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The Coming Crisis in Electricity Generation

Grunge Power Lines

For more than 100 years electricity generation and distribution systems have evolved to become one of the most reliable services imaginable - one which has been the foundation of the industrial expansion and prosperity of the developed world. Our society is totally dependent upon this and even relatively short and localized interruptions in the power supply (for example during the Sandy superstorm) cause major disruptions to everyday life.

The reliability of the system depends upon a rather delicate balance of supply and demand that varies throughout the day and throughout the year.

Huge thermal base-load steam turbine generation plants that can reliably provide the same power output 7x24x365 are the foundation of the system in most parts of the world. Historically these have been fueled by coal which generates "dirty" (in some cases toxic) ash and a lot of CO2. More recently single cycle and combined cycle natural gas plants have played an increasingly important role. These plants are cleaner and much more efficient than coal plants in that they transform more of the energy generated by combustion into electricity. The disadvantage of these plants is that natural gas has historically been much more expensive than coal.

In regions where there are large rivers that drop hundreds of meters in a relatively short distance it is possible to build hydro facilities. These were the earliest source of large scale electrical generation and are still used extensively. Unfortunately, most of the best hydro locations in the world have already been developed.

Starting in the 1950's nuclear plants were added to the mix and generate a significant percentage of electricity in many countries (the highest being 75% of electrical output in France).

These base-load plants are designed to run all the time at a relatively constant output receiving a fixed price for the electricity generated. That is how they run most efficiently and a constant and predictable revenue stream underlies the calculations used to get the building of these plants financed and the operating costs paid. In most cases the payback on these facilities is achieved only after many years of operation.

When electrical demand starts to peak in the late afternoon and evening peaking plants come into play. These are typically single cycle natural gas turbine plants that can come on-line in a matter of 15-20 minutes or less. Because they run only during peak demand times the expectation is that the electricity they generate will command a higher average price. It is also assumed that they will be able to generate revenue most days although that varies with time of year and the weather. For example, very hot summer days and very cold winter days will result in higher peak demand than moderate days in spring and fall.

This complex balance of base-load and peaking power plants has been in place for decades and has resulted in a very reliable electricity supply. The most common source of power outages are storms that bring very strong winds, knocking down trees and branches that take down overhead electrical lines.

Over the past decade that balance has been disrupted by the introduction of renewable energy sources such as solar and wind. These are both unreliable in the sense that it is not possible to match supply with demand, and highly variable due to passing of clouds in the case of solar or frontal weather systems for wind. As an example, on Christmas day, 2012 Texas set a new wind generation record of 8.638 GW (26% of total supply) for a few hours. The very next day across the whole of Texas there was essentially no wind generated electricity available for 6 consecutive hours.

In most jurisdictions renewables are given priority access to supply the electricity grid regardless of whether or not there is demand. In order to balance supply and demand thermal generating stations have to cut back output, electricity is exported to neighbouring jurisdictions (typically at very low prices) or hydro stations "spill water" by redirecting the flow from penstocks to spillways.

As long as renewables made up a relatively small portion of total generation capacity the physical problems could be handled. But the economic issues are now coming to the fore as the development of renewables continues.

With base-load and peaking thermal plants now sitting idle (as spinning reserves) for more and more of the time the economics of running these plants has been significantly eroded. Many of these plants are marginally profitable or are actually losing money. There is no realistic hope that this trend will do anything but accelerate in coming years. As a result it is becoming increasingly difficult to get financing for the construction of new thermal generation plants.

In the United States the situation is particularly dire. The MACT regulations issued by the EPA in December, 2011 will result in the closure of many older coal-fired plants (estimates run as high as 34 GW of capacity or more). Plans to replace this capacity are both vague and uncertain. For example, Georgia Power's announcement that 2 GW of coal-fired capacity would be shuttered by 2015 was justified by the addition of 2 nuclear powered plants in 2017 - plants which may well run into significant construction delays. What happens between 2015 and 2017 (or later)?

Texas already has inadequate electrical generation reserves as highlighted in a strongly worded letter from the North American Electric Reliability Corporation. In an effort to get utilities to build new base-load generation facilities the Texas regulator (ERCOT) is raising the maximum peak price for electricity to $9,000/MW-Hour. The hope is that if you let a base-load plant charge 170x the average annualized price for the few hours that it is not idle then construction of the plant still makes sense. Call me a skeptic but I have to say "that dog don't hunt."

In Europe various studies referenced in Paul-Frederik Bach's excellent blog postings outline similar issues.

Beyond supply and reserve issues the economic disruption caused by renewables is producing some very strange consequences; in "green" Germany coal-fired plants are being used in preference to cleaner, more efficient gas-fired plants due to costs; in Ontario they are spilling water at "green and renewable" hydro dams in order to make room for "green and renewable" wind generation; the Danes end up using Swedish nuclear-generated electricity when the winds are calm even though they banned nuclear power generation; in Texas they are selling wind energy at negative prices almost 10% of the time because Production Tax Credits provide a profit.

Declining reserve capacity and uncertainty regarding the economics of new thermal plants will destabilize the electric grid. Rolling blackouts and/or regional grid failures will occur on a more frequent basis. These are the unavoidable consequences of continued aggressive development of renewable generation.

There are public policy initiatives that could make the transition to renewables less risky and disruptive but these would take time to implement. However, I personally don't see any public support or political will to try and slow down the introduction of renewables in order to proactively protect the integrity of the electrical system, particularly in North America and Europe. Instead, I fear that we will have to experience repeated significant failures in the system before the scale of the problem is fully appreciated.

Sometimes it seems like we just have to learn things the hard way!
Davis Swan's picture

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Malcolm Rawlingson's picture
Malcolm Rawlingson on April 25, 2013

The results of Rutherford's experiments were surprising that is most definitely true. However the bit you are missing is that his work could be repeated by others (and was). No such capability exists with the Earth's climate. The global warming mantra is simply a set of theories which cannot be proved one way or the other. None of the dire predictions of just a few years ago have come to fruition even though the world is burning billions of more tons of coal and fossil fuels and the concentration of CO2 is higher than it was then. That is why people are skeptical. You GW folks keep telling us the sky is falling and it hasn't. Maybe you are right and it will but you cannot prove what you say by experiment therefore what you have is a theory and not scientific fact.

Mr.Gores famous video was full of untruths (we call them lies in Canada) and has been proven so in court cases in the UK. That is why people are very very skeptical. The skepticism is underwritten by the scandals at the University of East Anglia and the convenient dropping of important data from the "hockey stick" graph to deliberately exaggerate it. You don't need the coal or oil lobby to be against what you say - you provide ample evidence without any assistance from them.

Consensus does not constitute science.


Len Gould's picture
Len Gould on April 25, 2013
Malcolm. "Mr.Gores famous video was full of untruths (we call them lies in Canada) and has been proven so in court cases in the UK." -- An Inconvenient Truth: Team Gore Responds - By Michael Dobbs As you know, being Canadian, we have varieties of catagories of lies as well.
Ferdinand E. Banks's picture
Ferdinand E. Banks on April 26, 2013
Malcolm, we could have the most inexpensive electricity in the world here in Sweden if Ferdinand E. Banks (Fred) was giving the orders. Despite being expelled from engineering school after his first year because he failed everything twice, and being expelled from infantry leadership school because he wasn't the type they were looking for, and..and... and... Well that's enough for the time being, and besides, dumb Fred knows a few things. One thing he knows is that renewables without nuclear won't hack it in the long run for many countries, although there might be a few exceptions. He also knows that in the long run nuclear is ABSOLUTELY the most inexpensive producer of large amounts of electricity. By the way, Fred knows this because he didn't fail any of his economics classes, nor did he fail any of his energy economics students - except perhaps the fool who walked into my room one day and informed me that I was wrong about Hotelling's theorem.

And Len, I can't stand Al Gore. I can't stand him because he did not do what he should have done to become president. With him as president there wouldn't have been any lies about weapons of mass destruction in Iraq, and those lies were the biggest crime of the twentieth-first century - at least so far. I have a similar feeling about John Kerry, alhough maybe I am predudiced because the real fault was with the American voters.

Michael Keller's picture
Michael Keller on April 26, 2013
Small point. There were weapons of mass destruction in Iraq and they were used on the Kurds and Iranians. Logic would lead one to conclude that they were still in Iraq and would be used again.

While some may argue about the wisdom of wiping out the tyrant, the fact is he had gassed folks in the past.

Richard Vesel's picture
Richard Vesel on April 26, 2013

Al Gore lost for one very simple reason. Ralph Nader, who is much farther to he left, absorbed (stole!) votes from the left side of the picture. I would bet my life that Nader did not get 1000 votes from Republicans in the entire country. If you go back and look at the results, Nader took away a couple of key state wins that Gore needed.

Yes, what a completely differrent world this would be, had that election NOT gone to "W".


Saddam was an evil megalomaniac, no arguments. Hardly worth $2T to eliminate him. I can think of far more efficient and effective ways that could have been done, and am hoping the current administration exercises them on NK, because he too is killing his population (through intentional starvation) and has WMD's. We should be able to do the job for 1% of what it cost us to take care of Saddam.


Len Gould's picture
Len Gould on April 26, 2013
Agreed Richard. Our tendancy is to simply dismiss the entire Bush 2 administration as stupid, because of the obvious which you state. However, it is much more accurate rather to evaluate them as smart but totally corrupt, exploiting the 911 crisis to open up Iraq's oil to worl markets under their control (they had hoped). Clearly, N. Korea has no oil so don't matter a bit.
Michael Keller's picture
Michael Keller on April 26, 2013
Is kind of interesting to speculate what path the world would now be on if past events had taken a different turn. Hitler killed off before he got started, ditto for Mao. Stuff of science fiction.

Back to the article! How might the future evolve if cooler heads prevail and some form of reasonable approach for all prevails? I do not believe we are on that path now.

Ferdinand E. Banks's picture
Ferdinand E. Banks on April 26, 2013
Michae, Susan Saradon asked at the beginning of that misadventure, "What did Iraq ever do to the US". Answer...nothing. And my logic tells me that Iraq would never use what you call "weapons of mass destruction" against the US, not even if they had rockets in which to carry them, which super-dumb Condoleeza Rice seemed to think were in the Iraqui arsenal.

But I still blame Al Gore for not winning. Among the many things he should have done was to talk to Ralph Nader, explain to him that there was a place for him in the Gore government, or ,maybe an ambassadorship somewhere with the same conditions that Robert de Niro mentioned to Dustin Hoffman in the film 'Wag the Dog'.

AnyWAY, we got what we got, and it was a curse for most of the world.

Gary Vesperman's picture
Gary Vesperman on April 29, 2013
My website has a link to my compilation of "130 Electrical Energy Innovations". It starts with Brief Summaries of all of these devices.

Three of them are enormously powerful DC generators that maybe power industry professionals can help us with - hydro-magnetic dynamo, electrino fusion power reactor, and micro-fusion reactor employing stable high-density plasma electron spiral toroids in neutron tube. Their particular Brief Summaries follow:

Hydro-Magnetic Dynamo – Hydro-magnetic dynamos are scalable from 100 kilowatts to 1,000 megawatts. One doughnut-shaped, fuel-less 1000-megawatt hydro-magnetic dynamo is about the size of a two-car garage and can reliably run continuously for 25 years or more with little or no maintenance, no external fuel source, and no pollution. Needs $10 million and two years to research and build 1 – 5 megawatts fourth prototype.

Electrino Fusion Power Reactor – A clean electrino fusion power reactor fuses electron sub-particles, “electrinos”, to generate 1880 megawatts for 100 years until shut down for refueling with 155 pounds of brass. By reversing the order-to-disorder arrow in the second law of thermodynamics, a $50,000,000 electrino fusion power reactor could be built which may also reverse all aging and disease processes within a one-mile radius.

Micro-Fusion Reactor Employing Stable High-Density Plasma Electron Spiral Toroids in Neutron Tube – Based on ball lightning, safe, pollution-free micro-fusion reactor-powered generators could reliably generate electricity with capacities ranging from 10 kilowatts through 1000 megawatts at the cost of 10% of today's electricity. All transportation vehicles could be reliably and safely powered with micro-fusion reactors with substantially lower production, operating and maintenance costs and without poisonous emissions. The mass and cost of aircraft could be reduced by 70%, and space launch costs reduced by more than 95%.

For comparison Hoover Dam's 17 generators have a total nameplate capacity of 2080 megawatts.

A doughnut-shaped hydro-magnetic dynamo the size of a two-car garage is projected to generate 1000 megawatts of DC electric power.

An electrino fusion power reactor in size is approximately 10 feet x 10 feet x 80 feet. It is projected to generate a net of 1880 megawatts of DC electric power.

The micro-fusion reactor employing stable high-density plasma electron spiral toroids in neutron tube is projected to be scaleable up to 1000 megawatts of DC electricity.

Multi-billion-dollar deployments of these and other clean electrical energy innovations would absolutely solve the coming electricity generation crisis, mitigate global warming, stop disastrous pollution, and provide consumers with much cheaper and more reliable electricity.

Gary Vesperman Boulder City, Nevada

Michael Keller's picture
Michael Keller on April 29, 2013
I think you've been reading too many Sci-fi books. Some day we may harness the power of the sun, but it will not be today nor any time soon.
Jerry Watson's picture
Jerry Watson on April 30, 2013
Looks Like I almost missed the dance on this article; however, ERCOT has a flawed market design. It is an energy only design that is insufficient for the task of insuring adequate capacity unless it includes huge prices spikes. It is not indicative of the entire US only Texas. If the Texans were a little less hard headed they could simply follow the PJM lead and prop up the flawed design. Again read the Brattle Group report about the ERCOT flaws.

Also, Solar does to a degree follow load in warm regions if and when the clouds come in load drops the needs for comfort cooling is reduced by clouds. It only supports comfort cooling; however, that is currently the big capacity driver. I do not know about any relationship between wind and load.

One thing I do know is if you have a enough economical peaking capacity and its associated fuel anything is reliable. Even if the wind had to backed up every other day the 11,000 heat rate combustion turbines coupled with the wind generation from the previous day would have an effective heat rate of 5,500 which is better than the best combined cycle. If the combustion turbine only occaisionally provided backup it should be a very good deal. We just should avoid counting wind as anything other than spot energy.

Jerry Watson's picture
Jerry Watson on April 30, 2013
I got carried away in my own rhetoric, I am not seeing the crisis just a market and Regulatory driven movement towards Nat Gas at least until the political climate changes. The US is a rich nation and now has a newfound abundance of Nat Gas and a lot more crude than once extractable. Peak Oil may come but it is currently meeting a lot of US resistance. The rest of the world is capable of copying our horizontal drilling technology so crude production will likely see new highs before the feared and inevitable decline. My guess is we will again see $60 crude dispites Forbes expert predictions of it staying around $100. I likely have socks older than Forbe's expert. From the article he hits me as a Houston insider trying to prop the market up and get a few more suckers before prices soften further.
Len Gould's picture
Len Gould on April 30, 2013
Jerry, are you forseeing Brent prices dropping to the $60 range, or just WTI? By how much can Brent and WTI disconnect? And what effect will result from the fact that, largely due to the huge discount on Oil sands production, they cannot continue operating if the WTI drops much below where it is now, around $90?
Malcolm Rawlingson's picture
Malcolm Rawlingson on May 1, 2013
I agree Len, the floor price of oil is the average cost to extract it. The sources of oil are no longer easy to get at. Deep sea drilling is a very expensive proposition as is shale oil extraction and getting it out of the tar sands deposits. If the price goes too low companies simply will not explore for it. If it costs $90/bbl to get it out of the ground for a sale price of $60 you have no business case to continue operating.

On the other hand better extraction technologies are becoming available all the time so things are not static in the oil business. Technology will reduce extraction costs so rather than the doom and gloom world of "we are running out of everything". I think we have a very bright future ahead of us.

The only time one can predict the end of a resource is if you know how much of it there is. We do not know how much oil there is in the earth's crust. Therefore we cannot know when it will run out.


Ferdinand E. Banks's picture
Ferdinand E. Banks on May 4, 2013
Funny, isn't it, but an ignoramus from Stockholm University and another dummy from my university did not seem to think that OPEC has any influence on the oil price. I wonder if anyone reads anything. OPEC and the oil companies are not going to let the oil price go to sixty dollars - unless they are spending days as well as nights in my favorite Vienna watering hole. And if that price falls, they know how to get it back to where it belongs.

Gee, I wish that I were a rich man. If I were I would pay people to tell me that the oil price will go to 60 dollars at the next conference I attend. They wont tell me that again.


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