We essentially stopped building nukes after 3 Mile Island, and we largely stopped building coal after the Clean Air Act was passed. (I’ve got an article in press quantifying this – should be published by the end of May.) However, we’ve been able to get by for the last three decades in spite of that slowdown largely because prior to the cessation of new, baseload construction, we had lots of spare capacity in the system. As a result, we’ve steadily increased the capacity utilization of those facilities and brought relatively cheap marginal power on line, creating the illusion that coal and nuclear power are cheap. (Both are only cheap if you don’t have to pay for capital recovery – which you don’t see if you’re just paying for a marginal unit of production.)

It’s not so much that we’re being “fed a line” right now as that we have now exhausted our ability to squeeze these assets harder, as they are all running just about at full bore. Our regulatory model makes it proportionally easy to build big, central stuff (e.g., more nukes, more coal) and relatively hard to build smaller local stuff like what we do. And yet the small local stuff is both cheaper and cleaner, creating a perverse situation wherein our regulatory model – if left unchanged – will lead us to precisely the wrong place.

So the answer to your question is complicated. We’ve identified 200 GW of potential for recycled energy in the US, which could produce about 40% of US power, suck up about $350 billion of investment (=economic growth), lower greenhouse gas emissions by 20% overall and lower energy costs. Those are truly remarkable numbers and – my self-interests notwithstanding – ought to be the core of any responsible energy or environmental policy. As to how soon we can build it… it depends on how quickly we modernize our outmoded energy regulation. It is a strange thing for a CEO to say, but this is an industry that really needs more competition.

Sean

Coal-fired central generation has been fortunate in the fact that they have not historically had to pay for their environmental costs. Moreover, under the Clean Air Act, the old (pre-CAA) plants were grandfathered out of compliance, and so they could continue polluting without penalty even as new, cleaner plants were forced to absorb costs to clean up still further. (For more on that topic, see here.) This has led to the rather odd situation where cleaner, cheaper power sources have been at an economic disincentive… but only so long as the old dirty fleet had extra capacity to spare. What we see in the current environment is a situation where we have to build more generation, but the new generation must comply with emissions regulations. As such, we can either build dirty, expensive power or clean, cheap power. This is a new world, and one which the conventional wisdom has not yet caught up with.

And so we find ourselves in the rather strange situation where politicians argue for raising electricity rates in the name of cheap coal. These chickens will eventually come home to roost… but in the meantime, we have a lot of better options – provided we can fix the flawed policy signals.

Sean

How we got to this point has more to do with lining up Senate votes by doling out pork than it does from any laziness within the environmental community – other than perhaps being a bit too willing to accept the flawed conventional wisdom that all routes to GHG reduction are expensive. And frankly, to get caught up in the (understandable) joy that we might finally get GHG legislation without casting a critical eye on the details.

Sean

I like Recycled Energy Development’s web site. It is well designed and full of information. Good luck with your business.