POWER January 2011 - 7

SPEAKING OF POWER
My Top 10 Predictions
for 2011
I
t's time to pull my crystal ball out of
storage, polish it up, and give you another
round of U.S. industry predictions
for 2011. I graded last year's predictions
B+ (for a complete rundown of how I graded
each prediction, see page 32), but I'm
convinced I'll do better in 2011.
10. Electricity Use Remains Flat.
The Energy Information Administration
reported in late November that electricity
usage in 2009 declined 4.1% in the
U.S. That's the lowest usage since 2003
and the largest decline in six decades. The
data say that 2010 will probably see an
increase (about 4.7%) that returns usage
to 2007 levels. I believe usage in 2011
will remain flat because the very slight
blip in economic recovery produced by the
stimulus spending has run its course, deferring
the worst of the economic pain to
2011. See " The U.S. Power Industry 2011:
The Sequel " (p. 22) for details of demand
growth.
9. Wind Power Projects Are Becalmed.
New wind projects in 2010 took
a steep nosedive: Wind installations were
down 72% from 2009, the lowest since
2006. The American Wind Energy Association
blames " Factors [that] include lack of
long-term U.S. energy policies, such as a
[federal] Renewable Electricity Standard
[RES]. " State RES and federal and state
tax credits are the engine that propels the
wind industry, not market demand. The
only hope of reviving the moribund wind
market rests with the passage of a national
RES, and that won't happen in 2011.
8. New Plant Construction Is Mostly
Gas. New plant installations in 2011 will
continue to be largely fired by natural
gas. Perhaps 8 GW to10 GW of new capacity
will replace shuttered coal plants
and " chase " nondispatchable renewable
projects such as wind and solar. Keeping
older coal plants running was important
to many utilities when cap and trade was
on the table because of the value of the
promised allowances. Cap and trade is
dead, so there is no reason to continue
operating uneconomic coal plants. For
HSB Solomon Associates' view of the gas
sector, see page 47.
6
7. Fracking for Gas Causes a Backlash.
Fracking, a process that uses proprietary
chemicals to break apart rock
formations to release natural gas, is
causing a strong backlash in regions
where groundwater supplies are said to
have been contaminated by those chemicals.
I expect the fracking controversy
will mushroom in 2011 to the point that
it will stall drilling of many new unconventional
gas fields.
6. The EPA Grades Wet Ash. The Environmental
Protection Agency (EPA) has
proposed alternative rules for wet ash
impoundments, depending on whether
the ash is considered a " non-hazardous "
or a " hazardous " waste product. There is
disagreement inside the administration
about which path to take, but I predict
that the EPA will again find the waste
" non-hazardous, " as it did in 2000.
5. Utilities Lose Interest in Biomass
Conversions. FirstEnergy announced that
it would convert two units at its R.E. Burger
Plant to burn biomass in early 2009.
Instead, the two units were mothballed
on December 31, 2009 because " expected
market prices no longer support " the project.
Not mentioned was the enormous first
cost of the sure-to-be-problematic conversion
that surely met with an unfavorable
response from risk-averse Ohio regulators.
I expect other retrofit projects will meet a
similar fate.
4. Economics Come First. Gas plants
may be de rigueur in 2011, but some states
will always place short-term gains ahead
of long-term pain. A good example is Tenaska's
Taylorville Energy Center, which
is seeking Illinois legislature approval
of a 30-year power purchase agreement
despite the Illinois Commerce Commission's
(ICC) finding that the plant would
prove too costly and have " uncertain
future benefits. " The short-term gain: a
few coal mine jobs. Long-term pain: The
ICC found that the electricity produced
by the integrated gasification combinedcycle
plant was over 21 cents/kWh even
when a federal tax credit of $417 million
from stimulus funds and a $2.58 billion
loan guarantee to help finance the projwww.powermag.com
ect
were factored in. At almost $6,000/
kW, Taylorville will be the exception that
proves the rule.
3. The Smart Grid Gets Personal.
I believe that smart grid technologies
hold great promise for demand management
and energy conservation programs.
Yes, costs can be high and some utilities
have had difficulty making the business
case to regulators. But forward-looking
utilities realize that a successful smart
grid program require strong customer
relationships before cultural changes in
electricity usage can take place. I believe
that 2011 will find the focus shifting
from technology to building customer
enthusiasm. Managing Editor Gail Reitenbach
covers other smart grid trends in
an online exclusive this month at www
.powermag.com, as do our Black & Veatch
contributors on p. 42.
2. Nuclear Steps Forward. As of November
2010, there were 441 nuclear
power reactors in operation worldwide
and 65 were under construction in 15
countries-the largest number in more
than two decades. Leading the global industry
are China (with 26 reactors under
construction) and India (with six). In the
U.S., work on Watts Bar 2 continues. I'll
step out and predict that the U.S. will
double the number of nuclear plants under
construction in 2011.
1. The War on Coal Continues. I don't
expect any significant energy policy
changes from the new Congress, and neither
does President Obama. The president
has turned to the strong arm of the EPA,
through rulemaking, to put coal-fired generation
out of business in the U.S. I expect
that either judicial review or the House
defunding the agency's rulemaking activities
will bring the EPA to heel later this
year. Remember the Clean Air Interstate
Rule and the Clean Air Mercury Rule?
I've shared my opinions on some of the
key issues facing the industry in 2011. I
know you have strong feelings on many of
these subjects as well. I hope you'll share
them with us at editor@powermag.com. ■
-Dr. Robert Peltier, PE, is POWER's
editor-in-chief.
POWER | January 2011
http://www.powermag.com http://www.powermag.com
POWER January 2011

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