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Doing What We Can

Feb 11, 2020

A few months ago, I wrote about comments I receive on my articles. I quote another reader this month.

He said, “I read with interest Gary Smith’s CEO column in Alabama Living about climate change and current debates. Although I also do not see the practicality of the drastic and radical changes that some of the candidates are proposing, it is interesting that the CEO of a power company is undermining the need to plan for a future where renewable energy will play a significant role. Whether Mr. Smith will live to see it or not, fossil fuels will eventually run out. It is in the interest of America to look far into the future and be at the forefront of developing technology and energy sources of the future. Please don’t justify your opinion by mentioning cost. Remember how computers were expensive at the time when typewriters were the mainstream; and how trains used to be dangerously fast for human beings to ride? Either we stick to our typewriters, keep riding our horses and succumb to our fate, or we keep America great and lead ahead of the Chinese and Europeans. It starts with CEOs with vision for the new economy and the world to come, and leaders who plan how we can get there.”

The reader makes some interesting points. Fossil fuels may eventually run out, but I doubt if I live to see it. Most estimates indicate that proven oil and gas reserves will last over 50 years at current consumption rates. Of course, consumption rates are likely to increase as more people in the world move out of poverty and use more fossil fuels. However, more reserves are discovered every year as extraction technologies improve.

The reader also lectures not to justify a position by mentioning cost. Costs cannot be ignored in any economic or industrial evaluation or activity. This is not the time to delve into the laws of energy or the laws of physics, but the energy revolution, if there is one, will not be guided by Moore’s Law, which applies to the economies of computing power, but by the scientific laws of energy and physics. Energy costs will not scale like the economies of computing power.

The reader challenges leaders to adopt a vision for the new economy and the world to come. That vision should apply to everyone in the world, not just the U.S. The rest of the world is trying to get where we are, and they are doing it with fossil fuels. China and India are building coal-fired generation plants at a very rapid pace. Those plants will operate for decades. They will continue to use fossil fuels because they are energy-dense, cheaper, and more reliable than renewable resources.

Because of changes in environmental regulations, PowerSouth is improving its emission footprints and moving away slightly from fossil fuels. We will close our coal-fired generation units in October 2020 because of increased regulation of coal ash. We will replace that generation with a highly efficient natural gas combined-cycle plant. The new natural gas plant, although producing more electricity, will emit about half the carbon dioxide and will not have the ash issues associated with the coal plant.

We have a Purchased Power Agreement in the Vogtle Unit 3&4 nuclear expansion near Augusta, Georgia for 5% of the capacity (or 125 MWs) for a 20-year term. That power is carbon free and is a pure hedge against carbon-free mandates or carbon taxes. It will be more expensive than natural gas generated power but will be more environmentally friendly.

We are entering into a Purchased Power Agreement for 80 MWs of solar power below our average energy cost. We have held off on solar generation until the price dropped below our average cost of energy. We would like to have more solar generation, but we are uncertain we can reliably manage the intermittency of more than 80 MWs of solar generation and meet our responsibility as an electric utility to balance load with generation.

We are looking at battery technology and waiting for the price of batteries to drop to a price comparable to our average cost of service. However, we will not have sufficient renewable energy or battery capacity to operate more than a minimal amount of our system on batteries.

There is no significant wind in Alabama to support wind generation and transmission of wind generation from the west costs too much to be reasonably affordable. We don’t expect wind generation to be a material part of our generation mix.

We have done about all we can do to cut carbon emissions and clean up our generation without a significant breakthough in technology. Today, I see no real evidence of that type of advancement. We are doing about all we can reliably do to add renewable generation.

Considering that, I have to take exception with my reader’s position. The world will be dependent on fossil fuels for electric generation for some time – probably multiple decades – because we have no other alternative. There is no renewable or carbon-free generation resource that will provide the reliable and affordable service we provide our members today. Anything else will be unacceptable.

I hope you have a good month.

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