Deloitte on 2008 energy: more nukes and efficiency

It will be more of the same for oil and natural gas prices in 2008, say the big brains of Deloitte & Touche, but uncertainty over how regulators will treat climate change could push the electric power business in new directions.

Power lines leaving the South Texas Project nuclear power plant near Bay City. Photo by Steve Ueckert / Chronicle

In its report, 2008 Industry Outlook: A Look Around the Corner, the accounting firm says as the country remains in limbo about how carbon dioxide emissions will be regulated (i.e. cap-and-trade vs. carbon tax, national program vs. regional ones), efficiency measures, so-called “demand response” programs and new nuclear power plant construction will likely get a boost.

In general, the energy industry has been anticipating this legislation with the hope that it will bring clarity and certainty around the steps industry should take to control greenhouse gas emissions. To date, some companies have been delaying investments in power generation facilities until new legislation is passed and the rules on carbon emissions are announced.

So, the current surge in new nuclear plant construction and operation applications should continue. (Our own local plant’s expansion takes another step forward next week with public hearings.)
But it takes a long time to get these projects built, even under the best of circumstances, so …

…the power and utilities industry will see demand-side programs and, especially, end-use efficiency move to the forefront in 2008 as an energy policy and regulatory matter.

Such measures include the “smart grid” movement that uses advanced power meters to let consumers better see their energy usage and its cost in real-time and perhaps allow for pricing based on peak and off-peak usage.
Other things to expect in 2008, says Deloitte:
Construction risk management will become an important focus for companies due to the unprecedented need to build new plants, upgrade current ones, expand transmission capacity and add smart grid technologies.
• Utility companies are expected to continue filing new rate cases more frequently to “ensure adequate returns.”