Power Failure Ahead: Waxman-Markey's 210% Electric Cost Increase

The Electric Power Research Institute (EPRI) is one of those apolitical technical research groups.  Usually their research reports are an insomniac’s dream—guaranteed to bring on the zzzzzz’s.  But a report released in August [1]examining the impact of the proposed Waxman-Markey Bill found that U.S. electricity prices could go up by as much as 210% by 2050 under the proposed climate change bill unless carbon capture and sequestration technologies were developed and deployed and nuclear power was used more widely as a baseload offset to coal.

Michael Howard, EPRI’s senior vice president of research and development, speaking at a U.S. Energy Association briefing in Washington said that EPRI research applied to the WECC market found that between 2010 and 2050, there is a 275% increase in the use of natural gas for electricity generation because the uncertainty about the future of either nuclear power generation new construction of carbon capture and sequestration development meant that despite price volatility natural gas fired generation would be the most prudent option for meeting future demand for most utilities.

EPRI found that using a full portfolio of generation and technology options would result in an 80% increase in the wholesale cost of electricity by 2050 relative to current costs, compared with an increase of more than 210% with a limited portfolio. EPRI’s new research assumed reducing carbon emissions 80% by 2050. Its full portfolio of technologies includes demand reduction, biomass, wind, hydropower, nuclear power, natural gas, coal plants with carbon capture and storage retrofit, and new coal plants using carbon capture and storage.  The limited portfolio tested did not use coal to generate electricity after 2030 because there is no CCS available resulting in significantly higher costs.

So what?

Waxman-Markey proponents of carbon emissions reduction are placing big bets on renewable energy, but the EPRI research finds that there is likely only one commercially available, cost competitive alternative to coal fired baseload generation to reach the emission reduction goals—nuclear power generation.  And even if new nukes could be built the cost of compliance is likely to raise electric rates a mere 80% compared to the 210%  it will take without them.

Waxman-Markey sets emissions reduction targets that depend upon new carbon capture and sequestration technology not yet proven or in commercial use.  While US DOE is restarting the FutureGen project to stimulate CCS development it remains a long way from commercial availability or economic use.

The reality is that absent CCS and assuming a lack of Administration enthusiasm for new nuclear generation construction in sufficient numbers to offset coal, the only practical alternative to meet future demand–even with all the renewable energy practicable—is combined cycle natural gas.

There is one other alternative to achieve Waxman-Markey compliance–substantial, sustainable energy demand destruction.

[1] http://my.epri.com/portal/server.pt?space=CommunityPage&cached=true&parentname=ObjMgr&parentid=2&control=SetCommunity&CommunityID=405