POWER January 2016 - 6

SPEAKING OF POWER
The Journey Ahead
J
anuary has traditionally been POWER's
forecast issue, and there's one overriding
prediction I feel confident
making: The speed of changes will continue
to exceed the power industry's ability
to fully comprehend and address those
changes. That's not meant as a put-down.
It's intended to light a fire under readers
to develop innovative solutions and prove
me wrong.
Imperfect but Necessary
Predictions
There will always be unknowns, but every
business has to make informed guesses
about where things are headed to ensure
survival. Few predict all the correct details.
Take NRG Energy. Its long-time CEO, David
Crane-famous for promoting renewables
and distributed generation and for
promises to disrupt the industry-resigned
in December after announcing a " reset " of
the company's organization. The changes
Crane predicted are happening, but other
unanticipated conditions-cheap natural
gas in particular-are also engineering
the road forward.
And when consulting firm McKinsey & Co.
looked back at its predictions from 2007 for
the energy sector, it found that in the areas
of solar, wind, batteries, unconventional oil
and gas, and energy efficiency, it " got the
direction right, but not the speed " (change
was faster). On the other hand, McKinsey
saw a brighter future for nuclear back in
2007, before the Fukushima disaster, ongoing
cost overruns for new nuclear units,
and cheap natural gas.
It's easy to find fault with imperfect
predictions after the fact, but without forward
thinking, we won't be prepared for
the future. Here are some factors that are
shaping the latest projections.
Fuels in Flux
Since April 2015, for the first time, the
U.S. generated more electricity from natural
gas than from coal. Also last year,
some utility-scale wind and solar projects
beat the price of gas-fired generation, and
the Nuclear Energy Institute predicted
more closure announcements for merchant
nuclear plants in deregulated markets. I
6
don't know anyone who predicted all of
those developments even five years ago.
Surprising shifts can be seen internationally
as well. A decade ago, few would
have predicted that Middle Eastern countries
would shift from fossil fuels to renewables
and nuclear power, yet many are.
" Oil- and Gas-Rich UAE Banks on Nuclear
Power " in this issue provides one example.
Meanwhile, many nations are going into
overdrive to develop renewable capacity,
for fuel security as well as environmental
reasons. See the lead story in this issue's
Global Monitor for more on this issue.
Sometimes it seems as if the professional
prognosticators are running to catch up
with the speed of reality. For example, IHS
last October revised its predictions for 2016
global solar photovoltaic demand upward
from already bullish projections to a total
of 65 GW. The increase was prompted by
" an acceleration of projects in the United
States, ahead of the solar investment tax
credit (ITC) expiration; and, second, faster
growth in China. " And last August, a Citibank
report ( " Energy Darwinism II: Why
a Low Carbon Future Doesn't Have to Cost
the Earth " ) predicted that global growth
in solar power through 2020 could be at
least 65% higher than estimates from the
International Energy Agency. Its projections
for wind were also higher.
Climate Change and
Cybersecurity Concerns
The nature of the changes facing the
power industry range from familiar ones
involving the cost and availability of fuels
(see " The Energy Industry in Xinjiang,
China: Potential, Problems, and Solutions "
in this issue), to the challenge of managing
regulatory compliance in evolving
power markets and coping with the effects
of climate change on power infrastructure
around the world.
It's worth noting that generators aren't
the only ones struggling to respond to all
of this change appropriately. Regulators will
be playing an increasingly important role.
In his installation remarks last November,
the incoming president of the National Association
of Regulatory Utility Commissioners,
Travis Kavulla of Montana, told his fellow
www.powermag.com
state commissioners, " each of us has a view
on the most important environmental regulations
of our era, which are those concerning
carbon-dioxide emissions from new and
existing power generation facilities. Some
of us may challenge them; some of us may
support them. But in either case, we should
acknowledge that we are living in a new
context where environmental considerations
appear to be the major force driving the procurement
and dispatch of resources. "
More recently, Kavulla underscored the
importance of both utilities and regulators
becoming informed about and taking
action on cybersecurity. His worst-case
prediction: If a multi-month cyber catastrophe
hit the power sector, " I don't know
that investor-owned utilities would survive
the potential nationalization of the
industry that would follow, " he said in an
interview with EnergyWire.
The good news is that the public is increasingly
aware of cyberthreats and beginning
to understand how critical it is to
have a grid that's reliable not only in the
traditional sense but also resilient in our
cyber world.
Be Road-Ready
When other traffic is moving fast and unpredictably,
you don't pull off the road.
You minimize distractions, pay closer attention,
and deploy the best available
tools to reach your destination safely. In
today's cars, that might mean using bluetooth
communications, spoken navigation,
and " smart car " features like heads-up displays
and lane-change sensors.
For the power industry, as I show in " Big
Data and the Industrial Internet Meet the
Power Plant, " those tools might include
smarter data collection, monitoring, and
analysis. That new tools designed to provide
greater intelligence about equipment,
fleets, and markets also present turbocharged
challenges should be no surprise.
The journey ahead is sure to include
some new scenery, vehicles, and passengers.
We thank you for including POWER
and powermag.com among your navigational
guides. ■
-Gail Reitenbach, PhD is POWER's
editor.
POWER | January 2016
http://www.powermag.com http://www.powermag.com
POWER January 2016

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