What have been some of the biggest challenges of running a massive utility?
In the five years since I've been at Duke, our biggest challenges have been several things. One is the recognition that after 50 years, the real price of electricity is going to rise because of tighter regulations on coal plants and the recognition that we have to restrict carbon. [After the merger] we will be [one of the] largest emitters of CO2 in the U.S. We have a special responsibility to lead on that issue.
We will have to retire and replace virtually every plant by 2050. In a sense, that gives us a blank sheet of paper. What will we build in the future? One of our challenges is going to be to try to position the company to totally remake its system of generation and at the same time modernize our grid, which effectively means going from an analogue grid to a digital grid.
What do you believe the energy mix will look like in the coming decades?Over the last 20 years we have started using coal in a cleaner way. But there needs to be more technological development to use it in a low carbon world. Is this carbon capture and storage (CCS)? Is it a system to use algae to capture carbon and accelerate the growth of algae and then use it as a biofuel? I think CCS will play a role particularly if utilities are in a region where the geography works, but that's predominantly in the Midwest. The ultimate solution to [make coal more sustainable] is to recycle the carbon. We have relationships with a number of Chinese companies, and they're actually more focused on how you recycle the carbon rather than storing it. On some level, it seems like a more sustainable practice to take it and reuse it rather than store it in the ground.
So you do still believe coal will play an important part of the energy mix in the future?
By 2030 coal will still be here and be used, but in the longer term, with the realization that we will have carbon constraints, the question is whether the technology will evolve to allow coal to remain a [clean] alternative. Whether or not these technologies will be here in 2050 is a function of how well we can develop technology to reduce their emissions footprint. With respect to renewables, how fast can we bring down the cost of solar and wind in a way that we don't need subsidies?
Do you think solar and wind will become cheap enough to compete with traditional energy sources?
I do. [The price of] wind has come down rather dramatically. What's going to drive down the cost of solar--although I don't believe Moore's Law applies to solar--if you look at the Chinese who are leading the world in solar panel production, wind turbine production, and probably lead the world in the development of batteries ...the Chinese are developing the intellectual property of scaling, and that in itself is what creates value. The Chinese are going to find a way to scale this, and as they scale this, they will drive the costs down. I am confident that over the next two to three decades you're going to see prices come down pretty dramatically.
What about the future of nuclear plants?
We will have to retire and replace every [Duke Energy] nuclear plant by 2050. Lets start with the simple assumption that 70% of [low-carbon] electricity today comes from nuclear. If we had to replace that with gas...it would have a fairly detrimental impact with respect to climate. Two things give me hope. One is evolving technologies, the second is development of modular nuclear technology.
When I look at nuclear, I look at it both as modular as well as large plants in the future. I believe we have to solve the spent fuel issue. The question is whether we store it or recycle it. My judgment is that we'll find a way to recycle it. So [nuclear] will play a role, and it's kind of hard now to really predict the role. I mean, that's what makes this puzzle so interesting, because we know what the pieces are, we kind of have inklings of what some of the shapes of the pieces will be tomorrow, but to put the map together of what the mix will be--it's a pretty intriguing exercise. We've got to do it. We don't have a choice.
What are some of the new energy technologies that will be prevalent in the future that aren't so well known today?
If I knew that I'd be taking money and making bets. I think modular nuclear as a group will be breakout. I think there are going to be breakthroughs in solar technology. I think in the long run solar will trump wind because solar can be distributed [on rooftops] and also I think will be more efficient than wind turbines over time for a variety of different reasons.
I think battery technology will be transformative, not just with respect to intermittent sources of power, but also it has a fundamental impact on how the grid actually operates. I'm following very closely what BYD is doing. I think zinc air [battery technology] is kind of interesting because [the cells] become grid storage, which I think is important.
These are some of the areas that I think will evolve. The only question is which ones will be lowest cost and most efficient. We're at a very important point, I believe. I wish I could be a CEO for another 23 years. The technologies are coming together and are evolving. Some are clearer than others. I've always told people particularly recently that we're a technology company disguised as a utility.
Notes: Thanks to Yahoo Msg Board
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