According to the International Energy Agency, "Modern energy services are crucial to human well-being and to a country's economic development." So why is it so hard in a developed nation like the United States to build new power plants of any kind? Even environmentally friendly power is increasingly seeing push back...
Large infrastructure projects usually suffer from a syndrome affectionately called NIMBY—not in my backyard! Utility companies are frequent sufferers of NIMBY. In some cases it's easy to see why there would be push back. For example Southern Company (SO -0.50%) is building two new nuclear reactors, Vogtle units 3 and 4.
After the Fukushima incident in Japan, nearby residents are understandably leery of new nuclear facilities. Although nuclear power, overall, has proven very safe and reliable, large scale disasters like the one in Japan and Russia's Chernobyl have provided dramatic rallying points for opponents.
Southern, however, can't catch a break. It's also building a new coal fired power plant. The Kemper facility will be among the cleanest coal plants in the world, but that hasn't stopped protesters. Like nuclear, it's easy to understand why a historically dirty fuel like coal would see opposition. Duke Energy (DUK -0.21%) also felt this heat as it was building its Edwardsport coal plant.
Both Duke and Southern are building new plants to help ensure electricity for customers. However, the choice in fuel is a deeper issue. These two giant utilities have been shifting increasingly toward natural gas, but it's a business risk to rely on just one fuel source. That's why unpopular power plants are being built. The environmentally conscious, though, might argue that renewable power would be a better option.
You don't like renewable, either?
The thing is, renewable power isn't any more acceptable than coal or nuclear based on the push back such facilities have seen. For example, solar power would seem to be one of the most desirable energy sources around. But ask the companies involved in the giant Ivanpah solar project, including NRG Energy (NRG 1.44%) and social do-gooder Google (GOOGL 0.92%), what can get in the way of an otherwise socially desirable power facility.
In the case of Ivanpah, it was tortoises. That's right, Google and NRG backed a project that might have caused harm to a desert tortoise. It's not surprising that some animal was disturbed, however, since Ivanpah covers some 3,500 acres of desert in California.
Opponent Dennis Schramm, former superintendent of the Mojave National Preserve, noted to the LA Times that, "The scale of impacts that we are facing, collectively across the desert, is phenomenal." And, "The public would be up in arms if someone was building Disneyland next to a national park."
While Schramm may or may not be right, it's easy to see his point. And solar isn't the only "Earth friendly" power source feeling some heat. A wind installation proposed for Nantucket Sound has been fighting for 10 years to get approved.
The 130-turbine installation, "...has required permitting review by 17 federal and state agencies and produced an administrative record of more than 400,000 pages," according to the developer. While it looks like the Nantucket project will, eventually, get done, New Jersey just killed a five turbine project off of Atlantic City.
Environmentally friendly doesn't equal an easy ride
Utility investors understand that it's hard to build new power plants. However, it's important to remember that this extends to environmentally friendly facilities, too. For example, Xcel Energy (XEL 0.05%) is proud of its push to increase wind power from 3% of its power supply in 2005 to 22% by 2020.
That may not be as easy as the company hopes, however, based on the fights against Ivanpah and the Nantucket Sound wind project. And as more projects do get done, you should expect increasingly stiff opposition. The utility industry is at an exciting technological juncture, but that doesn't mean you should get caught up in the hype. Big environmentally friendly projects are often viewed just as negatively as coal and nuclear projects.
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