One man might know: Ralph Izzo is chairman and CEO of New Jersey-based Public Service Enterprise Group (PSEG), one of the largest electric and gas companies in the United States. As the keynote speaker March 4 at the MIT Energy Conference and in a separate interview, the longtime energy expert offered thoughts on the future of various electricity sources.
Overall, he said, future electricity growth is projected to be low, driven by electricity demand decoupling from gross domestic product growth and the impact of energy efficiency.
“We’re getting more dependent on electricity from a lifestyle point of view, even though we use less of it [thanks to greater energy efficiency],” Izzo said. “This matters from a power supply perspective, because it suggests no growth in demand and no need for new supply. Why would you build new plants in the face of the absence of growth? The answer is, you wouldn’t.”
Still, he projected that reliability needs will keep transmission investment at high levels.
Renewable energy pros and cons. Izzo discussed how fuel economics and tightening federal air quality standards have altered the generation portfolio: While natural gas, coal, and nuclear still make up the majority of electricity generation, renewable energy has grown in recent years due to policy support.
Still, it’s not a silver bullet.
“I think the Achilles’ heel of renewables is their lack of ability to run around the clock and to control when they run at all. That’s up to Mother Nature. If they’re going to have a meaningful role to play in a long-term future, we have to be able to store that output to meet the consumption,” Izzo said. That’s a problem scientists are pursuing. One MIT spinout, Ambri, is building a liquid metal battery with hopes of storing the output from renewables for use during peak consumption times.
Twenty-nine states and Washington D.C. have renewable portfolio standards, Izzo said. Renewables are supported by many public policy mechanisms, like subsidies, sometimes with “unintended consequences.” For instance, net metering, the practice of crediting residential solar producers for adding power to the grid, has in some states been criticized as exacerbating income inequality.
“Net-metered solar customers don’t pay for the services they utilize, specifically the distribution infrastructure, shifting costs to other, less affluent customers,” he said.
Gas prices remain low; coal could face threats. Despite an increase in demand, natural gas prices will remain relatively low, Izzo predicted. He said retiring coal plants will be replaced by natural gas and renewables, which will serve to reduce wholesale energy prices. That analysis is at odds with the Trump administration’s outlook on coal, which so far includes legislation repealing a rule that forced mining companies to track water quality in streams and restore streams after mining is complete.
“I don’t know how you’re going to revive coal without making real progress on clean coal technologies,” he said.
In fact, the abundance of inexpensive natural gas has altered wholesale energy prices and affected coal. In 2015, natural gas surpassed coal as the primary source of electricity for the first time. Izzo noted that prices were down between 27 to 35 percent across the United States in 2015, compared with 2014, and the decline persisted into 2016. Lower gas prices have also led to coal plant retirements. More than 25 gigawatts of coal production have been retired in the last several years or will do so soon — a 10 percent reduction from 2011 levels.
That said, natural gas isn’t foolproof.
“Natural gas produces about a ton of carbon for every megawatt hour you generate. You may get a little better, but you’re not going to change it. If you’re worried about CO₂, you can’t rely exclusively on natural gas,” Izzo said.
Nuclear plants have an uncertain future. Nuclear power is responsible for 10 percent of capacity nationally, but due to low operating costs and high capacity utilization rates it provides 20 percent of generation output.
However, low gas prices are making it difficult for nuclear plants to compete. Izzo said to expect plant owners to advocate for policies that recognize nuclear power’s environmental benefits and to pursue cost reductions and improved market price formation.
Izzo said nuclear power could benefit from a national or regional carbon-pricing program with unique emission rates goals for each state, such as those envisioned by the EPA’s Clean Power Plan. However, this implementation is delayed due to litigation in the U.S. Court of Appeals for the District of Columbia Circuit.
“Coal has gone from dominant to on par with natural gas, and it may shrink to one-third. We’ll see growth of solar, wind, hydro, and other forms of renewable energy. But from a carbon perspective, what will we allow to happen to our nuclear fleet?” he asked.