White House Chronicle

News Analysis With a Sense of Humor

Coming Electricity Crisis Will Test Trump and Musk

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I would like to lay before you two powerful myths that are very present in the United States in this post-election hiatus.

The first is that business people, because they have had a record of making money, will be good at running the government.

The second is that because one has been a successful inventor, one can fix everything.

No president, including Donald Trump in his first term, has been able to apply the harsh lessons of business to the infinitely complex task of taking care of all of the people.

Equally, inventors can’t invent the nation out of every challenge; they fail more often than they succeed. If Elon Musk had launched his Boring Company before Tesla, he likely wouldn’t be known today.

No one should underestimate the genius of the man. Just think of the engineering feat of Musk’s SpaceX “catching” the first-stage booster of its Starship megarocket as it returned to the launch pad after a test flight.

But that doesn’t mean Musk is qualified to overhaul the government or that he will have a simpatico relationship with Trump for long. Trump has suggested that Musk will be the architect of a new streamlined government. Maybe.

The Trump-Musk entwining  of two myths isn’t likely to endure.

Trump, always used to getting his way, will come into office with the knowledge of where he failed the first time. He will take control as though he had won the nation not at the ballot box, which he assuredly did, but in a takeover battle, and he will do with the company he has bought what he will. He found that hard to do the first time, but he is better-equipped this time with a substantial mandate that he will employ.

Even though he has been designated by Trump as an agent of change, Musk is unlikely to last.

Musk won’t bow to Trump for long. He is like Rudyard Kipling’s cat: He walks by himself, alone and capriciously. He embodies many of the strengths and limitations that marked the late Howard Hughes: vision and willful eccentricity.

Trump has disparaged electric cars and renewable energy, two of the cornerstones of the Musk empire. Musk is a man who dreams of a future that he can invent, with automated cars, space habitation, and solar power dominating electric supply.

Trump’s vision is not soaring. It is a backward look to a time that has passed. It is a vision which recalls the Reader’s Digest view of America in the heyday of that magazine, wholesome, patriotic, simple but fundamentally unreal.

The first crisis that might divide the two men, and challenge the Trump administration, is energy.

An electricity shortage is bearing down on the nation and there are no easy fixes. Trump has laid out an energy policy that would emphasize oil and gas drilling and environmental controls and curbs on the rate of wind generation deployment.

None of that will get us through the impending crisis as the demand for more electricity is surging. It is driven by more electric vehicles, greater use of electricity in manufacturing, and by the huge and seemingly limitless demands of data centers being built across the country to serve the needs of a data-driven, AI economy and its relentless electricity demand.

The fixes for the electricity shortage are all just over the horizon: new nuclear plants, more solar and wind, more transmission, and a more efficient use of the generation we have at hand.

The most immediate fix is a so-called virtual power plant which coordinates energy saving with new sources, like rooftop solar and surplus self-generation at industrial facilities, under the rubric of distributed energy resources. That is already underway and beyond that looms the potential of blackouts.

California and Texas, along with parts of the Midwest, are precariously balanced. Any severe weather interruptions, like extreme heat or extreme cold, and the electricity supply could fail to meet demand.

Trump is likely to react with fury and to lash out at renewable energy (solar and wind) and electric vehicles. In a way, he will be blaming his new best friend, a principal creator of the current electric landscape, Elon Musk.

The myths will unravel, but the underlying truth is that we are going to have five or more years of acute electric shortage without a quick fix, from an inventor or a businessman.

Texas Utility Exemplifies Struggle With Surging Demand

A graphic of the flag of Texas with wind turbines and other methods of electricity generation in the background.

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Electric utilities are doing something that is equivalent to a person changing clothes without ever getting naked.

They can’t shut down while they switch out old plants for new; they can’t turn off the lights while they retool. They must try to modernize without the communities they serve being affected by so much as a flicker.

What is called “the world’s largest machine” — the coordinated operation of the nation’s 3,000 electric utilities — must hum 24/7 while replacing old polluting plants with new less-polluting plants and adding tranches of renewable power, primarily wind and solar.

I have been watching this feat of changing in place at CPS Energy, the municipally owned electric and natural gas utility in San Antonio. And, I have been following its president and CEO, Rudy D. Garza.

It is a utility with all the stresses now faced by utilities: growing demand, pressure to retire fossil fuel plants and preparing for the onslaught of demand from data centers, driven by the need for more computing for artificial intelligence and other computing needs.

Underlying all of these challenges in San Antonio, as elsewhere, is the need to control the increase in consumer bills. Garza told me with pride that despite the pressures, CPS Energy still has among the lowest electricity rates in the country.

Some in the environmental community may have balked at the company’s recent announcement that the utility was buying two large gas turbine plants in Corpus Christi and one smaller unit used for peaking in Laredo from Talen Energy, which is emerging from bankruptcy. The deal is worth $785 million and will provide CPS Energy with a whopping 1,710 megawatts of power.

Garza told me that CPS Energy will spend additional money on bringing the purchased plants up to its operating standards and preparing them for continuous use. Talen Energy, a power merchant, used them intermittently.

The purchases will enable the utility to shut down so-called steam gas plants. These older gas-fired units don’t use modern, super-efficient turbines but operate like coal-fired plants with a boiler and a lot of wasted heat. Garza said this would reduce air pollution in San Antonio. CPS Energy is also planning to retire coal generation on an accelerated schedule.

Although CPS Energy may not be able to get off of gas entirely, it is a leader in clean energy. It is, Garza said, the largest solar generator in Texas and the second-largest wind user. It has added 50 MW of battery storage and is seeking up to 500 MW of new storage.

Out with the old and in with the new.

This includes the rising electricity demand, which is growing at a rate of 3 percent, and the looming need of data centers. The demand, fed by artificial intelligence, is incalculable and growing exponentially.

Garza said, “The wild card is how quickly these larger loads that are coming to the area get connected to the system. We’ve got eight of these (data centers) on the ground right now in San Antonio with 20 more waiting in the wings.”

Some data centers, Garza said, will need their own backup generation. Although outages are rare on the CPS Energy system, he said the 24/7 needs of the centers are such that the larger ones will have to have their own emergency backup.

CPS Energy isn’t alone in dealing with data centers. It is a challenge faced by utilities nationwide. Rene Haas, CEO of Arm, the UK chip development company, part of Japan’s SoftBank, has described the need for electricity by AI as “insatiable.” A former U.S. secretary of energy told me it is scary and underestimated.

CPS Energy is looking at ways of accommodating the data centers and is at the forefront of new ways of generating. It is collaborating with Joint Base San Antonio — the giant military installation that sits in the center of the CPS Energy service area — to explore the potential for carbon-free solutions. CPS Energy is also looking into geothermal, particularly efficiencies that can be attained with fracking technology, which has changed the oil and gas outlook.

This creativity, which is part of the electric evolution in San Antonio, is taking place across the country. Like changing clothes without getting naked, it is a challenge.

The Dark Ahead: Crisis Building in the U.S. Electricity System

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There is a gathering storm over the nation’s electric supply.

What has been described as the world’s biggest machine, the U.S. electricity system, is stressed — and that stress will increasingly affect reliability. That means sporadic blackouts, some extensive. While the nation won’t be plunged into total darkness, regional difficulties will occur, according to the industry’s own watchdog group, the North American Electric Reliability Corp.

There are nearly 3,000 electric utilities in the United States, and what is known as the grid is, in fact, three grids: the Eastern, the Western and Texas. The first two interconnect and flow power back and forth where possible, but Texas is separate — and not subject to the regulation by the Federal Energy Regulatory Commission.

There are three classifications of electric utilities: the big investor-owned companies like Pacific Gas & Electric, ConEd and the operating units of the giant Southern Co.; the 2,000 public power companies, usually municipally owned, and a  few, like TVA, federal government-owned; and the rural electric cooperatives, which can be quite large or very small. Together, they operate the grids in surprising harmony and collegial cooperation.

The price of electricity is rising faster than inflation, according to the Energy Information Administration — a sure sign of building pressure on the companies. The causes of this stress are many. First, there is more demand for electricity across the board. That demand is rising about 2 percent a year, and the increase may accelerate after 2026.

Contributing to the demand is the proliferation of data centers and their huge appetite for electricity — an appetite now fed by artificial intelligence and its increasing use everywhere.

Then there is the effect of environmentally driven demand: switching heavy industry from using fossil fuels to using electricity for high-energy uses like steel-making. This is set to grow.

In the same way, the use of electrified transportation is upping its share of electricity demand: It isn’t just Priuses and similar personal vehicles but big fleets, particularly for in-city deliveries. The Postal Service, Amazon and other fleet users are converting to electricity. Burns & McDonnell, the Kansas City-based engineering, architecture, construction, environmental and consulting solutions firm, estimates half of intracity deliveries will be with electric vehicles by the decade’s end.

Increasingly, new homes will be all-electric as the future of natural gas supplies is compromised by public policy.

Exacerbating instability in the electric sector has been the swing from fossil-fuel generation — primarily coal and natural gas — to renewables. Those simply aren’t always available. The race is on for better batteries and storage to smooth the variability of wind and solar, especially wind.

Nonetheless, the pressure is constant to close coal and gas plants, which have always available generation, known in utility parlance as “dispatchable,” and account for 19 percent and 38 percent of generation, respectively. It adds to the difficulties of keeping the lights on.

The dilemma was set out for me by Duane Highley, CEO of Tri-State Generation & Transmission, in Westminster, Colorado. It provides power to 42 rural co-ops in four states.

Highley explained the new instability in the industry this way: “The rapid rate of retirement of dispatchable generators has raised concerns among our membership about the reliability of the greater grid.”

He said the industry can and is achieving rapid rates of emissions reduction but will still need “an appropriate amount of cost-effective dispatchable generation.”  Today, Highley noted, this is provided by coal and natural gas. This power will be needed to ensure a reliable and resilient grid as the demand for electricity increases.

“The traditional metrics utilities have used to model reliability can no longer demonstrate grid resilience as we rely more on intermittent weather-dependent resources.”

Tri-State, Highley said, is “working with its members on new reliability methodology to assure we have sufficient capacity, even with high levels of renewable generation.”

Electricity loss is a lethal matter.

In Texas, 254 people, by official count, died when some of the grid went down during the blackout caused by Ice Storm Uri in 2021. And in last year’s heat dome over Arizona, the state estimates 654 people died of heat-related causes in Maricopa County.

Clearly, job one is to keep the lights on before we retire the tried-and-true generating plant of yesterday. Life depends on it.

Misadventures of Howard Hughes Can Teach Electric Utilities

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By Llewellyn King

Howard Hughes, a pioneer in movie making and aviation (which informed his cantilevered underwire bra design for actress Jane Russell), was blindsided by disruptive technology. Electric utilities might want to heed Hughes’s history as they deal with future shock.

Hughes believed that his 1930 silent movie “Hell’s Angels” — which has some of the finest flying sequences ever shot — could make it even as the age of talkies was dawning. But he was in error; he had remake the movie with a sound track at huge expense.

Something similar happened to Hughes with the H-4 Hercules, the giant, wooden flying boat — nicknamed the “Spruce Goose” by the press — which he built during World War II. Eight reciprocating engines were no match for the potential offered on the horizon by jet engines. And spruce was no match for the superior aluminum alloys that had been developed during the war.

Leaders in the electric utility industry know full well that times are changing. But are they making brilliant silent movies when the talkies are around the corner, so to speak?

Dealing with change is especially hard for utilities because they are in a real-time business. The juice must flow 24-7, which means the new has to integrate seamlessly with the old. Shutting down to retool, as Hughes did with “Hell’s Angels,” is not an option.

Yet in the 46 years that I’ve been writing about the utility industry, I’ve never seen such upheaval, ergo such challenges. There is no aspect of the industry which isn’t beset by technology at the gate: computing and artificial intelligence; drones for line surveillance and security; 3D printing (additive manufacturing) for repairs; superior data from smart meters; and aggressive growth from competitors on the roof – in the form of solar panels — and in the marketplace.

But, to my mind, the most-daunting challenge facing the industry is flat or declining electric demand. For investor-owned utilities, which provide 80 percent of the nation’s electricity, this challenge, this reality has been masked by the good performance of their stocks on Wall Street, which owes a lot to low interest rates and volatility in the market, not to the long-term prospects for investor-owned companies. For now, it is the utility paradox.

The industry, through the Edison Electric Institute, has built a superb lobbying arm that can seek legislative remedies for its troubles — as it did when dividends were under attack. But there are no legislative fixes for an industry in market turmoil, abetted by technological disruption.

There is more hope for relief from regulators. Increasingly, the industry is focused on state commissions: it wants relief from the downside of rooftop solar; relief from intrusive and misleading marketers of solar products; and, above all, protection of the grid’s existing infrastructure.

Additionally, not all technology is disruptive. Utility solar farms are an economic and technological success. Storage is attracting innovators and may yet get a breakthrough. There is the hope that new load may come through electric vehicles — although growth there could be stunted by cheap oil. It behooves the industry to push for better recharging, particularly inductive charging, and to advertise more electric consumption as a remedy for air pollution from the automobile tailpipe.

In 1974, I worked with the then chairman of the Atomic Energy Commission, the late Dixy Lee Ray, on an energy study for President Richard Nixon. The study advocated more electrification of transportation – and we had railroads in mind first and foremost. The United States has a few miles of electrified railway in the Midwest and the Amtrak corridor from Washington to Boston – far less electrified railway than other developed countries.

The railroads got away from the electric utilities, and they won’t be corralled now. But there is a powerful environmental and social case for electrifying cars; creating a moral imperative to drive electric, if refueling is solved — and I don’t mean hanging an extension cord out the kitchen window. South Korea has buses that refuel through induction-charging plates at bus stops; smaller batteries, frequent charging.

It will be a lot easier for utilities to argue for regulatory relief to protect their social and shareholder responsibilities if they are extending their social value. — For InsideSources

The Joy of the Private Car

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The U.S. Chamber of Commerce said Wednesday it will attempt to do what a string of economists and urban planners couldn’t: persuade the Congress to raise the federal gasoline tax to pay for better roads. — The Wall Street Journal

For all the problems that automobiles bring in society, they are wondrous things. They are, in a way, emblems of freedom. Surely private, discreet mobility is nearly beyond price?

There’s a price and a high one at that: pollution, congestion, sprawl, accident lethality and the geopolitics of oil. But oh, the joy of turning the key and heading to a highway; free, anonymous and among your own things (or your own mess, to be precise), listening to your choice of music–your life briefly in your control.

So far, the joys of the personal car have mysteriously evaded the attention of major poets and composers. Maybe it’s because cars bring joy equally to the proletariat and to the elite.

The primary differentiation between vehicles is not aesthetic but financial. A neat car, like a Bentley or a Maybach, costs money, lots of it, compared to, say, a Ford Focus. Yet their function is identical: they move us around.

Just four times in the 100-plus-year history of the automobile has a truly classless–in the sense that blue jeans are classless–car appeared on the streets. These were vehicles driven by the wealthy and the lowly with equal enthusiasm. They were the Ford Model T, the Ford A, the Volkswagen Beetle and the Morris Minor. All were owned and driven across the social spectrum.

It is an American conceit to believe that our love affair with the automobile is unique. It isn’t: It’s as universal as love itself. The poorest Indian dreams of abandoning the bullock cart for the automobile and even Europeans, who are well served with public transportation, love their cars.

One of the first consequences of Irish prosperity was that Dublin became a traffic jam. The Irish folk song goes, In Dublin’s fair city where the girls are so pretty/ I once met a girl named sweet Molly Malone/and she wheeled her wheel barrow/ through the streets broad and narrow/
singing cockles and mussels alive alive oh. Well, Molly would have a hell of a job in today’s traffic.

When Britain opened its beltway around London–known as the M25 corridor or Orbital–in 1986, so many cars took to the road traffic stopped dead, despite designated speed of 70 mph.

What has happened in western Europe is that driving has become more of a recreational activity, and commuting to work is close to mandatory. London, for example, is the second great city in the world to impose a stiff charge on private cars entering the downtown. The first was Singapore.

Mayor Michael Bloomberg would like to do something similar in New York City, but he faces too many jurisdictions that feed traffic into the city. Other American cities do not have the public transportation infrastructure to be able to contemplate choking them off during the week.

New housing developments everywhere are antithetical to public transportation. The cul-de-sac is hard enough to get a fire truck into, let alone to run buses.

A second problem, after congestion, is where are we going to get the oil to fuel the fleet of cars which is growing exponentially around the world, with most that growth in China and India? That future, for a period of 60 or so years, could be natural gas or electricity–and the smart money is on electricity. The rub is that batteries are not yet up to the task; and today’s gasoline and diesel automobile needs a lot of power for non-motion functions, like air conditioning, lights, power windows, seats and trunks.

Will electric vehicles reach market fast enough? That depends on the thorny issue of geopolitics, religious fanaticism, royal families, and prosperity in India and China.

How to proceed? The government would like to move everything forward, but the Department of Energy is having difficulty getting research and development money out of the door, while local jurisdictions are cutting back on highway funds.

Enter the U.S. Chamber of Commerce with an unlikely proposal for a business group: a fuel tax devoted to transportation solutions. It’s radical, unexpected and comes from an organization with right-of-center clout.

Maybe one day, we’ll again tool down the open road—well, get into a stream of traffic that moves, whether it’s with hydrocarbon or electric fuel. Varoom!  –For Hearst-New York Times Syndicate

 

 

 

 

The Pity of Earth Day–It Brings Out the Crazies

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The trouble with Earth Day, which we mark this week (April 22), is that it has a powerful hold on crazies. Crazies on the left and crazies on the right.

That certainly is not what Sen. Gaylord Nelson had in mind when he inaugurated the first Earth Day in 1970. The senator, and others, hoped that Earth Day would attract a serious examination of the stresses on the Earth. Instead, it seems to attract stressed people.

From the left come the neo-agrarians, the anti-capitalists, the no-growth proselytizers, and the blame-America-first crowd. From the right come the supporters of the Competitive Enterprise Institute, a pro-business phalanx that is in deep denial about man’s impact on the environment, and libertarians who refuse to believe that governments can ever get anything right, or that government standards can be beneficial.

The fact is that a great majority of Americans are deeply concerned about the environment and maintaining the quality of life that has been a hallmark of progress in the 20th and 21st centuries. This majority includes electric utility executives, oil company CEOs, and the trade associations to which these industrial captains belong.

It is notable the extent to which the energy industries have signed onto the concept of global warming and other environmental degradation. They know that their activities often collide directly with the environment and they are, often to the surprise of the environmental community, keen to help. British Petroleum is pouring millions of dollars into solar power and hydrogen. John Hofmeister, president of Shell Oil Company, the U.S. division of Royal Dutch Shell, is retiring early to devote himself to the task of alerting Americans to their energy vulnerability and to the environmental story.

Sure, it took industry a long time to get on the environmental bandwagon. It is the way of industry that it initially resists any innovation that might cost money or involve difficulty. Later it buys television advertising, pointing to its own virtue when it has capitulated.

The introduction of double-hulled oil tankers in domestic waters is a clear example of this: conversion in the face of necessity. After the Exxon Valdez disaster in 1989, the government mandated double-hulling, the tanker industry moaned, and oil spills in domestic waters declined by 70 percent. The cost of double-hulling is balanced out by the lack of payouts for spills. Double-hulling ships, like removing lead from gasoline, introducing the catalytic converter, and banning hydrofluorocarbons in propellants and refrigerants, are major American environmental successes. We led the world.

But if you listen to the critics, you would think that the United States was always on the wrong side of the environmental ledger.

The problem is we live well and we consumer a lot of energy and a lot of goods in our routine lives. There are about 21 gallons of gasoline in a 42-gallon barrel of oil. If you calculate your own daily gasoline usage, you will come up with a pretty frightening number over your lifetime. Likewise, coal burned for lighting, heating and cooling. Residents of New York City, who live on top of each other and do not drive very much, use about half of the energy of suburban households.

For a serious improvement in the environment, just from an energy consumption standpoint, we need to generate electricity by means other than burning fossil fuels (nuclear and wind), introduce more electric-powered public transportation, and substitute electric vehicles for hydrocarbon-powered vehicles. The technology is in sight for all of these. The problem is that the political will is distracted by the pressure groups on the left and the right.

Human impact on the environment can be disastrous or benign, and even beneficial. The towpath along the Chesapeake & Ohio Canal in Washington, D.C. started out as a purely commercial intrusion on a river bank, but now it is a recreational magnet. The dams along the Colorado River have boosted growth in the West, but the river has paid a price. Seattle City Light, the utility that serves the Seattle area, is now carbon-neutral because of the large amount of generation it gets from wind and hydro. There is a debate whether damming rivers is justified; but compared with other ways of producing large quantities of electricity, it is relatively benign.

Farming is an intrusion into nature—a constructive one. The challenge for the Earth Day advocates is to find other constructive intrusions.