Low demand? I don’t like the sound of THAT…

58de7f2b16b4e.image

A lot of folks are reacting in a lot of ways — mostly negative — to the decision by SCANA and Santee Cooper to abandon their nuclear power project.

We’ve heard a good bit about the $9 billion already spent, the $1.4 billion in rate increases, and all the folks whose jobs depended on the continuation of the project.

But I’d like to see more on one aspect of the decision: The explanation that the utilities bailed because power demand isn’t turning out to be as great as projected.

Is it that the original projections were just entirely unrealistic? Or were the projections sensible at the time, but then rendered inaccurate by the economic collapse of 2008? In which case, assuming we ever fully recover from that, maybe we go back to the kind of growth that was originally projected…

Another way to put it: Is weakened demand a temporary condition, or the New Normal?

I don’t know. I just know that when I hear “low demand,” like the characters on “Seinfeld” reacting to the news that their new shower heads were “low-flow,” I don’t like the sound of that.

I mean, that can’t be good, can it? Doesn’t less power demand track closely with less economic growth? A lot of us have had to adjust to lowered economic expectations in the last few years. News like this seems to tell us, Get used to that; it’s not getting better.

Or does it? I’d like to know more about this. In the meantime, I don’t like the sound of it…

low flow

60 thoughts on “Low demand? I don’t like the sound of THAT…

  1. Brad Warthen Post author

    And yes, yes, all you Jerry Browns out there: I’m familiar with the “Less if More” school of thought that holds that it is a GOOD thing for people to be demanding less electrical power.

    Well, I might go along with you if you can demonstrate that the lowered demand results from the population of SC being super-smart about conservation without sacrificing prosperity. But no one has shown me that.

    Of course, as I said above, it could be that the projections on which the project was based were NEVER realistic, even assuming the economy kept charging forward and never hit that speed bump in 2008.

    But I haven’t seen that demonstrated, either. Perhaps it’s out there and I’ve missed it.

    Anyway, as I say, I’d like to know more….

    Reply
        1. Doug Ross

          Actually as someone who does data visualization as a living , that graphic is horrible. It commits the cardinal sin of data visualization — starting the Y axis at a non-zero number in order to make the the change look more dramatic than it really is.

          It also show just how terrible people are at forecasting.

          Reply
          1. Doug Ross

            The actual line shows peak usage in the middle of the recession and a consistent dropping trend as the economy has improved.

            Reply
            1. Brad Warthen Post author

              Although I have some sympathy for the utilities on that point.

              If you’re in charge of a utility, I imagine the thing that keeps you up nights isn’t the possibility of OVERestimating future demand, but the opposite. You don’t want to assume less demand and turn out to be wrong. If the state is poised to start booming and everybody wants to move here and live and work and make stuff here, and you don’t have power for them, then people will REALLY hate you…

              Reply
              1. Lynn Teague

                Or, you might just calculate that if you overshoot demand you’ve still made 10.5% on every dollar you’ve spent, and then can sell excess power. Especially nice if you’ve transferred all risk to the ratepayers.

                Reply
  2. Doug Ross

    “In which case, assuming we ever fully recover from that, ”

    Are you saying we haven’t recovered from 2008? In what way? The stock market is at all time highs and unemployment is very low. Companies are showing record profits — Apple has $250 BILLION in cash sitting unused. GDP Growth has averaged around 4% since 2010. Federal tax revenues have grown to their highest levels in history — 3.5 trillion compare to 2.5 trillion in 2008.

    I’m thinking there are all sorts of variables that would decrease demand… mainly around more efficient devices and other technology.

    Reply
    1. Brad Warthen Post author

      As I said, it would be great if someone could demonstrate that that’s the case — that we’ve managed to be that much more efficient.

      And none of the numbers you cite shows me that South Carolina’s economy is cooking along at the sort of rate we need to lift all boats. And as you know, South Carolina needs some boat-raising more than a lot of other states.

      I’m sure Bobby Hitt’s agency can throw some numbers at me showing how great we’re doing, especially if you have a new job making tires or something.

      But lowered power demand seems to me indicative of the kind of fundamental, structural weakness that worries me…

      Reply
      1. Doug Ross

        SC Unemployment rate is 4.3%, the lowest it has been since 2001. It’s lower than North Carolina’s. SC’s GDP growth is in the upper quarter of the country.

        I’m asking again where you’re seeing an issue? Greenville is booming. Our roads are packed with cars going SOMEWHERE.

        Reply
        1. Brad Warthen Post author

          And I’m telling you again I don’t KNOW. I just know that reduced power demand has generally not been a great economic sign.

          I’m not arguing here; I’m raising questions…

          Reply
  3. Mark Stewart

    It appears Santee Cooper could have potentially 1005 MW available of NEW generating capacity of Nuclear if units 2 & 3 at VC Summer were completed. The current total coal-fired generating capacity of Santee Cooper I calculate at 3,475 MW – so about 41% of the total coal generating capacity could be shut down if the 2 reactors were completed (assuming demand remains relatively constant).

    The math would seem to be: projected cost of continued coal production + cost to abandon the 2 reactors vs. the cost to complete and run the reactors + the cost to decommission the coal plants. I have no idea what that would equate to for this analysis. However, there are also the environmental costs to weigh; which is an even thornier problem.

    From Santee Cooper:
    ” In 2016, Santee Cooper, a South Carolina power company, generated approximately 52.1 percent of its electricity from coal, 20.4 percent from natural gas, 12.18 percent from nuclear, 1.87 percent from and hydro, and 0.34 percent from other renewables .”

    “Based on generation, this state-owned electric and water utility is the nation’s second largest publicly owned electric utility among state, municipal and district systems.”

    Generation (GWh): 2016 2015 2014 2013
    Coal 12,347 12,832 16,607 13,949
    Nuclear 2,886 2,366 2,297 2,788
    Hydro 444 523 506 624
    Natural Gas and Oil 4,834 6,212 3,821 4,315
    Landfill Gas and Renewables 81 93 96 115

    VC Summer Nuclear Plant:
    Unit 1 966 MW (33.3% is Santee Cooper’s)
    Unit 2 1117 MW (45% would be Santee Cooper’s)
    Unit 3 1117 MW (45% would be Santee Cooper’s)

    From Wikipedia:
    As of March 2011 Santee Cooper has four operating coal power plants with a total generating capacity of 4043 megawatts installed capacity.

    Plant Name State County Year(s) Built Capacity
    Winyah SC Georgetown 1975, 1977, 1980, 1981 1155 MW
    Cross SC Berkeley 1984, 1995 2320 MW
    Jefferies SC Berkeley 1970 396 MW (Now closed)
    Grainger SC Horry 1966 170 MW (Now closed)

    In 2006, Santee Cooper’s 4 coal-fired power plants emitted 27.1 million tons of CO2 and 83,000 tons of SO2 (0.55% of all U.S. SO2 emissions).

    Reply
  4. bud

    Not sure I get the handwringing over the lower demand comment. Probably has to do with greater efficiency and perhaps an expected increase in solar panel installations. I agree with Doug the economy is doing well right now with a record number of positive job numbers.

    Reply
    1. Claus2

      Is it getting cold outside… maybe starting to snow? I just agreed with bud, who agreed with Doug… that has to be a first.

      Reply
  5. Phillip

    The story about the SC reactors made the NYT, and I seem to recall that article talking about the overall nationwide plateau-ing of electrical demand…combination of significant increase in energy efficiency, and also they mentioned cheap natural gas. What I read that sounded bad was that as a result of these plants not being built, coal plants will continue on longer than would have otherwise been the case. This is always the split in the environmental movement, the fact that nuclear power is cleaner than coal…that is until you get a Fukushima and it’s most emphatically NOT.

    But I would encourage you to be open to the idea that reduced energy demand is a good thing, not a bad thing, and doesn’t necessarily have to correlate to a slumping economy, in fact, quite the opposite.

    Reply
  6. Brad Warthen Post author

    I’m surprised by how many of you think conservation has played a big role in the reduced demand.

    Folks, this is South Carolina. I can’t remember the last time I saw someone sitting in a parked car in the summer WITHOUT running the engine to keep the AC running — something I NEVER do, but others seem to ALWAYS do.

    I’m just going to have to doubt there’s been this triumph of smart, earth-friendly behavior here in the Palmetto State. I hate to be negative, but…

    Reply
    1. Doug Ross

      It’s happening by default. Low wattage bulbs, much more efficient HVAC systems and appliances, higher efficiency ratings in home construction, and MUCH MUCH better monitoring systems to allow the big power consumers to become more efficient. Could be any number of factors that are completely unrelated to the economy.

      Is this going to be a “I’ve made up my mind and nothing will convince me otherwise” situations?

      Reply
      1. Doug Ross

        As an example, I moved two years ago into a home built by Essex Homes. One of their selling points is “Ebuilt Homes”.

        “A better way of building. eBuilt homes by Essex use 25-35% less energy than a typical new home, and even more than a typical resale home. These numbers don’t come from us though, they come from a third-party inspection process that is nationally recognized as the new home efficiency standard. Every new Essex Home is an eBuilt home. These are not upgrades…these are the new standard.”

        http://www.essexhomes.net/ebuilt-energy

        Some of the features that definitely help include: on demand water heaters, CFL bulbs, Radiant Barrier Roof Sheathing, and improved insulation… to name a few.

        And I can validate their claims. My utility bills were cut by 50% compared to our last home which was 25% larger. So 25% seems about right.

        Reply
      2. Brad Warthen Post author

        No, Doug. Nothing I’ve said here would indicate that. A post could hardly be more noncommittal than this one. Hence the oblique approach. I didn’t say “this is bad;” I quite clearly said “I don’t like the sound of that.” It worries me.

        I appreciate all efforts to reassure me. But the idea that we did it by being such awesome friends of the planet doesn’t seem to do it by itself.

        It may be that the answer is what Mike said above — a little this, a little that, and some more the other thing. I find that more realistic-sounding.

        Why does everything have to be a big argument?

        Reply
        1. Claus2

          Computers today are a fraction of the size from just a few years ago…. I don’t like the sound of that.

          Reply
    2. Mark Stewart

      It’s baked into most things. Changed lighting (including all the streetlights etc in the public sphere), increased energy conservation ratings for HVAC, refrigerators, window AC units, dryers, water heaters, etc, etc.

      The trouble is, we’ve probably captured much of the easy low-hanging fruit. Which is why the demand charts for the utilities show a rightward shift of the demand, meaning demand still goes up, it just takes a few more years to get there.

      Since the new nuclear plants will be in service for 30+ years, the fact that they would be delivered later actually squares with the later rising demand. Over the long run, we will still need increased power generation requirements.

      It seems to me that both utilities view the Summer units as excess capacity; not the opportunity to pull more coal plants offline. That seems shortsighted to me – since at this point about half of the projected costs of the units are already sunk costs.

      Reply
    3. Claus2

      How many commercial lights have been switched over to LED? I’m in the process of switching over to LED from Compact Fluorescent, which were switched over from incandescent bulbs, in my house. I haven’t seen an incandescent bulb at work in maybe 10 years.

      Speaking of LED, I converted all of my bulbs over from incandescent to LED in a vehicle earlier this year. I came back from vacation and realized that I had left the dome light on for 7-8-9 days and figured I’d see if the vehicle would start. It started as though nothing was wrong. Try that with an incandescent bulb.

      Reply
    4. Claus2

      Apples and oranges… unless you drive a Prius I don’t see nuclear power affecting your power consumption. Now if you see people running their A/C with their doors and windows open we’re on the same page.

      Reply
    5. Norm Ivey

      Anecdotally:

      When we purchased our 1976-era home in 1999, our power bill was running at about $250 a month. Since then, we have replaced virtually all of our light bulbs with fluorescent or LED, installed a more efficient heat pump, added insulation, installed a programmable thermostat, replaced all of our major appliances with the most energy efficient we could afford, and done a few other energy-conscious things. Our current bill is $139. In July 2006 we used 2643 kwh. This year we used 929. (Usually in the 1400-1600 range. This year was REALLY low.)

      Getting the kids out of the house helped as well. I will never recover the costs of the improvements we made, but it was about the energy savings, not the money.

      There are lots of people who have done some of the same things.

      Reply
  7. bud

    Another important factor. The nations fertiliy rate is coming in lower than it did before the recession. Fewer people results in lower future demand.

    Reply
  8. Brad Warthen Post author

    You know what, though? Cogitating on something Phillip said above, I’m thinking maybe I wrote this post about the wrong worry.

    A greater one may be this: This decision is going to make it harder to build nuclear plants in the future. It was already hard; this makes it harder. We know that the folks who ALWAYS oppose nuclear like to accuse utilities of overestimating future demand. This case will give them greater credence, make them less like the boy who cried Wolf.

    And that’s bad why? Because… Whether future demand is as great as previously thought or not, there will be some new demand. And making it harder to build nuclear makes it much more likely that that demand will be met by coal.

    And while things CAN go wrong with nuclear, coal is bad for the planet every day, when working as advertised.

    So there’s that…

    Reply
    1. Claus2

      So, you’re arguing that they should have gone on with the project regardless of cost? A neighbor just got his 60 day notice yesterday and had been out there for the past 5+ years, he said anything and everything that could be screwed up was screwed up. Which might explain why the original estimate was 50% of the actual cost.

      There is nearly an endless supply of natural gas in the midwest, or at least several lifetimes and oil wells area flaring it off as a waste product at most wells. If we are looking for an alternative natural source I’d start there.

      Reply
        1. Claus2

          There comes a time when you throw in the towel. As the old saying goes, when you find yourself in a hole, stop digging.

          Reply
          1. Brad Warthen Post author

            Sure. And maybe this is such a case. I just wish they could have gone ahead and gotten this done.

            By the way, I’ve never been much of a cut-your-losses guy. When I was a kid playing touch football on the proverbial sandlot, I never, ever punted. That’s one of the things I don’t like about football — they’re always punting. I’d rather see them do or die trying to score… going for that first down even if it’s 25 yards away.

            I also don’t like intentionally walking batters in baseball…

            Reply
            1. Mark Stewart

              One of the things that killed the project (yes, there were many) was the expiration of the federal production credits set to expire in 2021, which the delayed construction process now cannot meet. The Trump administration wouldn’t extend these; maybe because they favor the coal industry?

              Net result is 5,000 people thrown out of work here and South Carolina will go on pumping out the coal-fired greenhouse gases (irrespective of how the Trump administration views global warming).

              I don’t know what the cost benefit analysis of completing or abandoning these reactors would show on an all-in basis; but it does seem pretty clear that this was a hastily made decision based more on panic than rigor.

              Reply
    2. Mark Stewart

      I think that there is one wild card to all of this projecting that could have a large impact – electric vehicles.

      I was just reading that OPEC revised their own projections to a future with 300 million EV’s across the globe in a few decades. That was a 500% increase in their estimation.

      I think we are at a place where we don’t have clarity into the future demand curve. However, it would seem fairly self-evident that demand isn’t going to go down moving forward. The question really is how high it goes up. A significant uptake in EV’s would lead to a concurrent rise in electric generation demand.

      On the other hand, plentiful natural gas from shale and a substantial increase in EV’s will likely put quite a hit on oil prices; which should keep energy prices relatively low going forward.

      It still seems like completing the VC Summer units and running them for 60 years might be smarter than taking the short-term view and writing off the units – which means continuing with coal…

      Reply
      1. bud

        It’s not self evident at all that electricity generated by power companies will be greater in the future. A number of factors mitigate against that. First, birth rates have dropped below replacement in the US. If sustained that will mean a lower total need for electricity. Concurrent with that is that the population is aging and older people tend to use less power. Second, solar panels are now competitive with coal in cost per watt of electricity. This means electricity can be generated at the site where it is used as cheaply as that from a large power plant. Small wind turbines might also be an option in some places for the same reason. Third, there is a growing trend toward smaller homes. Fourth, telecommuting may cut the need for office space and the resulting use of electricity. Fifth, as discussed already devices that use electricity are becoming much more efficient. Sixth, while it is true EVs are likely to become more prevalent they can be charged at times that wouldn’t necessitate power needed at peak use hours. Typically they are charged at night when demand is low for other uses like lighting. This limits the need for extra capacity.

        Reply
  9. Claus2

    How do the CEO’s and Board members keep their jobs after costing customers, share holders and taxpayers billions of dollars with this bungled mess? Seriously they aren’t the least bit concerned and will likely receive large EOY bonuses.

    Reply
      1. bud

        We’ll see but I doubt any executive at SCANA will be unduly burdened. This is yet another example of the American plutocracy run amok.

        Reply
      2. Claus2

        I doubt the executives on either board are concerned about where their next job will come from. They’re set up regardless if they’re voted off or resign.

        Reply
  10. Burl Burlingame

    The Democrat socialists in the Gummint have been pushing and mandating more efficient energy standards for years. This is the payoff. But as a southern state with an ocean front, SC has energy options other than nuclear.

    Reply
  11. David Carlton

    One factor that may be neglected: the decline in manufacturing. I know that Duke Energy has been pushing hard to entice power-guzzling server farms to the western Piedmont of NC because they built out their generating capacity and transmission grid for an industrial economy that no longer exists. I suspect that, BMW, Boeing, and Volvo notwithstanding, electric power usage in manufacturing has dropped in SC as well, and services aren’t picking up the slack.

    Reply
  12. Chuckie

    So much backward thinking. Like it’s a choice between coal or nuclear and nothing else. When the fact is, there’s plenty of untapped capacity both in terms of generation and efficiency. There’s untapped wind capacity. There’s probably untapped geothermal capacity. And of course there’s untapped solar capacity. We could be moving toward a distributed generation system based largely on South Carolina’s vast supply of sun, combined with new generation battery storage and other systems and offset fluctuations in supply from renewables. In short, we could be looking ahead rather than looking back.

    Reply
    1. Mark Stewart

      One thing the legislature ought to extract from both SCANA and Santee Cooper over this debacle is a repeal of all of the legislative roadblocks their lobbyists have inserted to restrict the development of renewable energy sources in South Carolina. Abandoning these reactors also torpedos the claim that renewable sources are a competitive supply threat to the utilities.

      Reply
  13. Scout

    Like others have said, I suspect the lower demand is at least in part due to increased efficiency that mostly has happened through changes that have nothing to do with South Carolinians consciously deciding to be environmentally conscious. I agree that is not a huge trend here. But still, things wear out and when you need to buy new ones and the only ones you can buy are way more efficient than what you had, then there is a gradual downward trend – be it due to light bulbs, washers and dryers, refrigerators, freezers, etc. They are just all more efficient now and people are slowly rolling over to the newer versions.

    But that guy running the air conditioning in his parked car is not in this equation since that is gasoline, most likely.

    It did also occur to me, as I think Mark said, if there were to be a significant increase in the use of Electric vehicles – that could definitely affect this equation. But this is SC. The only way that would happen is if they just stopped selling gasoline cars, or they made electric cars dirt cheap.

    I don’t especially expect South Carolinians to change their appetites or behavior – they just are able to satisfy their appetites more efficiently through no particular effort or desire of their own.

    Reply
  14. Norm Ivey

    There will be a significant increase in the number of electric and hybrid vehicles. Most new car sales will be full electric or hybrid by 2030 if not sooner. Things change slowly until they change quickly, even in South Carolina.

    Reply

Leave a Reply to Claus2 Cancel reply

Your email address will not be published. Required fields are marked *