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A Responsible Electricity Future: An Efficient, Cleaner and Balanced Scenario for the US Electricity System 2005-05-25 Download the full report.

Executive Summary

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The current electric power system in the US is heavily dependent upon central station plants, fossil and nuclear fuels, and an increasingly strained system of wires to deliver that generation to customers. “Business as usual” development of the system, as depicted for example in the US Energy Information Administration’s latest Annual Energy Outlook (EIA’s AEO 2004) shows consumption of electricity increasing by more than 50 percent by 2025 and massive investment in new coal and gas central station power generation to meet that demand.1 The increasing demand and supply in this scenario place stresses upon the electricity transmission and distribution system which then requires its own massive investment in new equipment.

In this context, Synapse Energy Economics was asked to develop a reasonable and balanced scenario for the future evolution of the electric power system in the US. This “Balanced Case” includes stepped up investment in energy efficiency and in renewable and distributed generating technology. These clean additions to the system avoid the addition of new coal and gas plants in the reference case and also allow the retirement of a significant portion of the older existing nuclear and fossil generating plants. They also allow a much reduced level of investment in new transmission and distribution infrastructure.

Not surprisingly, the environmental impacts of the Balanced Case are far lower than those of the Reference Case. For example, the Reference Case carbon dioxide emissions increase from 2.2 billion metric tonnes in 2001 to 3.3 billion metric tonnes in 2025. In the Balanced Case, instead of this 50 percent increase carbon dioxide emissions decrease by 21 percent to 1.8 billion metric tonnes in 2025.

It may surprise some that costs are projected to be lower in the Balanced Case than in the Reference Case. How can we realize a diverse and clean electric system without paying substantially more for it? The Reference Case includes a tremendous investment in expensive new fossil fueled central station power generation and the investment in wires to bring that generation to consumers. The Balanced Case also requires substantial new investment, primarily in energy efficiency measures and in a mix of generating technologies that are renewable and/or distributed. The Balanced Case resource mix avoids the investment in new fossil fueled central station capacity, the costs of the fuel to operate that capacity, and much of the Reference Case transmission and distribution investment. Using EIA’s numbers for the technology and fuel costs, we project that the Balanced Case will begin saving money within a few years, and that by 2025 the annual savings will amount to about $36 billion.