that environmental regulations are going to shut it down.
Even the alternative energy industry - with wind, solar and geothermal as
the poster children - has formidable challenges. The biggest issue is cost
competitiveness. That's because alternative systems provide power at costs
that range from slightly higher to much higher than tradit
