Energy Systems Consulting Perspectives

Recently there have been calls for a ban on U.S. oil and natural gas production using hydraulic fracturing (also known as “fracking”), and several states have passed laws banning its use. To investigate such a policy initiative, the American Petroleum Institute (API) turned to OnLocation to provide quantitative modeling and analysis to determine the impacts of an outright ban on fracking. API chose OnLocation because of its reputation for respected and timely analysis of this nature.

The United States has a long and complex history with regards to nuclear energy, stretching back to the first harnessing of nuclear power during the Manhattan Project through the panic in the wake of the Three Mile Island accident and to today where technological advancements are making nuclear power safer and more efficient than ever before. Despite these advancements, decreasing natural gas prices, a boom in solar and wind power, and a persistent inherent fear of nuclear power in some circles has brought construction of new nuclear plants to a virtual standstill. Only one new reactor, Watts Bar #2, has come online since 1996, one construction project in South Carolina was abandoned partway through construction, and the only active nuclear construction project, Plant Vogtle in Georgia, has been mired in controversy and uncertainty amid escalating costs. Compounding that issue in the nuclear industry is the expected closure of many of the aging nuclear reactors across the country, with almost 12% of U.S. nuclear capacity expected to close in the next seven years.

 Frances Wood and Sharon Showalter at OnLocation  co-authored a paper that was recently published in the Energy Modeling Forum (EMF) 32 special issue of the journal Energy Economics. The article, titled “U.S. Energy Sector Impacts of Technology Innovation, Fuel Price, and Electric Sector CO₂ Policy: Results from the EMF 32 Model Intercomparison Study,” describes results from a joint study with the U.S. Department of Energy’s Office of Policy, the National Renewable Energy Laboratory, the Pacific Northwest National Laboratory – Joint Global Change Research Institute, and HEC Montréal.  The study was performed using several energy models, including a customized version of the National Energy Modeling System created by OnLocation.

Tucked in amongst a host of energy credits in the February Congressional Budget deal were several changes to the existing 45Q federal tax credits for carbon capture and sequestration (CCS) aimed at making the technology more economical. CCS has the potential to be revolutionary for the power sector, once regulatory hurdles are overcome and the technology becomes affordable to scale-up across fossil fuel emitting power plants. These changes to the 45Q tax credits might just be a significant step towards that goal.

While the U.S. electrical grid continues to be dominated by fossil fuels, the push to decarbonize the nation’s energy mix remains strong. As climate change concerns become a driving factor in energy policy, many are promoting the increased use of carbon-neutral fuel sources (including both nuclear power and renewable energy) to minimize the environmental impact of the energy sector. Any decarbonization trend that relies heavily on non-dispatchable renewable energy sources (such as wind and solar) in lieu of dispatchable fossil fuel sources (such as coal and natural gas), comes with side effects—both good and bad—to the nation’s electrical system beyond the intended reduction of CO2 emissions.