Warning for utility planners: The all-of-the-above energy policy will fail

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By: SGN Staff

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Quick Take: Whether you are planning for the generation side, the grid side or the customer side of the business, you have to make your best guess about the dominant form of generation. Your world will be very different depending on whether renewables, natural gas, nuclear or some other choice prevails. The story below claims the all-of-the-above strategy now popular with both political parties in the United States is doomed to fail. And likely to cause big headaches for any utility that marches down that path. - By Jesse Berst

 

Both the Republicans and Democrats are promoting an all-of-the-above energy strategy. In other words, electric power utilities should pursue all available energy options.

 

That's a naive and dangerous approach, warns a Bloomberg article that cites Citi Research. Historically, one energy source becomes dominant. And, when you think about it, it certainly wouldn't make sense for utilities to be spending to install more expensive options when one source is more cost efficient.

 

Today the most inexpensive source is natural gas for North America, but the situation is different in other parts of the world. The Citi report, "Energy Darwinism: The Evolution of the Energy Industry," cites Germany as an example. The 30 GW of solar built since 2007 have up-ended the country's power mix. "Peak demand now goes to solar production, leaving traditional generators with a lot of capacity they're not using, and a lot of money they're not making."