Figure 2.2: Announced and Projected Coal Retirements by NERC Region

Figure 2.2: Announced and Projected Coal Retirements by NERC Region

Source: Potential Coal Plant Retirements: 2012 Update, The Brattle Group, Oct. 2012

During these early years, the nuclear power industry maintains a low public profile with only a modest level of lobbying for additional R&D funding. Concerns about safety, long-term waste disposal, and the impact of Japan’s Fukushima Daiichi plant meltdown make investors and policy makers quite risk averse about nuclear power. Though new plant designs, e.g. thorium-fueled molten salt reactors, appear promising, only investments by power companies in the Southern U.S. keep the industry in business. Few utility CEOs will publicly commit to nuclear without significant government guarantees and financial support, including recovery of investment costs during construction.

In both the 2014 and 2016 national election cycles, polls of American voters show consistent political support for a more progressive energy future. Job growth potential, export market opportunities, and private investment in the underlying new energy technologies sustain a centrist political approach that spurs innovation and commercial development. Federal, state, and provincial government policies push the expansion of renewable energy investment and R&D. Consumers accept a new value proposition based on previously externalized costs being included in planning, decision making and power rates. With subtle, but strong, reminders from large damaging storms and other climate related events, the public accepts the proposition that climate change must be addressed. This is evident in the growing electrification of the automotive and transport sectors.

By the 2016 U.S. election cycle, economic recovery nationally and in the WECC region is on solid ground. Growing tax revenues have strengthened state coffers and housing markets are in full recovery, much of it driven by more urban infill building.

Middle Years: 2018-2022/Tension Passing Through the Inflection Point Toward Sustainability

Investment in new energy infrastructure is needed to support a more efficient (thus cheaper), reliable, resilient and cleaner base for the economy. At the same time, some large investments from the past are made obsolete. It is not politically feasible to place the whole cost of making the transition on those companies that had made legitimate energy investments to serve the nation. With the boom there is also a bust for some.

State and federal energy policy makers and regulators struggle with how to distribute the cost and rate impacts of the energy market transition taking place. Federal agencies are careful not to extend their power too far into local rate setting, but want the expected cost-saving benefits of a more efficient, coordinated and more regional power system captured. State governors and regulators also want cost savings, but also wish to capture in-state economic development opportunities and keep power rates moderate to support job growth. With all of this, comes a lot of work to manage the financial issues in the energy market transition.

The energy industry manages to muddle through some financial challenges with support from regulators and policy makers who soften the impact of the adjustments needed. Combinations of refinancing, long-term rate recovery, tax breaks, and rate increases are used in various states to make the deals needed to smooth the path toward a sustainable energy sector. In most cases, rate increases are put in place without shocks.

In contrast to this downward trend, there is expansion in areas such as: (1) Smart meters and smart-grids; (2) Wind and solar plants (including some CSP plants capable of meeting reliability needs) with new storage technologies; (3) Flexible natural gas plants used to balance power systems in meeting reliability; (4) Electric vehicle charging stations; and (5) A transformation of the power grid that enables more coordination between distribution-level and transmission-level operations.

In light of the earlier setbacks for U.S. car manufacturers in the electric vehicle market, most observers did not anticipate such tremendous success in the hybrid vehicle market. But with the price of hybrid and all-electric vehicles declining due to ramped-up production and improved battery systems technology that extend vehicle range, a positive feedback loop of customer satisfaction accelerates sales and overall market penetration. Hybrids sales achieve 30% market share for all vehicles sold in North America by 2020. With EPA CAFE standards for light-duty vehicles still expected to come online by 2025, forecasts are that all-electric and gasoline hybrids will achieve a combined 50% share of the new vehicle market by then.

Electric power companies welcome a new wave of investment in heavy-duty and long distance vehicles even though few had expected the size of the uptick in demand growth from the transportation market. Increased profits also help U.S. automakers rebuild both their financial base and their manufacturing assets for the long term. What’s good for General Motors is once again good for America.

The U.S. is not alone in pursuing investments that will change electric power markets. Other nations in Europe and Asia are also on the bandwagon seeking to generate jobs, investments and competitive exports. Policies to address climate change are common in the largest economies in line with global commitments to address greenhouse gases. U.S. leadership plays an encouraging role in a global implementation of clean-tech investments with financial as well as policy support.

Another trend being shaped by policy and energy realities is the reduction in urban sprawl. Urban and inner-suburban land development contributes to a more efficient economic structure for the nation. Lifestyles, which embrace the use of public transportation, car sharing, biking, and just plain old walking, are no longer seen as exceptional.

The increase in demand growth benefits the power sector and makes the drive toward meeting renewable portfolio standards easier. It’s putting the “wind in the blades” of wind generators. Solar companies, builders of distributed power systems, and independent power networks all experience growth in sales. This leads to a more distributed and smarter power system. Consumers experience the emergence of a power system in which a wider range of prices are charged for differing levels of energy services. Prices paid to recharge cars may differ from location to location or at different times of the day. The unfolding and full deployment of information, communications, sensor and control technologies allow demand side resources to play a much larger role in ensuring reliability. Power from greener sources is easier for consumers to access by choice.

During these years the U.S. economy hits its stride. States and Provinces in the WECC region are in full recovery mode. States and Provinces with strong positions in mining, timber, agriculture, and energy lead the way. As incomes rise, consumers start to purchase big-ticket appliances, televisions (including some relatively energy-intensive 3-D sets), and cars with greater frequency. Some of these purchases help to put a cleaner and greener U.S. economy into place, but the prosperity also causes some increased use of electricity.

Extensive use of rooftop solar systems is key to this movement. Electronic and mechanical devices are now embedded with smart communications and management technology to allow various modes of use, many with energy efficiency as a key choice. Making smart choices becomes a fabric of the social environment as people share and exchange ideas and experiences. These shifts contribute to job growth in the economy (see potential categories of new job growth in Table 2.2).