Energy: The Foundation of Modern Economies

I am generally pessimistic about the future of the U.S. due to recent energy policies at the federal and state levels that favor “green” energy technologies, primarily solar and wind. These policies often distort the economics of power production, leading to a massive misallocation of capital and overinvestment in unreliable solar and wind projects. Reliable electricity supply requires consistency every second of the day, not just minute-by-minute, but also over weeks, months, and years. My past experience in forecasting electricity demand for a five-year horizon showed that wind and solar forecasts fail to meet this requirement.

Energy requires a reliable and economical source

Economies and standards of living hinge on having an adequate, economic, and reliable energy source—attributes that are non-negotiable for an optimal energy infrastructure. Our current trajectory risks creating inadequate, unaffordable, and unreliable energy supplies, which would devastate the U.S. economy and standard of living.

Is there any hope? Yes. I recently attended The Energy Future Forum sponsored by RealClear and RealClearEnergy. I was impressed by the thoughtful and comprehensive discussion on energy issues in the U.S. and globally. While these insightful voices are currently ignored by the administration in Washington and many states, there is hope for future change.

The forum’s speakers covered a variety of topics, including renewable energy and the sources of materials for solar panel manufacturing, electric vehicles and the future of transportation, petroleum exploration and production, small modular nuclear reactors, and federal energy policy. Most speakers understood the physics and engineering realities of energy production. Mark Mills, in particular, emphasized the three requirements for a successful energy system: adequacy, reliability, and economic viability. He noted that society is more adept at finding new uses for energy than producing it and highlighted the dynamic nature of energy demand over time. He also stressed that AI will significantly increase electricity demand, concentrated in specific regions.

Nuclear power not economical today, but with better licensing,…

To meet this new demand, much of the supply will come from natural gas plants, as AI and data centers require a reliable source of electricity every second of every day. Fossil fuels and nuclear power are currently the best technologies to meet this need. However, new nuclear power plants, my favored generating technology, are currently uneconomical.

Small modular reactor (SMR) designs might offer a way forward, providing virtually unlimited electricity with no carbon dioxide emissions. This topic was discussed extensively at the forum and has garnered much attention over the past 12-18 months. Both nuclear proponents and opponents recognize that licensing regulations must be revised for these reactors to become financially viable. The political battle over these regulations will determine the future of nuclear power.

The Energy Future Forum provided reasons for optimism about the future of the U.S. If the political class listens to the facts and understands the physical laws governing energy production, our children and grandchildren could inherit a foundation for a plentiful, reliable, and affordable energy system.

This article was originally published by RealClearEnergy and made available via RealClearWire.