Middle Years: 2018-2022/A New Day Dawning

Middle Years: 2018-2022/A New Day Dawning

Newer industries, including biotechnology and information services, experience significant growth rates. The commercialization of three-dimensional computer chip technology kick starts the next “smart product” generation, which results in the proliferation of chip-based intelligence in almost every product. Clean energy technologies expand quickly, increasing their economic impacts as companies based in the WECC region start to produce and export more products resulting from their recent R&D spending. For these companies, geographic proximity to both domestic and export markets increases the overall global competitiveness of regional companies.

The energy sector contributes to job growth by increasing demand for distributed power systems and energy management services. Utilities start to build out smart-grid systems using new, more intelligent devices on both the demand and supply sides. Demographics, which are often underappreciated as an economic driver, start affecting the global economy. As a result of consistent immigration, the U.S. population grows, as is evidenced in the 2020 U.S. Census. The U.S. avoids the continuing population losses seen in Japan and most of the member states in the European Union. In combination with the ongoing recovery and population growth, renewed spending returns as consumers start to purchase big-ticket items including automobiles, appliances and electronics—items that were deferred by many during the last five years.

While Arab nations in North Africa and the Middle East are moving toward more democratic forms of government, this process proves to be both contentious and rife with uncertainty. Oil prices consistently hover above $120 per barrel based largely on global demand. Price spikes occur regularly because of political disruptions and violent outbreaks in the Middle East.

A combination of renewable energy, readily available domestic natural gas and oil, and energy efficiency and conservation provides a clear path for steady reductions in U.S. energy imports. Natural gas prices are only slightly impacted by both environmental regulations on fracking and increased demand from the electric power sector as production continues to increase. However, as the push for energy independence continues and new natural gas infrastructure comes online, there are growing concerns that the distribution system is now even more vulnerable to both natural disaster and terrorism.

Innovations in both electric supply and distribution systems emerge from renewed R&D spending—although no game-changing breakthroughs are on the horizon, a number of innovations are reaching a critical mass, including:

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  Wave generation technologies make significant strides and are close to being market ready at competitive costs
  
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  The first EGS (Engineered Geothermal System) comes on line in California and traditional plants experience better efficiencies
  
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  Small scale modular nuclear plants are successfully demonstrated
  
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  Solar DG at 100 KW scale and larger has reached grid parity (retail cost)
  
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  Advanced battery solutions for energy storage and electric vehicles.
  

Global financial markets have absorbed and restructured the toxic debt that had so severely damaged credit markets. There were some significant bankruptcies and mergers, but, by this time, credit flows support both sound investment and home ownership. Money pours into the energy sector, as investors perceive it to be a secure industry. Sound economics drive good investments: Demand grows and is very likely to rise because of expansion in industrial and consumer product sectors. After five years of sluggish growth, electric-powered vehicles start to pick up market share due to lower costs and higher efficiencies of greatly improved battery systems (See Figure 1.4 on expected shifts in the transportation fleet).

Figure 1.4: Sales of light-duty vehicles using non-gasoline technologies by fuel type, 2010, 2020, and 2035 (million vehicles sold)

Source: DOE/EIA Energy Outlook 2012 (With Projections to 2035), Page 85, DOE, April 2012

In the WECC region, the reshaping of the electric power systems takes an “inside-out” approach. Installation of generation close to load now happens before power is shipped in via transmission lines. This means that forms of distributed generation, demand response, solar power, natural gas and energy management systems now dominate the market. The challenge with this approach centers on sudden spikes in demand and guaranteeing reliability. As a result, these systems remain connected to the grid to ensure reliability. Smart grid investments by early adopters in communities, high technology companies, and utilities accelerate.

With a steadily improving economy, public pressure on the power industry focuses on climate change solutions as well as other environmental concerns. Land use impacts of natural gas production, renewable energy installations and water scarcity lingering from the 2011-2016 drought (evidenced by additional dry-cooled generation) now merit continued public concern. As the nation grows both in terms of demographics and economics, there are more conflicts about the use of limited natural resources.

Tourism continues as a sizable industry in the WECC regions and land use, in particular the use of open and protected areas, sometimes conflict with energy system growth. A balanced approach in most instances allows important transmission and distribution systems investment to proceed, especially those bringing in power from renewable sources. State and provincial economies pursue environmental agendas, while federal policies are aimed mostly at fostering economic growth. Moderates and centrists maintain political power in many states and seek to balance both employment and economic growth with responsible stewardship of natural resources.

Electric power companies actively adjust to the new more distributed and self-contained power infrastructure, effectively and efficiently managing the data and information flows coming from the accelerated build out of the smart grid. Energy services evolve into many submarkets as consumers are segmented into levels and styles of service that will accommodate their different needs. Even so, many consumers continue to receive power the old-fashioned way.

There are many new players in the energy market, especially in the information sphere. Supporting this faster-paced aspect of the electric market are large corporations developing software and hardware options that allow smart energy businesses to provide quality services. The technology allows WECC to expand the sub-regional EIM region-wide and leads to more sophisticated energy trading and more effective cost management. This more connected system allows Native American Tribes and First Nations to develop and manage their energy-producing assets and activities and, as a result, receive financial benefits.

By the end of 2022, renewed confidence in the economy and financial systems as well as ongoing technology improvements provides a foundation for an economic renaissance and the long-overdue transformation of the electric power system in the WECC region.