Carbon control legislation under consideration in Congress is intensifying regulatory uncertainty in US energy generation. The challenge today is keeping existing generation assets spinning while planning for and building new assets.

Regulatory uncertainties continue to affect energy generation planning and investment, especially as Congress continues work on the currently proposed American Climate and Energy Security (ACES) Act. With the expectation that some form of carbon control policy will eventually be enacted, utilities are placing bets on low carbon technologies and programs before standards have been designed or proven.

There is pressure from the government and a significant amount of money at stake propelling the utilities’ current approach. Some perspectives on generation technologies and strategies:

• Large, utility-scale renewable projects face a lack of financing and the economics of the projects have deteriorated—increasing the trend of utilities funding the projects on their own balance sheets and on the renewable vendors.
• A lower carbon intensity future will need clean coal with carbon capture and storage (CCS) technology, although the economics and technology are clearly not there now.
• Integrated gasification combined cycle (IGCC) with carbon capture and sequestration is not out of the picture, but is not yet economically feasible.
• New nuclear generation is carbon neutral and will play a significant role in future generation.
• Flexible gas-fired generation will continue to play a major part in the future, particularly in the near term, as it will be required to back up highly variable generation.
• Energy efficiency combined with demand response will continue to be important generation “resources.”

Wind and biomass will account for much of the renewable energy used in the future. Solar will also play a part. Geographical location is a problem for solar and wind development. Big wind tends to be in the middle of the country and solar in the southwest, whereas loads are far apart and concentrated along the coasts. Energy storage technologies will be essential to match some of these geographically– and time–displaced renewables with load. Storage applications not only enable interconnection of variable energy resources, but can also improve reliability and efficiency, and provide ancillary services.

Generation is also becoming more distributed as customers seek to become greener, and gain control over their own loads and energy costs. Such distributed generation, combined with demand response and energy efficiency, offers a second source of sub-plant generation with the potential to reduce energy demand by up to 20 percent at peak.

A more detailed summary of the executive-level energy and utility industry dialog held at KEMA’s 2^nd annual Utility of the Future conference – including the Generation and Carbon Control panel – is available on-line and as a download at www.kema.com/utilityfuture2009.