Market forces are transforming the electric utility industry in surprising and unpredictable ways. This from a national market trends forum last week. Some not surprising, others more interesting.
No Surprise. The fracking revolution has overturned coal’s historic cost advantage over natural gas, while market forces are now driving a larger role in declining costs for wind and solar—resources once dependent almost entirely on state and federal tax policies.
Surprise. Recent nuclear plant closures are a surprising example - at least to me based on our nuclear generation - of how market forces sometimes produce results never envisioned. Nuclear is the largest, most reliable source of base load power free of CO2 —IMO still the most effective generation needed to meet ever tighter GHG regulatory standards — but it has become less economically attractive.
Venture capitalists, private equity firms and corporations are pouring money into the clean energy sector. First-quarter 2016 investments from these sources was $1.4 trillion globally, while a number of corporations and wealthy investors have formed coalitions to make an even bigger impact.
Advancing technology has also accelerated this transformation. A core of market-driven developments, such as improving batteries and efficient micro-grids, have moved beyond their original purpose and are now leveraged by a growing number of utilities.
Changing consumer demands and expectations combined with advanced technology is producing an evolution in my industry that could be expected in a market economy. Affordable and reliable energy is at hand from non-fossil resources. Carbon taxes and micro regulation of consumer choices are not needed for this market driven trend. In fact, shutting down fracking as the enviro lobby wants, might adversely impact these trends in unintended ways. The fracking revolution was the ace in moving these market forces forward faster than even regulation did.
No Surprise. The fracking revolution has overturned coal’s historic cost advantage over natural gas, while market forces are now driving a larger role in declining costs for wind and solar—resources once dependent almost entirely on state and federal tax policies.
Surprise. Recent nuclear plant closures are a surprising example - at least to me based on our nuclear generation - of how market forces sometimes produce results never envisioned. Nuclear is the largest, most reliable source of base load power free of CO2 —IMO still the most effective generation needed to meet ever tighter GHG regulatory standards — but it has become less economically attractive.
Venture capitalists, private equity firms and corporations are pouring money into the clean energy sector. First-quarter 2016 investments from these sources was $1.4 trillion globally, while a number of corporations and wealthy investors have formed coalitions to make an even bigger impact.
Advancing technology has also accelerated this transformation. A core of market-driven developments, such as improving batteries and efficient micro-grids, have moved beyond their original purpose and are now leveraged by a growing number of utilities.
Changing consumer demands and expectations combined with advanced technology is producing an evolution in my industry that could be expected in a market economy. Affordable and reliable energy is at hand from non-fossil resources. Carbon taxes and micro regulation of consumer choices are not needed for this market driven trend. In fact, shutting down fracking as the enviro lobby wants, might adversely impact these trends in unintended ways. The fracking revolution was the ace in moving these market forces forward faster than even regulation did.
