The Modern Electric Power Industry and Global Sustainable Development
Peter Mark Jansson, Ph.D. PP PE
Electrical and Computer
Engineering
Victor E. Udo, Ph.D.
Manager, Business Planning and Research
Utility Operations and Services
Pepco Holdings Inc.
ABSTRACT
This paper explores key roles that the modern
electric utility industry plays in paths toward global sustainable development.
It is widely believed that a key contributor to global climate change is the
continued growth of the global economy and commensurate increased consumption
of fossil fuels. A key facilitator of this consumption and the key
infrastructure for the economic expansion of nations is the electricity grid.
While it is known that this system has an overall energy conversion efficiency
of less than 30%, alternatives remain less cost-effective or lack technological
readiness for the reliability required by such an important global
infrastructure. Our research suggests that nations, which are ranked high on
SD, tend to have higher usage of renewable energy. The key factors involved in achieving
sustainable electricity production are described in the paper. Public policy paths for shaping a more
sustainable future for electric power are outlined.
The electric power grid represents one of the
world's most critical infrastructures supporting the social, technological, and
economic development of modern societies.1, 2 In recent years, significant climate change
research has correlated advancing global industrialization and its associated
increase in energy usage with observable changes in global carbon dioxide
levels. 3-7 According to the
Electric Power Research Institute (EPRI), this and other energy related
environmental challenges (i.e. resource depletion, nuclear proliferation, waste
and hazardous air, water, and land emissions) demand the exploration of
alternative roadmaps toward sustainability for the electric power industry.8
The need to shift to more sustainable modes of electric generation, while not
presently economically pressing, represents our largest present-day presumptive
anomaly* 9-10 and thus the question of what should be the role of
the electric power industry in reinforcing global sustainable development (SD)
in the 21st century. However, there is no generally accepted
definition of SD.11 This paper suggests a holistic and quantifiable
definition of SD and uses it to explore the pattern of SD and electrical/
electronic infrastructure (E-Infrastructure) management capacity in over 130
nations. Our research suggests that nations, which are ranked high on SD, tend
to have higher usage of renewable energy. Building on this finding, the paper
reviews some of the key factors and requirements for sustainable electricity
production.
The paper posits that electric power presumptive
anomaly can provide a basis for the significant transition towards global
sustainable development. Such transition, it is further argued, requires local
to global public policy leadership11 and paradigmatic changes in
electric utility engineering and business management. A summary of the
technology readiness of the most environmentally and economically sustainable
electric generation options is provided.
The most significant contribution of this work is its integration of the
many technology, policy, standard, and economic factors to build multiple
feasible pathways toward sustainable electricity production, bridging the chasm
which now exists between desirable long-term environmental futures for society
and present utility investment strategies driven by the short-term pressures of
least-cost competition in deregulated markets.
These strategies include economic rationalization, incorporation of
values for natural capital, 12-14 purposeful technology,15
life cycle assessment for portfolio expansion,16
market/customer-driven green pricing, and international electricity valuation
based upon carbon-exchange. While each of these strategies represents a
significant departure from present laissez faire policies in capitalist
society, they promise a more realistic energy price signal, significant
longer-term consumer and environmental benefits, and increased employment in
the electricity industry.
The global sustainability problem as driven by contemporary culture can
be viewed in a holistic perspective as a complex interrelationship of society,
technology, and the environment. This problem seems to require new public
policy praxis even as the underlying hegemonic structures in the global system
are to be questioned for emancipation purposes.
In this context, technology shaped by humans that in turn shapes humans 17,18
should be seen as a tool for humans to minimize scarcity, not necessarily as an
autonomous or autocratic phenomenon.19,20 Inappropriate use of
technology can also be seen as a contributor to environmental depletion and
pollution, mass destruction in terms of war, and a moral dilemma in terms of
human cloning. Sustainability therefore
calls for a balanced relation of technology, society, and the environment with
a focus on replenishing the earth.
Otherwise, there may be neither earth nor humans in the long term.21-24 This technology-society-environment
relationship is very complex, thus requiring significant abstraction for basic
understanding. A good public policy goal must be one that will ensure maximum
total benefit to the majority and minimum total cost (including production,
delivery, and environmental impact) to all. Solving the complex problems
associated with achieving SD is made more difficult since definitions of what
“sustainable” means abound. More so, key variables for measuring SD are
interconnected and therefore very difficult to represent with traditional
engineering and mathematical models.
Adaptive Coupling of SD Variables and Drivers
Complexity theory-based exploration was preferred
instead of reductionistic cause and effect econometric modeling due to the very
high interconnectedness of technology-society-environment variables that
represent
Much sustainability literature tends to focus on environmental
sustainability; 25, 26 this work adopts a more holistic definition
that includes social and technological variables as well. Therefore, sustainable development is herein
defined as a pattern of social, technological, and environmental progress that
can enable intergenerational and intragenerational equity based on good
governance and infrastructure management. The sustainable development capacity
of a nation is measured as a relative performance score on aggregated social,
technological, and environmental variables.
Thus, later in the paper when nations are compared with one another,
sustainable development capacity is explored as a survival and progress measure
through three indicators: (a) the social sustainability capacity indicator, (b)
the technological sustainability capacity indicator, and (c) the environmental
sustainability capacity indicator. To
explore sustainable development as the capacity for human organizational
systems in a polity to survive and progress, several adaptively coupled human
survival and progress input, output, and impact variables are therefore selected
and aggregated such that:
Sustainability development
capacity ó AC{social, technological, environmental
capacities}
where the above three indicators are assumed to be
adaptively coupled (AC) such that
Social ó Technological
ó Environmental ó
Social
and each capacity indicator is an adaptive coupling of various
attributes such that
Social sustainability ó AC{global human
rights, human transparency, human development, human survival, income equity,
and human freedom attributes}
Technological
sustainability ó AC{renewable
energy, energy efficiency, industrial balance, research and development assets,
basic human sustenance, and disaster management attributes}
Environmental
sustainability ó AC{clean air, water
usage, land preservation, ecology protection, resource usage, and sanitary
health attributes}
and each attribute was
represented by either a single or multiple variables and quantified as
discussed below.
Quantification
of SD Among Nations
To quantify the above conceptual representation of SD, 132 nations were
ranked using a cross-sectional comparative study with secondary data available
as of September 2001. The inclusion of nations in the research sample was based
on the availability of sufficient data and a population size of approximately
1.5 million people or more. These 132 nations represent over 95% of the world’s
total population as of 1999. They also
represent about 93% of the total surface area of the world and a total of about
$28.2 trillion in GNP (96% of the global total as of 1999) and about $29.5
trillion in GDP, (97% of the global GDP total as of 1999). In essence, this research sample is a good
representation of the contemporary global system with nations as the
constituent units. As a basis for our
analysis, we assumed that a high score in E-infrastructure management capacity
facilitates high sustainable development capacity, although the former is not
necessarily a sufficient condition for the latter. To test this assumption, several society,
technology and environment data reported for both the private and public
sectors of each nation in the research sample were aggregated as indexes of
several variables and attributes defined as adaptive coupling. We assume that
index and scales are efficient devices for data analysis since the
consideration of a single data results in a rough indicator while several items
provide a more comprehensive and accurate indicator of the concept studied.
This type of aggregation is an efficient device for representing complex data
because such aggregation makes it possible to convert several indicators into a
single numerical score. The major sources of secondary data used for this
purpose included Human Development 2000 Report, World Development 2000/2001
Report, Environmental Sustainability Index 2001 Report, Economic Freedom Index
2001 Report, and The CIA 2001 World Fact Book. Using data from these sources,
each nation was given a relative performance score on the attributes. The
attributes were then aggregated into indicators and overall capacity index for
the nations to be ranked accordingly. An example of the pattern observed is
summarized below with more details in.11
For the purpose of our
research and to assure consistency with the SD capacity conceptualization, E‑infrastructure management (EIM)
capacity was explored in terms of three interrelated indicators: public
communication/ mobility, energy/power, and transactional/ telecommunication as
shown below:
E-Infrastructure Management
Capacity ó AC{public
communication/mobility, energy/power, and transactional infrastructure
capacities indicators}
where the three E-infrastructure capacity indicators are assumed to be
adaptively coupled, and each indicator is an adaptive coupling of various
attributes such that:
Public
Communication/Mobility ó AC{Land and air transportation, radio and TV diffusion attributes}
Energy/Power Indicator ó AC{Electric growth, electric penetration, electric
efficiency, and productive utilization attributes}
Transactional/Telecommunication
ó AC{Fixed phone, personal computer, mobile phone, and Internet access
Similar rational and secondary data sources used for the quantification
of SD capacity were also used to quantify E-infrastructure capacity of the 132
nations in our research sample. See11 for more detailed discussion,
results and analysis. For the purpose of
this paper, our focus is on the energy/power aspect of EIM as the most critical
system in which the notion of presumptive anomaly seems most applicable when
viewed in the context of global sustainable development as will be discussed.
Table
1 - Comparison Ranking Results with Other Studies
The results of SD
analysis of 132 nations show that of a possible score of 1800, only 20 nations
achieved a score above 1300 (72%). The
Table 2
- Top 20 Nations’ SD Indexes and Renewable Energy vs.
An interesting finding
from this analysis was the observation that the highest performers overall in
the SD Index also had relatively high levels of renewable energy usage in
general – adjusting for statistical factors. Given the above discussion and
analysis, a fair and reasonable question becomes, “What should be the role of
the electric power industry in global sustainable development?”
·
Technology
Efficiency/Readiness - Life-cycle resource utilization efficiency justifying
investment
·
Technology
Economics - Cost competitive renewable, sustainable fuel, hardware options and
long-term ROI
·
Manufacturing
Capacity - Production and delivery infrastructures adequate to meet global
demand
·
Consumer
Demand/Market Adoption - Increased local, regional and international market
demand
·
Ecological
Footprints - Standardization and agreement on ecological impacts of all
technologies, ISO14000
·
Global
Environmental Accords - UNEP, IPCC, (Intergovernmental Panel on Climate
Change),
·
International
Competition - local resources, global technology, national development,
ecological tariffs
World installed electrical capacity at the end of the 20th century was
slightly over 3 billion kilowatts, of which 21.5% was from a renewable source
(hydropower).10 Nearly 4/5ths of the world's production was from
fossil fuel or nuclear sources. Since
the greater portion of this generation includes use of a steam
turbine/generator, the overall thermodynamic efficiency of the fuel to electric
conversion cycle averaged 32% or lower.
When losses associated with the power delivery grids are included, the
effect is that for each Btu of primary fuel used by society, less than 0.3 Btu
of electricity reaches the end-user. This inefficiency is magnified again
significantly when one considers the typically low overall end-use efficiency
of most modern appliances and devices that use the electricity once it arrives
at the customer location. To put this in a macro perspective, if end-use
devices are on average 35% efficient in performing their intended purposes
(which would be considered quite high since refrigeration systems, for example,
are typically 14% efficient - compressor-evaporator-condenser cycle16),
then present global installed electric generators and power delivery networks
(which are more than triple that capacity) consume 90% of their fuel just to
serve system losses.
Efficiency (Fuel à Electricity): 32% (1)
Efficiency (Power Grid Delivery): 90%
(2)
Efficiency (End-Use Device): 35%
(3)
Net Overall System Efficiency (Fuel à Use): 32%x90%x35%= 10.08% (4)
Overall, this level of system (including average utilization) efficiency
is not admirable. Continued expansion of such an inefficient central electric
power infrastructure to serve inefficient end-use devices clearly does not
represent a sustainable long-term future for the industry. It is for these reasons that EPRI is
exploring alternative roadmaps toward sustainability for the electric power
industry,8 and adoption of the renewable energy portfolio is under
serious consideration by 15 states in the
While efficiency is an important engineering concept and is well discussed
and documented in the literature of electricity producing technologies, in
itself, it is an insufficient measure in representing the overall
sustainability of a technology option. When comparing the benefits of competing
technologies, it has typically been desirable to discuss their overall
efficiency. In this paper, we suggest that this can be misleading. For example,
if one were to compare the fuel to electric conversion efficiencies of two
competing technologies, an efficiency comparison is valid, since it represents
a clear relationship between the relative environmental impacts of the
competitors (at least in terms of their resource utilization). However, it may not be an adequate comparison
with respect to their air or water emissions, solid waste generation, etc. The use of efficiency values when comparing
fuel to electricity conversion technologies (fossil, nuclear, etc.) with other
renewable energy options (wind, photovoltaic, solar thermal to electric, etc.)
becomes even more distorted since the overall efficiencies of conversion for
the nascent renewable technologies may be very low compared with their fossil
competitors. Specifically, the success
rate (efficiency) with which the renewable energy based technology option is
able to convert the abundant, replenishable natural energy resource to
electricity is irrelevant for a sustainability comparison. The impact on natural resource depletion (and
often emissions of all types as well) is so small for the renewable energy
based system that its sustainability benefits far outweigh the minor conversion
efficiency benefits that might exist for the fossil or nuclear-based
alternatives. Table 3 summarizes the
present day efficiency ranges for electricity producing technologies.
Table
3 -Efficiencies of Electricity Producing Technologies
* - NOTE: These values include credit for the use of
waste heat in the commercial process of the end-users
The overall economics of each electricity generating technology is actually
a present snapshot of the value society currently places on capital. This
singular value (cents/kWh) is a measure of how much it currently costs to
generate a specific unit of energy (kWh) for each device assuming that the
value of natural capital is free.
Table
4 - Costs of Electricity Producing Technologies
* - NOTE: These lower values can be achieved in
What is meant by that is there are no benefits associated with
technologies that do not utilize, deplete or exhaust finite natural resources
(such as fossil fuels), nor are there any penalties placed on technologies that
require the use of natural resources such as the buffering capacity of the
oceans to absorb any undesirable air or water emissions. Table 4 indicates that
there is a significant gap between renewable energy technologies such as
photovoltaic and wind energy when compared to the present costs of electricity
from the
The role that public policy driven incentives can play to bring the
more sustainable alternatives into the marketplace has been well discussed and
debated. The near term benefits of
increased market demand are offset by the fact that fundamentally the true
economic picture has been temporarily altered while rebates exist and demand
falls off when the rebates are removed.
This leads to unsustainable market dynamics, and fluctuations in demand
may mask presumptive anomaly in the electric power industry.
Historically, technological evolution has followed many diverse paths
driven by need and opportunity.29 Earlier in this paper, we
presented the concept of presumptive anomaly, which also has been a historic
driver of technologic change. Very
often, innovation occurs by necessity when scientists or engineers perceive
that the present system is reaching the limits of its usefulness or may be
about ready to fail based upon their understanding of changing technical,
social, economic, environmental and/or political milieus. The conventional
system for generating electric power globally has not yet failed in any
absolute or objective sense, but observations (such as climate change data)
that have been derived from science indicate that conventional, inefficient,
grid-based electric power systems will fail to meet the burgeoning global
demand for electricity without dramatic environmental consequences (resource
depletion, air/water emissions, solid waste production, etc.) which society
appears unwilling to accept. From a practical engineering perspective, we have
reached an impasse. Electric utilities
are motivated by investors and regulators to provide the lowest costs to
consumers and the highest financial performance; the existing technologies are
27-30% efficient and provide a host of environmental impacts.
A sustainable path for electric power may range from 10-46% efficient
but may cost two to three times as much for consumers as the current
technologies and potentially lower returns for shareholders. As engineers and
educators of engineers, we cannot simply change the way things are done
overnight. The process of change is complex and involves many parties. In the
case of introducing new electricity technologies to the power grids of the
world, the change will be very gradual.
Significant intervention on the part of policy makers created models
such as those adopted in
How then are we to
achieve the solution to our engineering problem? We have identified the complex nature of this
problem, and its solution will be multi-faceted.
There is a broad array of potential paths; our research has indicated that they
all include significant public policy intervention. Public policy intervention
will be required to successfully navigate along any or all of the following
potential paths towards a sustiable electrical power infrastructure.
Economic
Rationalization
Engineers, scientists,
and policy makers must jointly develop agreed upon means by which the true
costs of the global environmental resources can be incorporated into the
products and services we produce in society, beginning specifically and
primarily with energy services and electricity. Natural capital 12-14
can no longer be a free service provided by the global environment available to
whoever is capable of exploiting the resource first.
Increasing
Consumer/Market Demand
In order to accelerate
the demand for more sustainable electricity options, an extensive effort on the
part of all energy and electricity providers to increase the local, regional,
and international market demand for green power and renewable energy
investments must be undertaken. This will accelerate the market pull for
renewable technologies and provide the required incentive for significant new
investments in production capacity by the investment and financial community.
Ecological
Footprint Standardization
Already today there are
more than adequate standards that could be adopted by all nations for the
agreed upon method for determining the ecological footprints of all existing
and identified renewable and non-renewable electricity generation technologies.
Agreement on ecological impacts of all electrical power generation and delivery
technologies using ISO14000 as well as complete life cycle assessments16
for all electric power portfolio expansion plans could quickly be accomplished
with a joint agreement among energy providers and national governments. This
would lead to honest and consistent record keeping across the globe with
respect to contributions to emissions, waste, and resource depletion for every
kilowatt-hour generated.
Global
Environmental Policy Accords
The important role of
global public policy initiatives and environmental accords such as those
developed by the United Nations Environment Program (UNEP) and the
Intergovernmental Panel on Climate Change (IPCC), such as the Kyoto Protocol,
cannot be overstated. The cooperative
work of many nations and the scientists of many countries have led to the
identification of this pressing environmental concern and the request for
immediate policy action on the part of every nation state. It is imperative
that all sovereign states realize that the planet is home to many countries
other than themselves and that the global stewardship and environmental
responsibility must be a key responsibility of every government and head of
state. A next step for reduction in CO2 emissions may be the development of an
international electricity valuation that is based upon carbon-exchange
calculations or other LCA acceptable under ISO14000.
National
As international competition heats up and the market becomes
increasingly global, each nation must begin to determine for themselves what
competitive advantage they will bring to the new competitive arena. Some
nations have apparently chosen to differentiate themselves by using their
federal governments to support renewable energy industries within the country
that can achieve more national energy independence and economic development
while simultaneously building new technologies for export (
This short paper has presented some of the key challenges that those of
us in the electric power industry face as we seek pathways toward a more
sustainable future for electricity. The current constraints we face make it
presently not possible to economically achieve sustainability for our industry
overall at the present time. In the foreseeable future, our industry will
become increasingly unsustainable without the thoughtful intervention of public
policy and plans that support a migration away from fossil-fuel based
generation. The pathways toward a more sustainable electricity future will
include increasing consumer demand for green power, incorporation of
environmental externalities into free market economics, standardizing
engineering design based on ISO14000, strong public policy action on
environmental accords, and increasing global competition with national
governments taking a strong role in developing their individual strategic competitive
advantages based upon renewable electricity technology development. Engineers will continue to play an important
role in the development of efficient new renewable technologies and assisting
business, industry and government in its rapid implementation.
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* Presumptive anomaly occurs in technology, not when the conventional
system fails in any absolute or objective sense, but when assumptions derived
from science indicate that either under some future conditions the conventional
system will fail (or function badly) or that a radically different system will
do a better job.