Speakers
Jone-Lin Wang Managing Director IHS CERA (Chair)	Philippe Joubert Executive Vice President, Alstom; President, Alstom Power
Brandon Bethards Chief Executive Officer Babcock & Wilcox	Bruce Grewcock Chief Executive Officer Kiewit Corporation

After a greeting by IHS CERA Chairman Daniel Yergin at the second Power Day for CERAWeek 2010, Jone-Lin Wang, IHS CERA Managing Director and Group Head, noted that although gasoline demand may have peaked, electricity demand will continue to grow globally. The power industry will have a bigger role in moving society toward carbon-free options to reduce emissions, including difficult decisions on fuel choice, technology choice, and planning for these long lead time projects.

Philippe Joubert, Executive Vice President, Alstom; President, Alstom Power, discussed the need to match technology, investment, and planning and offer the right technology at the right time to meet power generation goals. Noting the increase in both global temperatures and carbon dioxide (CO2) emissions, Mr. Joubert said regardless of their correlation, the power industry must take responsibility for its 40 percent share of the carbon concentration. He offered solutions through the technology mix; efficiency; and the carbon capture and storage (CCS) options for coal, which will still be a part of the installed base in 2030, he said. Indeed, China is the most efficient coal market currently as it replaces older plants with the latest technology. Alstom also designs hydropower and pumped storage, which can store large quantities of energy and is credible, safe, and has no environmental impact, he said; it "will change the way we look at power." Offshore wind energy, with no problematic ownership issues, will be significant, as will geothermal, cheap and also environmentally friendly. Biomass will decrease CO2 emissions only in cofiring applications with coal and by taking out the CO2 at the installation. Nuclear, which can provide large volumes of power with no emissions impact, will have to be included in the mix. These solutions are not enough to meet the emissions goals, however. Efficiency at the machine, the plant, and the system levels is essential; to provide customers the right level of technology, the energy industry must cooperate to connect power smartly, working with manufacturers and software companies. Even gains here will not be enough to meet the reduction targets; Alstom will have CCS technology for oxycombustion and postcombustion solutions for new and existing coal plants and for gas commercially available in 2015, working with transportation and storage partners.

Brandon Bethards, Chief Executive Officer, Babcock & Wilcox, shared his perspective as an innovative supplier to the new, environmentally complex energy world. Meeting customers' demands now for deployment 5 to 15 years down the road requires forward planning. The current energy landscape out to 2020 is hampered by the lack of a defined policy path and the present "frantic policymaking at state, regional, and world levels," which, Mr. Bethards suggested, is suppressing some new-build solutions to energy needs. In this new landscape policy decisions on power projects are putting the economics in the background, a reversal of the previous environment. Instead of the gradual progression of better technologies, we're seeing the rapid deployment of evolving technologies. He outlined five truths driving the Babcock & Wilcox strategy for the future. Agreeing with the International Energy Agency's projections, a changing, new mix of multiple technologies is needed to meet future demand, including nuclear; "There is no silver bullet." Second, dispatch decisions must be balanced based on transparent costs for fuel, capital costs, and technologies and capacities. Third, these comparative costs are not stagnant; their volatility is a by-product of the innovation stage globally. The policy uncertainties define the fourth truth. "We need a forward pricing mechanism"; costs will be higher in the future, but with carbon pricing still undefined, decision making is difficult. Fifth, Babcock & Wilcox is focusing on nuclear (including a modular nuclear reactor); clean coal (using oxycombustion); carbon neutral renewables; and concentrating solar power, under development for the past 30 years and, he said, read to go up to the 45 megawatt range. "The road to alternate energy future will be a long one," Mr. Bethards concluded. "Governments, utilities, and suppliers must work together to advance the technology portfolio. Events like CERAWeek go a long way to promote that concept."

Bruce Grewcock, Chief Executive Officer, Kiewit Corporation, a construction firm active across North America in public infrastructure and energy projects from coal plants and transmission, had a tough message for CERAWeek delegates. A key challenge for the industry--including owners, engineers, equipment manufacturers, and general contractors--is "a so-so record at bringing in projects" on time and on budget, Mr. Grewcock said. From power projects to oil and gas development, "the success from all perspectives is a mixed bag." For example, in the Canadian oil sands projects, "if you bring in a project at 50 percent over budget, you're a hero;" and historically, cost overruns on big projects can run at twice the original estimate, or higher. He cited the Boston "Big Dig" highway construction project that blossomed from the originally estimated $3 billion to $15 or $20 billion--different figures are discussed. Imagine if this happens with a $14 billion nuclear project for the future, he asked delegates. "It is a shame and tragedy in our business that we can't figure it out better than that." Some fault contracts that cannot adequately define risk; but Mr. Grewcock cited several already available ways to shape responsibilities. The problem, as he defied it, was an inability of the contract parties to work together to allocate risk to the party best able to control it. Rather, risk "gets pushed around the table" until one party finally figures there might be some way to make it work. "The problem is, there is no process" that encourages equipment manufacturers, engineering and design firms, construction companies, and project owners to take a collaborative approach to each project to minimize or eliminate risk. He encouraged listeners "to find a better way," to think about certainty of outcomes, perhaps using public works sector models, such as the Army Corps of Engineers' "early contractor involvement" structure. He sent out a challenge for these big energy projects to think about "a different way to do it, or find ourselves with huge cost overruns in the power industry."

The question period looked at the energy and fuel tradeoffs for CCS, storage issues, labor costs, and large power project economies of scale.