impact that a nuclear accident can have around the world. While it did not stop nuclear power in its tracks, “nuclear renaissance” is not a term likely to be heard in the years immediately ahead. One consequence will be to tilt development of new plants to more advanced designs, which incorporate passive safety features so that, for instance, cooling in an emergency would not require electricity from backup diesel generators. Many countries will still choose to include nuclear power in their energy mix for a variety of reasons—extending from zero carbon to energy independence, to the need for base-load power, to avoiding brownouts and blackouts with all the costs that they bring. But economics will also count, and in the United States, even before Fukushima Daiichi, something else was making the competitive prospects for nuclear power more challenging. Thus was the surge of inexpensive unconventional natural gas.
POWER AND THE SHALE GALE
Natural gas is the other obvious fuel choice. The breakthroughs in unconventional gas—specifically the shale gale—hold out the prospect that very large volumes will come to market at relatively low cost. That is changing the choices and calculations for electric power. John Rowe is the CEO of Exelon, which has the largest nuclear fleet in the country. But the arrival of shale gas has changed his calculations. “Inexpensive natural gas produces cheaper, clean electricity,” he said. “Cheap gas will get you if you bet against it.” This shift in perspective and expectations could lead to the building of a significant amount of new natural gas generation.23
That possibility may remind some of the dash for gas in the late 1990s that ran right into the wall of tight supplies and rising prices and ended in distress and bankruptcies. But now the arrival of unconventional gas portends low prices and abundant supplies for many decades or even a century or more. What is also different from a decade ago is that there now exists an urgency to find lower-carbon solutions. Natural gas has also gained a new role—as the enabler of renewables, which are not always available when one wants them, or needs them most. Gas-fired generation would swing into action when the wind dies down and the sun doesn’t shine.
BUT HOW MUCH?
For all these reasons it is virtually inevitable that an increasing share of power generation will be fueled by natural gas. But how much? Some argue that the natural gas capacity that is already in place can be used to replace more carbon-intensive coal. A good part of that natural gas capacity needs to be kept available as a “peaking” or surge capacity to balance the overall power flows when demand increases, whether at six in the evening when people get home from work and switch everything on, or when a heat wave causes a sudden increase in air-conditioning use. Without this kind of flexibility, the stability of the overall transmission system would fall apart, leading to brownouts and potentially catastrophic blackouts.
But what about building only natural gas facilities for new capacity? That is not likely. A utility is looking out many decades because of the large capital costs and because of the long life of a unit being built today. It is too risky to overcommit to one approach when technology, expected fuel costs, regulation, public opinion, and ranking of risks can change sometimes with abrupt speed. Diversification is the basic strategy for protecting against uncertainty and unexpected change. Moreover, while natural gas is lower in carbon, it is not carbon free. So natural gas can help reduce emissions substantially in the short and medium term, but even it could be under pressure in a couple of decades—unless carbon capture and storage works for natural gas as well as coal-fired generation.
Still, gas usage in the U.S. power sector could increase substantially—and all the more so if power demand surges and if efficiency and renewables do not deliver on what is expected and utilities thus need to do something quickly. Gas-fired capacity is the most likely default option. This is true not only in the United States. It is also likely that natural gas–fired generation will grow significantly in Europe and in China and India if unconventional gas development succeeds in those countries.
For many years to come, the power industry will be struggling with the question of what to build and what to shut down and its overarching quandary of fuel choice.
But the decisions about fuel choice will be based not only on energy considerations but also on what has