High-ranking and influential Georgia Tech alumni and faculty—as well as the Institute’s good friend Ernest Moniz, the U.S. Secretary of Energy—weigh in on the state of the energy industry and its future in this exclusive Alumni Magazine roundtable.
Energy Roundtable Participants
Dr. Rafael Bras is Georgia Tech’s provost and executive vice president for Academic Affairs, a professor in the School of Civil and Environmental Engineering and School of Earth and Atmospheric Sciences, and a member of the Secretary of Energy’s Advisory Board.
Tom Fanning, IM 79, M IM 80, Hon PhD 13, is the chairman, president and CEO of Southern Company, one of America’s largest electricity producers.
Tim Lieuwen, MS ME 97, PhD ME 99, is the executive director of Georgia Tech’s Strategic Energy Institute and a professor in the School of Aerospace Engineering.
D. Nathan Meehan, Phys 75, is a senior executive adviser at Baker Hughes, one of the world’s largest oilfield services companies, and 2016 president-elect of the Society of Petroleum Engineers.
Brian O’Hara, ME 97, is president of the Southeastern Coastal Wind Coalition, a nonprofit organization dedicated to advancing the coastal and offshore wind industry.
In your opinion, what is the biggest challenge facing the U.S. energy industry today?
Tom Fanning: Amid evolving environmental regulations and calls for specific generating sources, I believe the greatest challenge—and the greatest opportunity—for the U.S. energy industry is continuing to build a generation mix that provides customers clean, safe, reliable and affordable power. A diverse fuel mix helps utilities deliver on this commitment while minimizing the impact of volatile fuel prices. America needs a national energy policy that encourages the development of the full portfolio of energy resources: nuclear, 21st century coal, natural gas, renewables and energy efficiency.
Rafael Bras: The orderly transition to a different mix of fuels and energy sources implies fundamental changes to economic models, to infrastructure, to patterns of energy consumption, to technology and ultimately to behavior. The opportunity is the development of new avenues of economic growth and a cleaner and safer world.
Tim Lieuwen: The way in which we generate, transmit and utilize energy is undergoing significant transformations, and this creates both significant opportunities and challenges. First, the U.S. has seen dramatic increases in domestic oil and gas production, and with it the significant drop in energy prices. This is creating significant opportunities for domestic manufacturing in energy intensive sectors that we were seeing going offshore. Second, the significant cost reductions in electricity generated from wind and solar photovoltaics is truly amazing. Third, the intersection between information technology and big energy infrastructure is creating new efficiencies and opportunities by enabling us to better understand and operate energy generating assets, as well as the way in which we distribute energy.
Brian O’Hara: I think naming the biggest challenge in the energy industry depends on one’s perspective. For incumbent energy providers such as electric utilities, the biggest challenge might just be the speed at which the energy landscape is changing. Utilities are sophisticated, well-managed and stable companies, but historically they have not had to deal with the rapid pace of transformational technology changes like we’re seeing now. It will be interesting to see which ones adapt and thrive versus which ones attempt to cling to the security of the past.
What’s one myth or misconception about energy production that should be forever debunked?
Lieuwen: Putting in more wind turbines or photovoltaic panels doesn’t reduce our dependence on foreign oil, contrary to popular belief. When talking about energy and the U.S., I think its important to understand that we really have essentially two almost-independent energy systems, and that policy decisions or international events may effect one but not the other. One energy system is transportation and it relies almost exclusively on crude oil, much of which we import. The other is electricity and is derived from coal, natural gas, nuclear, as well as other non-hydrocarbon sources. Imported oil is not used for electricity generation—we are energy independent in this sector.
O’Hara: While it’s true that energy sources like wind and solar are variable in nature, it’s a common misconception that adding renewables means you have to add “backup” power. Our grid is designed to match electricity supply and demand on a minute-by-minute basis, which means it already handles significant variability from changing supply and demand (i.e. people and companies cranking up the AC, for example). The changes in supply can also be large and unpredictable, meaning sufficient reserves must always be available for when a large coal or nuclear plant trips offline, for example. In addition, the shift from coal- to natural gas-fired generation means our grid is becoming even more flexible, since natural gas is better able to change output to match demand.
D. Nathan Meehan: There’s concern that hydraulic fracturing is destructive to the environment. However, hydraulic fracturing has been around for more than 60 years and has largely proven safe and effective. With advances in modern technology and continuous innovation in the ways we approach unconventional development, safety and environmental risk are reduced and can be addressed effectively. The one truth that doesn’t get the attention it deserves is the very real, very positive benefits that have arisen from the increased use of natural gas, including economic benefits and reductions in greenhouse gas emissions.
We’ve been waiting for decades for renewable energy sources—solar, wind, etc.—to become economically viable, efficient and mainstream. Are any of them ready to fulfill that expectation?
O’Hara: The wait has been long, but the era of wind and solar as mainstream energy sources has begun and is ramping up quickly. Consider this: From 2009 through 2013, wind, solar, and other renewables made up about 45 percent of all new electricity generation capacity additions in the U.S., rivaled only by natural gas at about 40 percent. Already, nine states get over 10 percent of their electricity from wind and two states get over 25 percent from wind, all while maintaining grid reliability. That is mainstream and efficient. Recent wind energy contract prices are cost-competitive with any new generation, including fossil fuels. Solar rooftop leasing programs in many states are saving customers money starting the day they are installed, and utility-scale solar is quickly approaching “grid parity.” In addition, wind and solar have no fuel cost and no emissions, so they are able to offer long-term fixed pricing that helps stabilize electricity rates and serves as a financial hedge against the volatility of fossil fuel costs. That’s economically viable.
Meehan: An American diplomat once said: “In retrospect, all revolutions seem inevitable. Beforehand, they all seem impossible.” I don’t expect a revolutionary advance in any of these energy sources, but rather an evolution that can keep pace with demand growth. Strong energy demand over the next few decades might result in a decrease in the percentage of energy coming from alternate sources because high demand would require increased fossil fuel usage. However, I don’t expect energy demand growth to be that high. Nonetheless, I expect fossil fuels to remain the predominant energy source for decades to come. It is interesting to note that the abundance of North American natural gas resources tends to slow alternative energy development by capping the growth in the cost of electric power. If natural gas prices are high, development activity will surge and generate additional supply for decades to come. In turn, these power rates will mean that many alternate energy sources will continue to require subsidies to be commercial.
Bras: In my opinion, no single renewable energy source will be dominant—a mix will develop that necessarily will respond to regional, political and cultural situations. I believe wind, various types of solar, geothermal, hydro, bio and others are flourishing and are in fact viable in various applications and places.
Fanning: Southern Company is bullish on renewables, especially solar, and they are a growing part of our energy mix. Within our service territory, subsidiary Georgia Power is developing the nation’s largest voluntary solar portfolio, adding nearly 900 megawatts of solar generation.
All of the Above in a
Carbon-Constrained World
By Ernest Moniz, U.S. Secretary of Energy
The Obama Administration’s approach to energy technology and policy has three principal objectives: economic growth and job creation; climate change risk mitigation and adaptation; and enhanced security. To accomplish this, we are pursuing an all-of-the-above energy strategy, meaning that investments are made for all fuels—fossil, nuclear, renewable, efficiency—and for the infrastructure needed to enable a resilient clean energy system. This is important since the clean energy mix will be different in different parts of our country and in different countries, as well. Further, we are making technology investments across the entire innovation chain, from basic research to incentivized deployment.
America is experiencing a remarkable domestic energy boom. We are now the world’s largest liquid fuels producer and the world’s largest natural gas producer. Our natural gas production is one factor that has helped drive a 10 percent decline in our carbon emissions since 2007.
We are seeing similar rapid growth in clean energy and renewable energy technologies. Since 2008, electricity generation from wind has tripled and solar generation has increased more than tenfold. In Georgia and South Carolina, the first nuclear reactors in 30 years are under construction. And energy efficiency gains for vehicles and for buildings are limiting demand and associated emissions.
These developments have real economic benefits for our country. A quarter of the companies on Fortune Magazine’s recent list of fastest growing corporations are connected to energy, from producing energy, to the supply chain for moving energy, to advanced energy technology.
Solar-related industries have created almost 50,000 jobs since 2010, about a 50 percent increase in four years. And there are an estimated 85,000 Americans currently employed in the wind industry and related fields.
The natural gas boom has also contributed to an American manufacturing renaissance. As the president noted in the state of the union address, American businesses plan to invest well over $100 billion or more in new manufacturing capacity using natural gas. In addition, the low U.S. natural gas price compared to that in other industrialized economies offers a competitive edge because of low process heat costs for a range of energy-intensive industries.
The United States’ increased domestic energy supply brings a sense of comfort, but it is not sufficient to resolve our underlying energy security challenges. The U.S. still imports about 30 percent of the oil that we consume, and we are still connected to global markets and subject to oil price volatility and shocks. Furthermore, the energy insecurity of our friends and allies, as can be seen today in Europe, is a national security issue for the U.S. Energy security is a collective challenge, not one to be managed as a purely national issue. Increased use of renewable energy, nuclear power and efficiency are as much a part of energy security as is reduced dependence on fossil fuels.
Adapting to the effects of global warming has taken on a sense of urgency since the president issued his Climate Action Plan in June 2013. This year, the administration released the third National Climate Assessment. It documents in painstaking detail the observable impacts on our country—and how these impacts already threaten our way of life. A team of more than 300 experts produced the report, which was exhaustively peer reviewed.
From Alaska and Texas to Florida and the Midwest, rising sea levels, rising temperatures, more extreme weather events, public health impacts, and economic losses are already taking a serious toll. Minimizing the economic and societal impacts requires aggressively mitigating climate change risks through clean energy.
The Department of Energy (DOE) is hard at work across the clean energy landscape, from our research and development programs that drive the scientific breakthroughs for tomorrow’s clean energy innovations, to our Loan Program Office, which works with the first movers in an industry to support the commercial deployment of an innovative technology, to bringing economic feasibility to the private sector.
Just look at the programs and projects that the DOE is supporting right here at Georgia Tech to get an idea of the breadth and depth of our research portfolio. Over the last two years, the DOE has supported more than $63 million of research at Georgia Tech.
Just one example of our basic science work at Georgia Tech is the development of the first completely plastic solar cell, where not just the cell itself but also its electrodes are made of plastic.
Our ARPA-E program supports high-risk, high-reward research projects that could create the foundation for entirely new industries. One ARPA-E project on campus is developing a supercapacitor using graphene, a two-dimensional sheet of carbon atoms, to store substantially more energy than current batteries.
Our applied energy programs work to refine the basic technological breakthroughs through additional R&D and pilot programs. The DOE’s Office of Nuclear Energy is supporting research at Georgia Tech that is working to develop a high-power light water reactor with inherent safety features that go beyond the capabilities of today’s most advanced passive systems.
Our Loan Program Office is helping deployment of clean energy across the board. A multi-billion dollar commitment to the construction of the Vogtle nuclear power plant in Georgia is helping advance the first generation III+ nuclear technology in the U.S.
The future of our global clean energy economy depends on the technological breakthroughs to help drive down the costs of these emerging technologies. The DOE, through our National Laboratories and in partnership with leading research institutions like Georgia Tech, is hard at work to ensure that all of our energy sources can be competitive in our future low carbon marketplace. Through these efforts, we will ensure that American companies and American workers will continue to lead the global low-carbon energy transformation.
What burgeoning technologies do you think will have the most potential positive impact on energy production in the future?
Fanning: Energy storage has the potential to make a big impact on America’s energy mix. Today, electricity has to be used as it is generated. Advancements in energy storage could enable excess electricity generated by renewables and other sources to be used at times of peak demand. As an industry leader in energy innovation, Southern Company is directly involved in the research and development of energy storage technologies.
O’Hara: Cost-effective energy storage essentially removes variability and intermittency as an issue for resources like wind and solar, allowing those resources to play a dominant role in electricity generation as their costs continue to decline. To be clear though, we are currently a long way from having enough wind and solar installed that we actually need energy storage. In addition, declining battery costs and improved energy density will eventually bring electric vehicles to a tipping point where they are fully capable and more cost-effective than internal combustion engines. The electrification of the passenger and light-duty vehicle fleet will not only drastically reduce vehicle emissions, but could also help shift oil away from being a strategic global commodity.
Bras: There is no question that the development of hydraulic fracturing technologies to mobilize gas and oil in tight and deep geologic formations (i.e. fracking) is by far the most disruptive ongoing event in the national global energy equation. This technology has turned upside-down many presumptions and predictions in the energy markets.
What will it take for the U.S. (government and energy producers) to develop a unified energy strategy?
Bras: This is the impossible question. Clearly our leaders need to come together, work across the aisle and agree to some broad goals for the country. Having said that, we must realize that the energy business is a global business. A lot can change because of technologies developed across the globe and actions taken by others. Any national energy strategy has to be flexible and nimble in responding to changes in the global energy equation. The emergence of natural gas as a cheap source of fuel driven by hydraulic fracturing technology is just one example of how things can change very fast. Any policy also has to recognize that energy and power production is very much impacted by regional conditions of resources and demands. This dependence on regional conditions adds complexity to the development of a unified strategy.
Lieuwen: I don’t see a unified strategy happening anytime soon. I think a growing trend we’ll see over the next decade is increasing roles of proactive states and cities, with various coalitions between them around substantive energy policy questions.
Meehan: We have not been able to establish a strategy to date, but I would hope that it won’t take a crisis to bring it about. I don’t think an energy strategy needs to have grandiose ambitions, but rather should be an actionable plan to reach an overall goal. Ten years ago, an energy strategy of energy independence seemed impossible, but this is well within sight now. The challenge to creating a unified strategy is agreeing on the right goal.
Fanning: I believe North America has the potential to be energy secure by 2020. To accomplish this, we must leverage all of the resources at our domestic disposal: nuclear, coal, natural gas, renewables and energy efficiency. America has been called the Saudi Arabia of coal and new technologies such as hydraulic fracturing have made natural gas more economical to obtain. A national energy policy should encourage the development of the full portfolio of energy resources. An energy policy focused on all of these components will enable utilities to deliver clean, safe, reliable and affordable electricity to customers while helping achieve North American energy security.
O’Hara: On the government side it will take patience, innovation and political courage. No wonder this is challenging! The patience is required for decision makers to fully understand the existing landscape of energy subsidies, special tax treatments, liabilities and externalities that result in the true cost of our energy choices. The innovation is required to take that knowledge and design a comprehensive but simple policy that creates an even playing field so that markets can decide our ideal energy mix. The political courage is required to maintain intellectual honesty and do what’s right despite the influence of powerful industries that may feel threatened. None of this will be easy, but it doesn’t mean we shouldn’t try.
Production of natural gas and oil, thanks to hydraulic fracturing or “fracking,” is at a near all-time high in the U.S. How is this shaping the country’s energy landscape?
Lieuwen: The effects are truly phenomenal. On the natural gas side, we’ve seen a major shift of electric generation to natural gas and significant new chemical and heavy industrial manufacturing investments in the U.S. In addition, a decade ago we were building up infrastructure on the Gulf Coast to import liquefied natural gas. Now these facilities are being reworked to liquefy our own natural gas and export it, and the first shipments are slated for 2017. Also, natural gas prices have dropped to the extent that it is cheaper than oil by a factor of 3. This is prompting lots of serious looks at how to utilize natural gas or its co-products for industries such as transportation or certain commodity chemicals that have historically used oil. The ramp up in oil production is also dramatic over the last five years—U.S. oil production peaked in 1973 and had continually dropped for the 30-plus years to follow. However, its production rate has steeply increased, and we may pass our historical production rate sometime next year. It’s important to realize that the costs for U.S. production are substantially higher than in the Middle East, and so a $10 change in crude oil prices can have a really big impact on profits for U.S. producers. It will be interesting to see how the recent drop in crude-oil prices impacts U.S. production.
Meehan: Energy forecasts from 10 years ago are instructive. They all predicted continued declines in oil production instead of what actually happened—an increase to near record levels. Carbon dioxide emissions have dropped in the U.S. more than anywhere else due directly to hydraulic fracturing and displacement of coal-fired power. Unconventional development would not be economical without the innovation of technologies and approaches such as hydraulic fracturing, and the balance of trade would have suffered dramatically. In spite of the economic and environmental benefits, the industry has had challenges communicating this message. Opponents of fossil fuels and oil and gas production specifically have focused on the supposed pitfalls of fracking—even making the word a pejorative—and have been quite outspoken about it.
O’Hara: In electricity generation, low-cost natural gas from fracking has changed the competitive landscape and had a major impact. It has significantly accelerated the transition away from coal-fired electricity and thus resulted in a reduction in the industry’s carbon emissions. In the near term, it has probably slowed the adoption of renewables due to a more competitive market, but in the medium-term it has paved the way for bringing much more variable resources like wind and solar onto the grid, since natural gas is a more flexible generation technology than coal or nuclear.
Fanning: The natural gas revolution has been exciting for our business, and our customers have benefited greatly. In six years, we tripled our use of natural gas as a generating fuel and have been able to pass along about $1 billion in fuel savings to our customers. Natural gas is a dominant solution but it is not a panacea. There are a number of issues that make me very cautious about overreliance. One is the lack of infrastructure, and you saw that in play last winter when the trading price for natural gas in the Northeast spiked so high during the “polar vortex,” and again during the following snowstorm, because there was not enough pipeline capacity to meet the high demand.
Bras: Hydraulic fracturing has transformed the energy markets. The price of natural gas per BTU is cheaper than ever; gas is becoming the fuel of choice for generation of electricity. The technology is so effective that natural gas is available from previously unthinkable locations in the U.S., and there is no reason to think that it will not be found and exploited with fracking technology all around the world.
How important a role does physical and information security play in the energy industry in a world where terrorism and cyberwarfare loom as risks?
Bras: As we move to an interconnected smart grid, where everything from appliances to cars has access, the cyber risks increase exponentially. Having said that, some of the biggest concerns have been, and remain, with crucial physical elements of the grid. We must identify those weak points, harden them and improve the robustness and resiliency of the system.
Lieuwen: Information security is a big deal: Every power plant today has major firewalls, and passing information across their boundaries is complicated because of federal regulations. We simply don’t want to see a situation where a hacker can damage a power plant or our electricity distribution system. In fact, it will be interesting to see how the potential efficiencies which could be gained from a smarter grid, or smarter ways of managing fleets of power plants, will be realized as we deal with competing concerns around cybersecurity and system optimization.
Fanning: One of the keys to protecting our electric system is to continually improve communication and planning between the public and private sectors. I chair the Electricity Sub-Sector Coordinating Council, a group of 30 CEOs that interacts with federal intelligence and energy agencies to protect against, prepare for and respond to threats to the grid. We look at responding to the constantly evolving cyber threats almost like football—someone is running an offense and you have to play defense.
Meehan: In the oil and gas industry, “intelligent wells” and other applications of remote control, automation and optimization have played a significant role in improving the safety and environmental record of production operations. This real threat has concerned operators and system designers at multiple levels. Oil and gas and service companies’ digital systems need a heightened level of security since they are under constant threat for an attack. There are a number of cases where cyber terrorists have caused expensive disruptions in activity; however, it is going to be much more difficult to cause physical damage in oil and gas drilling and production operations with the development of new technologies to combat future cyber threats. Yet, downstream refining and petrochemical operations may face a larger threat and have to address those challenges.
How do you see information technology transforming the energy industry in the coming years?
Lieuwen: It will be huge. We’re seeing a growing intersection between the information technology and big energy infrastructure. For example, in the power generation industry, the delivery of energy services structured around big data and prognostics will become comparable in business opportunity to historical models associated with simply selling an energy asset. Similarly, electricity distribution and utilization models will be transformed by the opportunity for feedback between suppliers and users.
Fanning: Information technology already plays a significant role in helping us find better ways to serve our customers, and that will continue. We are very focused on energy innovation as we work to invent the future. For instance, our experts say that sensing technologies may transform how people use electricity. At some point in the not-too-distant future, any asset in your house will have its own sensor. The air conditioner and everything else will have the ability to manage its performance—hands-off—based on your behavior. That’s exciting to think about.
O’Hara: IT advancements will make big impacts on both sides of the meter. For energy suppliers, information technology will enhance grid resiliency, improve customer service and expand the ability to implement things such as demand management and real-time pricing. For consumers, information technology will ultimately improve quality of life and save us money. By accessing real-time information on energy pricing and then automating decisions based on that information, appliances can be set to run when electricity is cheap, or your electric car can sell energy back to the grid when prices are highest.
In your opinion, what will the global and domestic energy landscape look like in the next 10 to 20 years? What will be most different?
Bras: Decreased reliance on coal, increased use of gas and increased development of renewables seem unavoidable. The smart grid, increasingly interacting with smart appliances and infrastructure, will come to pass. The nexus of energy, environment and water will become increasingly important. Development of nuclear power will continue to be hampered by waste disposal and management.
Lieuwen: We’re going to see a lot more renewables and a more distributed generation system. However, whatever the aspirations of western countries, hydrocarbon-derived fuel will continue to dominate as the developing world is going to increasingly dominate new energy capacity.
O’Hara: The cost of wind and solar will continue to decline, and their adoption will accelerate even more. Offshore wind will take off in the U.S., starting on the East Coast. Developing countries will be building “all of the above” to meet growing demand for some time to come. Electric, natural gas and alt-fuel vehicles will start becoming more mainstream, but oil will still dominate the transportation energy sector.
Fanning: Technology is driving the changes that we’re likely to see. As the technologies change, so do customers’ expectations. Energy providers get that, and that’s why we’re putting so much into innovation. We’ve got to innovate for the benefit of the customers we are privileged to serve. Families want for their children a better place to live, better food on the table, better medical care, better education—a better future. Access to clean, safe, reliable, affordable energy is a way to help people achieve these. Providing real solutions is what our innovations for the future are all about.
Meehan: Possibly, within the next 10 years, fossil fuels will remain the dominant source of energy with only modest changes in the mix. While that may be discouraging to some proponents of alternate energy, it should also be encouraging because technology development across a wide range of competing energy supplies will allow effective options to come to the forefront. More than 1.3 billion people are currently without electricity. Almost every measure of quality of life is directly correlated to energy usage. This year, the World Health Organization cited household air pollution as the number one cause of premature deaths in children 0 to 5 years of age. This pollution comes from the burning of coal, wood, and animal and crop waste for heating and cooking. What I hope is most different in the future is more widespread availability of modern fuels in the third world.
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