Oil prices have recently dropped well below $100 in response to slower economic growth around the world. But this decline doesn’t necessarily mean that the utilities industry will be able to provide cheaper power to millions of American consumers and companies.
In fact, utilities are going to face huge and upward price pressure on the electricity they deliver over the course of the next decade because of environmental clean-up costs, rising world market prices for energy sources like natural gas, much-needed infrastructure improvements, and an eventual restoration of economic demand. All of this will lead to larger energy bills—at least triple what we’re paying now—for citizens across the country.
Fortunately, there’s a significant new business model coming of age in the utilities industry today, a localized energy distribution system that will gradually replace the centralized approach that has somehow managed to stand the test of time in American cities and towns since the 19th century.
This 21st century distributed model is facilitating the development of exciting new alternative energy technologies, which will ultimately lower electricity prices for business and residential customers while allowing them to customize and control their energy intake in the home or at the factory or warehouse. When it takes hold, the localized model will even enable companies and consumers to generate their own energy, or sell it to a utility.
Clearly, this is a profound and sweeping technology transformation in the making. For over 100 years—ever since Westinghouse and Edison fought over AC and DC current standards—utilities have functioned like mainframe computers; hulking and centrally located power plants have done all the work and then sent the electricity out along a tangle of old, antiquated transmission lines. Unlike the one-way central-station-to-customer model, the new distributed model puts energy users in charge, thanks to smart grids, digital meters and intelligent appliances that talk to each other the way PCs do in a distributed computing network.
Next-Generation Biomass Furnaces
Producing energy—and greater efficiency, economy and green-collar job growth—at the local level is the wave of the future for the utility industry. And one of the most under-estimated and under-publicized delivery systems for this decentralized but potentially large-scale approach is the new generation of clean-burning and cutting-edge biomass furnaces. These state-of-the-art mobile furnaces, which are based on the latest breakthrough technology, utilize readily available and tremendously inexpensive feedstock like wood and wood waste. [Disclosure: The author is the founder of Greenwood Technologies, which develops clean-burning, biomass furnaces—Eds.]
Our recent analysis of available fuel sources in a cold-weather region like New England shows just how cost-effective these wood-burning biomass furnace systems can be. Assuming that home heating oil is currently about $3.50 a gallon, we calculated equivalent prices that range from $0.26 a gallon to $0.90 a gallon for cord wood, utility-scale wood and wood waste.
We believe that the new “biomath of biomass”—which reflects a considerable pricing differential between wood / wood waste and just about any other fuel possibility—is sustainable, structural and solid for the long haul. And our projections for future energy production confirm this. Indeed, after crunching the numbers, we anticipate that overall domestic energy production will grow 0.8% annually between 2006 and 2030 versus 4.3% for biomass.
The story behind these production numbers revolves around regulatory uncertainty, the cost of technology, and global energy flows and pricing. Carbon capture, for example, is a very well understood process, but no one is certain if it will really work on a large scale. These doubts, plus the government’s ambivalence about a carbon cap-and-trade program or tax of some sort, have effectively taken new coal plants off the table. Even without carbon capture, the costs of a new coal plant are massive, on the order of $2 billion, so very few utilities can afford to make a financial commitment this large—especially in a credit-constrained environment.
If coal is a no-go, then what about natural gas? Natural gas plants are relatively