Mohammad Qayoumi is vice president and CFO of administration and finance at California State University-Northridge. He can be reached at mo.qayoumi@csun.edu.

This year marks the 30th anniversary of the 1973 oil embargo, an event that fundamentally transformed our views toward energy. The shock waves of the embargo were felt in almost all aspects of our lives. In some ways the embargo and the subsequent price hikes were so unusual that even a year before the incident it could not have been projected by many experts. For the past three decades we have witnessed a significant number of changes in the field of energy. Today, as we are trying to look into the future and predict what may lie ahead, it may be helpful to examine the transformations we saw in the past thirty years.

As the aftermath of the oil embargo, the United States concentrated its efforts in trying to reduce its dependence on oil imports and promote the use of coal. In the mid-1970s, the energy crisis was primarily viewed as an oil import issue. The motto during the early days of President Carter's administration was: "The United States is the Saudi Arabia of coal." By the late 1970s, a number of landmark energy-related legislations were passed. These included the National Energy Conservation Policy Act (NECPA), National Gas Act (NGA), Fuel Use Act (FUA), Public Utilities Regulatory Policy Act (PURPA), etc. The focus of the early rulings was to promote energy conservation by prescribing thermostat settings for heating and cooling public facilities, mandating minimal gas mileage for automobiles, and facilitating cogeneration systems. In these early days of rulings, applying energy conservation meant coping with colder buildings in the winter and warmer ones in the summer.

It is important to note that during this period even though the primary fuel prices-namely oil, gas, and coal-increased quite dramatically, the electric prices remained relatively flat. Since roughly 85 percent of electric prices are based on fixed-capital costs, fuel costs, which were part of the variable costs, had a relatively small impact. Moreover, many electric utilities had more installed capacity than what they needed. The incident that had a significant impact in reducing the future supply of electricity was the 1979 Three Mile Island nuclear accident. This incident basically brought the nuclear industry to a halt. Although many electric utilities that were in the last stages of completing nuclear plant projects were able to bring their plants online with sizable cost overruns, more than 100 nuclear plant projects that were at various stages of planning, design, and construction were abandoned.

By the early 1980s, many universities embarked on energy conservation projects using federal and state energy grants to reduce the overall energy consumption. Moreover, quite a few large universities began studying the economic feasibility of cogeneration plants. Some were even successful in building such plants on their campus. This success, coupled with the natural gas deregulation, which significantly reduced the price and increased its availability, raised our dependence on natural gas. Another contributing factor in the shift to natural gas was the environmental consideration.

The next major legislation that affected energy was the 1992 Energy Policy Act (EPACT). One of the major elements of this policy was that it allowed individual states to deregulate the generation of electricity. This landmark legislation changed the nature of the electrical utilities industry which had been the same since the mid 1930s. EPACT gave the states the ability to break down the vertically integrated monopolies that the regulated investment-owned utilities had enjoyed for over six decades. In other words, the generation of electricity was decoupled from transmission and distribution sectors, and became a non-regulated industry. It is interesting to note that by the mid-1990s, the cost and availability of electricity became the dominant energy issue in the United States.

One of the impacts of deregulation was the increase in our dependence on natural gas. Because gas-based electrical generators are easy to build and permission to operate these plants is easier and faster to secure, they are the only viable choice, especially for independent power producers. Natural gas consumption will significantly increase especially in electrical generation. Currently, about 52 percent of our electricity is generated by coal, 20 percent by nuclear power, 14 percent by natural gas, 10 percent by hydroelectric, and the remaining 4 percent by renewable resources. By the end of this decade roughly 70 percent of the U.S. coal plants will be more than 40 years old and in need of replacement. The replacement generators will be gas-fired units. As a result of these conversions, by 2020 natural gas will replace coal as the dominant primary fuel for generating electricity.

Therefore, it is interesting to note that even though in the 1970s the thrust of our national energy policies increased the use of coal, our dependence on coal has continually been decreasing. Based on the above figures, let us examine our current energy issues and theorize on the trend in the energy field for the next decade or more.

Oil prices in the U.S. economy have gone down considerably in the past decade due to the sharp growth of the information technology field. For instance, while information technology has added $800 billion to the U.S. economy in the past decade, "the share of gross domestic product absorbed by oil purchases is 30 percent lower now than in 1990 despite the current high prices"1

With the "siliconization" of energy, the price of electricity plays a more significant role in the U.S. economy than that of the price of oil. The predominant use of oil is in the transportation field, which constitutes less than 10 percent of the national economy. In fact, over two-thirds of the oil is consumed within this sector of the economy. The remaining 90 percent of the economy gets about 55 percent of its energy from electricity. Therefore, our future energy challenges have moved from an "oil-centered" issue to an "electric-centered" issue. In addition, as we look at the "siliconization" phenomenon, it becomes clear that the reliability of electrical energy is far more critical today than it ever was in the past. For instance, our power systems were designed and built to serve electric loads that required an uptime of 99.9 percent, or a "three 9 reliability." This translates into a downtime of roughly eight hours per year, which was acceptable for traditional electric loads such as lighting, electric motors, refrigerators, etc. By contrast, many real time computing systems today require an uptime ranging from 99.999 to 99.99999 percent or between five 9 to seven 9 reliability. This creates a totally different set of challenges that were not present even two decades ago.

Therefore, as we look into the future, a reliable and adequate supply of electricity will become the dominant factor for the national energy scene. It makes sense to examine the technologies that may impact the supply of electricity in the next few decades. Today, electricity is a one trillion dollar per year global enterprise and a $250 billion per year enterprise for the United States. Roughly 17 percent of the world's energy generation and 20 percent of the U.S. generation is nuclear-based. Today, there are more than 400 nuclear power plants in operation worldwide. Although no new plants have been constructed since the Three Mile Island accident in 1979, there are still more than 100 plants in operation in the United States. In the past few years several companies have been very active in purchasing existing nuclear plants and operating them very profitably. This consolidation has significantly enhanced knowledge sharing among similar plants.

Although the switch to natural gas reduces the emission of carbon dioxide (CO2), it does not eliminate it since natural gas produces some, albeit smaller, quantities of CO2 as a combustion by-product. To stabilize the global CO2 emissions at the current levels the world must build 100 large nuclear plants per year. There have been some discussions about the next generation of nuclear plants based on the "Generation III" advanced light water reactors (both as pressurized water and boiling water reactors) that may be utilized within the next three decades.

One of the technologies that will have a significant impact on bulk electric power transfers will be the future development of superconducting technologies. Superconductors can carry three- to five-times the amount of current that their conventional counterparts can with less than half the losses. Therefore, by using superconducting cables, one can appreciably increase the power carrying capacity of transmission lines with their existing right of way. The invention of a high-temperature superconductor (HTS) in 1986 greatly enhanced the economic feasibility of such systems. With HTS, the necessary cooling temperature is minus 323 degrees Fahrenheit, which can be achieved using liquid nitrogen, as opposed to traditional superconductors that require minus 452 degrees Fahrenheit using helium as a coolant. Helium costs around $5 per liter as compared to $0.12 for liquid nitrogen.

The Department of Energy is working on a project to develop HTS wires that will have one hundred-fold increase of capacity over the conventional wire of the same dimension and generators that will be half the size and power loss as compared with existing generation units. There are several HTS demonstration projects that are in operation around the country. For instance, in 2000, Detroit Edison installed three 100-feet HTS cable that weighed around 1,000 pounds, replacing nine copper cables that weighed 20,000 pounds.

Another technology that will impact the supply of electricity in the future is the proliferation of distributed generation systems (DGS) and the development of power "microgrids." In this environment, small electric generation units can be connected with the utility power grid using the Internet to control and access these sources. This will increase the use of renewable energy resources. It is projected that the use of renewable energy resources will continue its gradual and steady increase. However, the growth will not be dramatic. For instance, the fuel cell, a technology that was invented in 1839, has still not become economically viable. In the next two decades, fuel cell use is expected to rise, which will increase hydrogen consumption. By then, the primary source of hydrogen fuel will be coal, oil, and natural gas.

It is very clear that the energy scene has undergone major changes. However, new changes still lie ahead. In 1973 it would have been very difficult to imagine the different twists and turns that the energy industry has experienced during the past three decades. The issues and challenges of the energy industry have grown in dimension and complexity; this trend will continue in the future. It should be recognized that no matter what new technologies are introduced, nobody will have the silver bullet to solve the issue completely. Facilities administrators will have to accept the fact that managing the energy needs of their facility will continue to remain a core activity for them. The importance of energy needs may not significantly increase, but they will certainly not decrease in the foreseeable future.

Reference
1. "Forget Oil; It's the Century Of the Electron", Wall Street Journal, Feb 23, 2000, PP. A22.