Generating Electricity in a
Carbon-Constrained World

Steve Specker
President and CEO of the Electric Power Research Institute
Thursday, March 30, 2006

Dr. Specker discusses electricity-generation technologies and investment decisions in light of ongoing efforts to curb emissions of greenhouse gases. He compares the costs of various options, including such technologies as wind, nuclear, biomass, pulverized coal, and gasification. In addition, he addresses key uncertainties affecting near-term decisions on new electricity generation.

Biography

Steve Specker is president and CEO of the Electric Power Research Institute (EPRI), which was established in 1973 as an independent, nonprofit center for public-interest energy and environmental research. Its members produce more than 90 percent of the electricity generated in the United States.

Dr. Specker has an exceptionally strong technical and business background and an in-depth knowledge of the electricity industry. His 34-year career has spanned nearly every dimension of the business. Prior to joining EPRI in September 2004, he served as president of Specker Consulting, LLC, where he provided operational and strategic planning services to technology companies serving the global electric power industry.

In January 2003, Dr. Specker retired from General Electric (GE) after 30 years of leadership in various executive roles, including president of GE's Nuclear Energy division, president of GE Digital Energy, and vice president of global marketing for GE Energy.

Dr. Specker began his career in 1970 as a nuclear engineer for the Tennessee Valley Authority in Chattanooga, Tennessee. He holds a B.S. in engineering science and an M.S. and Ph.D. in nuclear engineering, all from Iowa State University.

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Event Synopsis

Steve Specker, president and CEO of the Electric Power Research Institute (EPRI), analyzes the potential for alternative energy resources and the economic feasibility of their industrial use as part of RFF's Policy Leadership Forum series.

In his talk "Generating Electricity in a Carbon-Constrained World," Specker presents EPRI's financial forecast on the price of fossil fuel and alternative energy technologies for the years 2010 and 2020, comparing the future costs of pulverized coal-based generation, integrated gasification combined cycle (IGCC) generation, wind power, nuclear power, and biomass combustion.

"We have to err on the side of making sure that technologies are ready to deal with a carbon-constrained future," he says, impressing that as a global community, we need every available source of electricity generation.

Acknowledging two primary uncertainties - the future cost of carbon dioxide (CO2) and the future price of natural gas - Specker hypothesizes that by 2010, pulverized coal and natural gas will be the two favored fuels of power utilities and new power producers. The United States will also be increasingly reliant on the use of CO2 capture technology in conjunction with traditional fossil fuel?based generation in the years to come, he says. This technology will potentially make carbon-based combustion more cost effective by generating a byproduct that can be pressurized, stored underground in a geologically stable repository, and harnessed for further electricity generation. It also reduces the amount of greenhouse gas emissions that are released into the atmosphere. As a point of comparison, Specker notes that without the use of CO2 capture technology, "IGCC is 15?20 percent more costly than a pulverized coal plant" and releases the same amount of emissions as a coal-fired operation.

Looking ahead to energy production in 2020, Specker outlines the potential for non-emitting sources of power, including wind, nuclear, and biomass. Noting that wind is "extremely important" and "very valuable" for future domestic electricity production, Specker concludes that the viability of wind as a significant source of power will be contingent upon its capacity factor. EPRI's research has demonstrated that while some parts of the country have capacity factors of more than 40 percent, domestic wind sources averaged out at roughly 29 percent capacity. In EPRI's estimation, wind power will cost an average of $75 dollars per megawatt hour in 2020. However, Specker notes that if more wind farms are built in offshore locations and areas of greater wind capacity with larger turbines and lighter blade materials, there may be "significant opportunity" to reduce costs.

Concerning future use of biomass as an energy source, Specker says there will always be a limit to the amount of organic material that can be used for electricity generation. Still, he estimated that biomass will be an essential part of a diversified "low-carbon portfolio" for future electricity production.

"Nuclear, clearly from an economic standpoint, is very attractive," Specker states, citing France as a main promoter of this technology and a country that is thereby "neutral to the cost of carbon dioxide." Recognizing problematic aspects of nuclear power, he discusses the hazards of managing spent nuclear fuel. Specker also refers to solar power as a key future energy source but finds that at a projected future cost of $160 per megawatt hour, it would not be competitive enough for central electricity production by 2020.

As Specker completes his presentation, he highlights four significant uncertainties for the future of energy production in a carbon constrained world: CO2 emission limits, the price of natural gas, the reliability of spent nuclear fuel storage, and the refinement of CO2 capture and storage technology. By tracking these four issues and adjusting domestic energy policy accordingly, Specker concludes that it may be possible to develop a low-emissions portfolio for energy generation within the next two decades.

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The RFF Policy Leadership Forum provides prominent individuals in the public policy arena with a neutral forum in which to present and discuss their ideas on important energy, environmental, and natural resource issues. RFF strives for political balance among speakers and makes all events open to the public free of charge.

RFF is dedicated to balanced and objective analysis and does not take positions on matters of public policy. In all instances, the views of staff and guests of RFF are their own and should not be attributed to the institution, other staff members, its trustees, or its officers.