Energy: Our Important Hard Work Ahead

Power System 2002 Conference
Bill Coley
President
Duke Power

Clemson, S.C.

Thank you for that warm welcome.

This conference is one indication that you and Clemson University are focused on real energy issues. I applaud the work the university is doing at its Energy Systems Lab — creating real-life opportunities for students to learn and understand technical applications.

It’s no secret that Clemson has been frequently ranked among the Top 20 engineering schools in the nation. It’s less well known that the university is also among the Top 10 in graduating African-American engineers — bringing diversity to the technical ranks. Duke Power is an active participant in supporting that effort — and I’m glad we are seeing positive results.

It’s no wonder that Duke Power and Clemson have forged a long relationship over the years. You can tell by the professorships we have endowed at the school, and you can also tell by the many Duke employees who are Clemson alumni. Almost any Monday morning in the fall Duke shows as much orange as it does big, red “D’s,” and I’m reminded that we have a lot of Tiger alumni on board.

The work we are all involved with — the industry that powers both our individual lives and society is important, vital work.

The world looks to us to meet its demand for energy — energy that is lower in price, energy that is essentially perfect in its quality, energy that is produced with less impact on the environment and — they want that energy today. There is a lot of important hard work ahead. That’s our challenge, and it’s both exciting and rewarding.

In recent months, the future of the energy industry seems to be driven more by the courts, the regulators, and the government. Regulations and laws govern our industry, but they’re not the heart of it. That’s to be found in places such as this.

The early history of the energy industry took place in the research labs — with Edison, Tesla, Fermi and Westinghouse. The future of the industry will follow much the same path. The labs may be more elaborate; the equipment may be better; the concepts may be more complex. But the advancement of this industry depends on the work of people like you — It builds on those innovators who came before us — and it depends on those who will follow you — the men and women coming from our colleges and universities like Clemson — and from the colleges you attended.

Which is why conferences like these are so important. It’s technical leaders and researchers coming together to exchange ideas and debate concepts. It’s learning about new ideas and new applications that can be moved successfully into the marketplace. Confucius made a statement centuries ago that we all should remember, “Real knowledge is to know the extent of one’s ignorance.”

No one has all the answers — no one at this conference has a corner on all the knowledge. But together, we have many answers and much knowledge. We just have to know our limitations. So I challenge you to share your knowledge; listen and absorb new ideas and incorporate what you hear over the next few days into real-world applications. Our society depends on it and companies like Duke Power are depending on it.

Six billion people depend on it, too. That’s our world population right now — a growing number that will edge toward 10 billion midway through this century. And we must find new and innovative ways to satisfy the energy needs for those 6 billion people. It’s a growing demand that breaks down to three areas.

• First, the high-tech connected people like ourselves in the U.S. and other developed nations. The world where most people have a Blackberry, Palm Pilot, pager, cell phone, laptop and are connected to the Internet 24 hours a day. — And that’s just our kids. We are driving a demand for energy that is focused in reliability as much as availability.
• Second, the nations in South America, Central America, Asia-Pacific and Africa - that resemble the U.S. in the 1950s — televisions, air conditioners and modern appliances. People of these nations are requiring energy at a growth rate that approaches 7-10 percent annually.
• Finally, we must connect with the 2 billion people who don’t have electricity at all. Almost one-third of the world’s people do not have electricity in their homes. Will they get it tomorrow? No. However, we must commit to a steady pace to connect the rest of the world with industrialized nations. As they connect to our energy grids, their quality of life will rise — right along with their energy demand.

Three segments of the world - each with different needs and each consuming more energy than the year before. According to the U.S. Energy Information Agency, world energy consumption will increase by more than 50 percent by the year 2020. In the U.S., demand continues to grow at 1-2 percent a year — significant when you consider that a 1 percent increase in demand equates to nearly 10,000 MW of new capacity. And that doesn’t take into consideration that nearly 100,000 MW of our present capacity is more than 40 years old.

Will existing technologies satisfy everyone?

Most likely “no.” But advancements in existing technologies have helped do more — with less. Each year, I’m amazed that Duke Power is generating more electricity with a pound of coal, a BTU of natural gas or a pound of uranium than the year before. It doesn’t happen by accident. The work being done by our own technical staff, plus the work being done by technical experts like you are helping stretch energy efficiency to greater lengths. Making our existing technologies work harder and better is a key to meeting future energy demands.

But 6 billion people are counting on us to explore new technologies. Their future depends on us to deliver the next generation of technology. Distributed generation is one example that is being talked about in this conference — but others such as wind power, solar, fuel cells, waste-to-energy — all must be examined and researched.

I wish I could predict which of these will be the next breakthrough in energy technology. But I can’t — maybe none of these ideas are the one. But we must continue to search, study, and sometimes fail. We must spare no effort to make progress in the race to meet our future energy needs. I was pleased when I looked at the many sessions at this conference. In my mind, they are all important… because they all focus on making us more energy efficient and more energy independent. Whether that be … power quality, limiting line loss, wind power … you name it, we must examine every avenue and leave no stone unturned.

I know many of you are examining ways to make our existing technologies better. But I know others are looking at new technologies, too — renewables, microturbines and distributed generation. These technologies hold great promise, but also promise a great amount of hard work - And hard cash before they can be commercially feasible.

We should all remember that quote — that “hard work spotlights the character of people; some turn up their sleeves; some turn up their noses, and some don’t turn up at all.” I can see that we’ve got a lot of people here today who have been turning up their sleeves for some time — and will continue to do so.

But new technologies do pose a great deal of challenges. Today, renewable energy makes up about 9 percent of our total worldwide energy usage — but half of that is hydroelectric generation — not exactly a 21st century technology. Much of the rest are biomass projects, including some that have been developed in Duke Energy business units.

The good news about renewables is that usage is expected to increase by 53 percent over the next 20 years, according to the Dept. of Energy. The bad news is that due to the rise in overall energy consumption — the market share of renewables is expected to fall from 9 percent to 8 percent over the next 20 years.

Have we “hit the wall” with potential growth of renewables? Only if we allow our thinking to be “walled” in. Again — challenges, barriers, hard work — but still, the growing demand for energy makes work in this field vitally important.

Distributed generation — again, important — but challenges and barriers exist. A 2000 study by the Dept. of Energy followed 65 distributed generation projects and found that all but seven of them had significant market barriers due to technical and non-technical issues. Many times state regulations had been drafted that never considered distributed generation projects. I’m sure some of you have run into that — and more.

Advancing new ideas and implementing new technologies is hard work. It’s work in which not every one will agree with you; not everyone will be pleased with you. And at least one person will say that you’re crazy — but remember the quote that says, “I don’t know the key to success, but the key to failure is trying to please everyone.”

If I have to echo one word of caution it would be: we must remember that new technologies, or improvements in old technologies, will still be judged using old economics. This is where the “hard cash” part comes in.

The bottom line at many companies — Duke Power included — is how it stacks up with what we are already doing. The cold reality of dollars and cents carries so much weight in our business world, we can’t ignore it. Our customers certainly won’t — and neither will our investors.

It’s a lesson we must teach our students in the classroom, too. When I advise future engineers, I urge them to take business classes in addition to engineering.

Why? To sum it up: “Just because we can, doesn’t mean we will.” Our breakthroughs in technology must make as much sense on the business side as they do on the technical side.

It’s something we preach at Duke Power. A good example is right here at Clemson. In addition to endowing an engineering professorship, we also endow a professorship in management. They are equally important in our eyes.

Technical graduates who also speak the language of business will succeed in grabbing our attention. And I believe they will be well prepared to advance the work in which we’re all engaged.

And that doesn’t just apply to college students. We all could use a dose of business reality as we charge ahead in our technical ventures — and in our personal lives.

So let me see if I can sum up the important hard work ahead for us:

• The good news — We have a growing demand for our product; a 6 billion person customer base.
• We must improve existing technology and introduce new technology. We should expect some skepticism, indifference or even resistance.
• We must overcome the hurdles of bottom-line economics, or rise to the higher challenge of refining them. That’s the business world we live in.
• We must not let setbacks deter us. Remember what Einstein’s said: “Anybody who has never made a mistake, has never tried anything new.”

There is plenty of important, hard work ahead of us in the energy industry. I commend you for being part of that hard work; I commend Clemson University for this conference to spotlight your hard work; I commend the speakers who will follow me for sharing their hard work — but most important, I look forward to seeing the results of that hard work.

Have a productive conference. Thank you.