How bad is the capacity crisis and why is it happening_

 

Very bad. Experts say it is not a question of if we will have blackouts, but simply when. In fact several major outages have already occurred in the West, and the Eastern half of the country has been on the verge of collapse several times.

 

The reason is simple. There is a growing shortage of generating capacity to meet peak demand. Capacity margins over peak demand have fallen to less than 10 percent in some North American Electricity Reliability Council (NERC) regions. (See the NERC Regions Map and the NERC Margin Charts) This means we are using 90 percent of all existing plants and power lines, many of which are old and unreliable.

 

But margins continue to slide, new construction has lowed to a crawl, while peak demand grows robustly. Summer peak demand grew 30,000 megawatts. nationwide in 1995, over 4% in one year, while only about 11,000 MW of capacity was added. In 1997 only 1,000 MW was added, while demand increased another 15,000 MW.

 

This growth means every generating unit we have is running for at least several weeks a year, and unpredictable weeks at that. Otherwise, large parts of the nation would run short of power and black out because electricity, unlike other commodities, can't be stored up. So-called demand side management programs report annual reductions in peak demand of 10,000 megawatts or so each year. But that does not mean peak demand is going down, although that is how the newspaper reports often read. These are reductions from what would otherwise have occurred, or so it is claimed. The truth is that demand continues to grow rapidly, averaging about 3% per year, and there is no reason why it should stop growing as the country grows.

 

Why is it happening_

 

There are three basic reasons for the crisis. First and foremost is the huge glut in generating capacity built in the 1970s after the last big blackout. (See the Capacity Chart) With all this excess capacity we started taking reliable electricity for granted, and we still do. Second has been our ever-growing environmental concerns, which make it difficult and expensive to build new power plants. Third, in 1992 we began to deregulate the electric power industry to allow competition between generating companies. In the uncertainty and confusion of deregulation few companies have wanted to take the risk of building expensive new power plants that might not be competitive. So almost nothing is being built while the old plants wear out. But demand keeps growing relentlessly. It is a prescription for disaster. See Electric Power Trends 1996-1997, Cambridge Energy Research Associates for more detail.

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How Important is Coal in Generating Electricity_

 

Very important. More than half of the electricity in the country is generated using coal. (See the Power Generation Chart below.) Here's why. Almost all electricity is made by spinning a magnet, called a generator. Most generators are powered by high pressure steam blowing through a sort of fan, called a turbine. Coal has always been our primary source of the steam used to make electricity, for several reasons. First and foremost, coal is abundant. It is found all over the country and it is easy to get to. In many places it can be mined right from the surface. In other places the miners go underground to get it. Because coal is abundant and easy to get to, it is very cheap. It is also easy to transport and store, compared to other fuels.

 

If you look at the Power Generation Chart you can see how we have made our electricity over the last 25 years. Oil and gas also have been burned to make steam, especially gas. They compete with coal primarily in places where coal is not found locally where they become competitive. But in most places oil and gas are more expensive than coal, especially oil. New gas-burning steam power plants are being built today. In addition oil and gas are burned in internal combustion engines to drive electric generators.

 

Since the 1970s, nuclear energy has become an important source of steam to make electricity, and it is now our second largest source of power. However, nuclear power has become very expensive because of concerns over its safety, so no new plants are being built. Water power can also turn a turbine, without steam, and hydroelectric power plants have always been important. However, they can only be built in special places, and some people object to the dams they require, so no new hydro plants are being built.

 

We also use a tiny bit of solar power, wind power, geothermal power, and some other stuff. But not enough so far to even show up on the chart.

 

So it is mostly coal and gas that we depend on for new generating capacity. But most people have no idea where their electricity comes from or how it is made. We used to joke about people who thought that milk came from bottles, not cows. Well, electricity is like that today. Here is a story that makes the point:

"Well it all runs on coal, or mostly coal. Same for the stores, the malls, office buildings and factories -- they all run on electricity, which means they run on coal. True, we also use nuclear power, some gas and oil, even some good old-fashioned water power to make electricity, depending on the electric company. But mostly it's coal, coal and more coal -- one billion tons a year or more. Almost four tons a year for every one of us. Four tons! Even today."

But coal is at a crossroads. We depend on it today, and we desperately need to build more generating capacity. Should we burn more coal or do something else_

Some people say it is too dirty to burn any more and we should stop using it. Some say we can burn it cleaner and should do that. Some say we burn it clean enough now, a whole lot cleaner than we used too, clean enough. Then there is the issue of whether burning so much coal is affecting the earth's climate_ And if so, how_ There's lots of disagreement about that.

Some want more nuclear power plants instead, but others don't want any. Many people want to burn natural gas instead of coal, but the only extra gas is in places like Texas and Canada, a long way away and very expensive. Some say we should just use less electricity, but that is hard because it is so useful. What to do about coal is a very big question. One we all need to think about.

For more detail: Energy Information Administration Department of Energy -- Fossil Energy Program.

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What about the effects of coal burning on climate_

First of all, the whole issue of climate change being due to human activity is, literally, up in the air. Scientists disagree, politicians disagree, and so does everybody else who has studied the issue. Second, most people think that if humans are having an effect on climate, it is to make the weather warmer. Whether this is good or bad is another big issue of controversy. So right off the bat there are no clear or simple answers regarding climate change or global warming. So there is also no clear, simple reason to do anything about it at this time. At this point it is just a big argument.

Where coal comes in is that one of the possible human drivers of climate change, if there is one, is carbon dioxide, or CO2. The amount of CO2 in the atmosphere seems to be increasing. Burning anything gives off a combination of water and CO2, and burning coal is no exception. Since we burn a billion tons of coal a year in the United States, those people who are worried about climate change and global warming are worried about burning coal. They want us to cut back on coal burning or stop it altogether, to reduce the amount of CO2 we put into the atmosphere of the earth.

On the side of coal burning, people point out three things. First and foremost, CO2 is what plants eat. Almost all of every plant's body is derived from CO2. In fact since all animals live on plants, or on animals that eat plants, life on earth depends on carbon dioxide.

CO2 is the stuff of life, so how can CO2 be bad_ Some people even argue that since CO2 is what plants eat, more of it will increase plant growth, helping to feed the growing human population. We don't want to cut back on CO2 if it will cut back on people's food.

Second, our coal burning is just a tiny fraction of all the burning of stuff done by the 6 billion people on the planet; perhaps one quarter of one percent of the total. But since burning coal is where most of our cheap electricity comes from, it is very important to us. We should not give up this cheap electricity without a good reason.

Finally, all of the CO2 put into the air each year by humans burning stuff, including gasoline, natural gas, wood and coal, is just a tiny fraction of the CO2 that comes from other, "natural" sources. The earth is covered with plants and the sea is full of them. Many of these plants die each year, and when they do, they return much of their CO2 to the atmosphere, where other plants can use it. So the coal we burn to make electricity is just a tiny fraction of a tiny fraction of the CO2 that goes into the atmosphere.

But in fact when we burn fossil fuels we are returning to the atmosphere the CO2 that plants sucked out of it millions of years ago, locking it up as the carbon in fossil fuels. Coal is nothing but the remains of the billions and billions of plants that covered the earth millions of years ago. Plants that were buried before they could return their life giving carbon dioxide to the atmosphere.

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Why don't we just stop burning coal_

Two reasons. In the short run we can't stop burning coal because of the capacity crisis. We have no capacity to spare and most of what we have is coal-fired. So we have to burn coal to have electricity. In the long run, ten years or so, we could switch to other forms of energy. But they are all much more expensive -- that's why we burn so much coal; coal is cheap and cheap electricity is good for everybody.

People get a lot of benefits from cheap electricity. The cheaper it is the more benefits they can afford. Look at the Cost Versus Use Charts. Where electricity is expensive people use a lot less of it. This means they can't afford a lot of the things cheap electricity provides.

Now look at the Coal Scenarios Chart below.

It shows four ways we can go in our use of coal in the next ten years or so. Each of these ways, or scenarios, is advocated by some people for various reasons, including the possible effect of coal burning on the earth's climate. Since we have to start building a lot of new electric generating capacity right away, we have to decide now which scenario we want to follow.

The first scenario is growth. We can let the use of coal grow with our economy, to keep us supplied with cheap electricity. This means building new coal-fired power plants.

The second scenario is to level off. Keep using our existing coal-fired generating capacity until it wears out, but use some other kind of energy from now on. The third scenario is to cut way back on burning coal for electricity. The Chart uses 50% as an example, but it could be more or less depending on how we decide to do it. This means either replacing a lot of our existing coal burning power plants with new, non-coal plants or switching them to another fuel, probably gas.

The fourth scenario is virtual elimination of coal burning. Again, the Chart uses a 90% reduction as an example, but it could be more or less. This is an extreme scenario, one that would require replacing orfuel switching on almost half of all the electric generating capacity in the country. And this would be on top of building the new capacity we desperately need to meet the crisis.

Replacing all our existing coal-fired capacity with new gas-fired plants would cost perhaps 150 billion dollars. If we built nuclear plants instead, it could cost as much as 1.5 trillion dollars. In addition, we still have to finish paying for the coal plants we have stopped using. To replace even a large fraction of our existing coal plants would simply mean the end of cheap electricity for a lot of people. Switching the coal plants to gas is less expensive, but gas costs about twice as much as coal. So the price of electricity would almost double. Again, the end of cheap electricity for a lot of people.

For details on alternatives to coal and their cost see: Energy Information Administration: Analysis & Forecasting.