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Karl Fessenden (KF) is vice president of power generation services, energy services, at GE, where he’s responsible for developing and executing a growth strategy to position the division, which was recently created following the merger of contractual services and power services. A 14-year GE employee, Fessenden’s focus is on power-generating plants. He shared his thoughts on supply-side efficiency, the future of power generation and other topics with Plant Services Executive Editor Russ Kratowicz (RK).
RK: What is supply-side efficiency and why is it a key area the electric industry should examine for productivity gains?
KF: Against today’s backdrop of tightening emissions regulations and reduced operating budgets, efficiency is the new normal. However, energy efficiency programs to date have focused largely on driving demand-side action by consumers to reduce their consumption by replacing incandescent light bulbs with compact fluorescents or switching to time-of-use programs, for example. One study found that if the U.S. utilities with peak demand greater than 3,000 MW achieved top quartile performance for demand side management, more than 47 GW of generation and 106 million tons of CO2 per year could be avoided. Similarly, pilot studies have demonstrated that, given proper incentives, consumers can reduce peak demand by more than 15% and total demand by more than 10%.
But, while it’s an important area of efficiency to address, focusing only on the demand side is a missed opportunity. To succeed, those improvements must be made in tandem with supply-side efficiency efforts. However, the dramatic efficiency improvements that can be made on the supply side have received little attention to date.
Considering that the International Energy Agency (IEA) estimates that two-thirds of the energy contained in the fossil fuels we use to produce electricity today is lost during generation, we must address these opportunities on the supply side. By improving the efficiency of energy production, plant operators can both reduce emissions and improve their bottom lines and energy output. In fact, the IEA estimates that for every $1 invested in supply-side efficiency globally, it will require $3 to accomplish the same level of CO2 reduction via demand-side efficiency efforts because of the number of touch points required.
Incremental improvements, when multiplied across the scale of the energy sector, can result in huge gains in energy efficiency and carbon reductions. Clearly, supply-side efficiency represents a huge source of untapped potential to increase both output and profitability.
RK: What is the producer’s vision for power generation in the future?
KF: A host of studies are predicting increased energy demand. In fact, a recent study suggests that global energy demand will climb 35% by 2030 from 2005 levels. Industrial plant managers and power generators are challenged to meet this growing demand, while balancing operational and financial goals. Today’s energy producers face unique challenges. This shift is forcing everyone in the industry to evaluate the status quo. Plants might now be required to operate in different modes from their original design concept. For example, a plant originally designed to operate with its maximum efficiency at full load will now be spending the majority of its operating time below full power.
To meet these challenges, power plant managers must examine their complete plants to achieve maximum reliability and profitability, by viewing the facility as a single system instead of a patchwork of individual operations. Industries and utilities need to explore and support various supply-side pieces of the energy equation. This will allow producers to understand the health of their overall operations and make smarter decisions about when and where to invest limited resources.
RK: What’s the long-term vision for electrical grid?
KF: Energy security as a key priority of any future grid needs to be a primary consideration. Such security can be achieved only with supply-side efficiency, reliability and flexibility, as well as through adequate demand management systems. Achieving these objectives requires new levels of collaboration and communication between the grid and power plants.
Considering that many of the power plants in the United States are aging — the median age of a coal plant in North America is 44 years — the long-term vision is to establish a complete end-to-end grid infrastructure that meets rising energy demands and complies with increasing regulations.