Are U.S. Utilities Ready for Winter?

Are renewables the cause for recent energy price spikes or the best way to prevent them?  Is it possible the answer is, both?  Well it depends on who you ask.  Europe’s ‘energy crisis’ stems from a low supply of gas and the rising demand for gas in Asia.  Some analysts say renewables, insulation and electrification are the answer to soaring gas prices across Europe.  While others are convinced the rapid transition to renewables is what led the region into relying too heavily on international gas to fill the gaps.  For example, low wind speeds last summer reduced wind power generation from 25 percent to 7 percent and gas was used to offset the decline.  However, Sarah Brown, an electricity analyst at think-tank Ember, said, “Blaming low wind is clutching at straws.” Manchester University's Matthew Paterson, a professor of international politics who researches climate politics, also commented in favor of wind, ”Part of the answer is to put more windmills up in different places, because the wind will be blowing somewhere.”  More research and development of solar and hydropower have also been encouraged.  Lisa Fischer, who leads the climate think tank E3G's program pointed to another factor as part of the solution.  The demand side.  "Europe has been building renewables quickly, and while we could go faster, what has been slow is critical action in cutting energy demand and making it more flexible,” said Fischer.  The good news is, smart grids were high on her list as a problem solver and according to the IEA, the United States is already one of the leading investors in smart grid technology.  While the United Kingdom, Spain, Italy and France are looking at a growing problem, the U.S. isn’t immune to winter price hikes and potential gas shortages.  Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC, said, “There are people of high authority at large utilities that are deeply concerned.”  Power producers at Duke Energy Corp. are already warning customers that bills will spike this winter.

Asia won’t have the only increase in demand, the latest annual findings by The U.S. Energy Information Administration (EIA) point toward a global increase in demand.  “We are predicting that [gross domestic product] Population growth offsets the short-term decline in energy usage associated with pandemics... We are driving an increase in global energy consumption, “said Stephen Nalley, Deputy Director of EIA.

Between inflation, demand, low temperatures and no wind, this winter might be tough.  When those numbers break records it often reveals that policies are broken. Some have blamed climate policy for rising energy costs. Others say the crisis fuels the need to switch to clean energy and to reduce reliance on a volatile commodity.  One very clear lesson learned is, without a backup plan, one failure can collapse an entire system. Case in point, Texas has the largest renewable power generation of any U.S. state but fell short during the catastrophic storm they faced last winter.  So are renewables the cause of the next ‘energy crisis’ or the only solution to avoid one? Probably neither. “Recent increases in global natural gas prices are the result of multiple factors, and it is inaccurate and misleading to lay the responsibility at the door of the clean energy transition,” said International Energy Agency (IEA) chief Fatih Birol.  How well is your utility prepared for the winter?  And how can you better prepare your customers?