A Look Back at 2015: An Electric Year

From issuance of the final Clean Power Plan to mammoth mergers, 2015 will be remembered as a tumultuous year.

Twelve months ago, as folks were emerging from an eventful 2014, POWER made some bold predictions, including that fuel economics will drive 2015 U.S. power markets, and the labor crunch will complicate the gas turbine arms race. Those predictions may have come to be, but the news deluge this year also brought along with it momentous happenings that are sure to send ripples well beyond 2016.

The EPA and a Rule Barrage

The legal and regulatory front was abuzz in 2015 with landmark decisions and rules-none that were as lengthily and voluminously discussed as the Clean Power Plan, which was finalized by the Environmental Protection Agency (EPA) in August. In the latest development, President Obama vetoed two resolutions that would have blocked the controversial rule.

Also noteworthy was the U.S. Supreme Court's June remand of the Mercury and Air Toxics Standards (MATS) to the D.C. Circuit, and the federal court's December decision to let the rule stand while the EPA works on a final cost finding (now likely due in April 2016).

The EPA, meanwhile, issued a bevy of proposed and final rules-almost all that immediately garnered legal pushback from industry and environmental groups (on opposing sides). In May it issued the Clean Water Rule, redefining "Waters of the United States." In September it finalized revisions to technology-based effluent limitations guidelines and standards, setting the first federal limits on the levels of toxic metals in wastewater discharges from steam electric power plants. Then in October, it issued the final version of new National Ambient Air Quality Standards (NAAQS) for ozone, cutting the then-current limit of 75 parts per billion (ppb) to 70 ppb. And in November, it issued proposed updates to the Cross State Air Pollution Rule (CSAPR).

Company Unions and Overhauls

The behemoth merger between General Electric (GE) and Alstom was concluded this November in a $10.6 billion transaction, and it means that the French maker of power equipment and grid software solutions will exit the business and entirely refocus activities on rail transport.

In the U.S., where merger and acquisition activity is in high gear within the energy sector, efforts to finalize marriages between Hawaiian Electric and NextEra and Exelon and Pepco Holdings ran into stumbling blocks. Otherwise, the year was marked by large electric utilities seeking to expand operations into the natural gas business, with Southern Co. agreeing to merge AGL Resources into its fold and Duke Energy announcing the acquisition of Piedmont Natural Gas.

At the same time, reorganizations were aplenty in 2015, signifying a rapidly changing market. NRG Energy embarked on a "reset" this September that will see a separation of its core distributed generation and fossil fuel businesses. And in May, Siemens AG completed its reorganization in response to the "persistently difficult environment" in the global power generation market.

Elsewhere in Germany, where a nuclear phase out is in effect and utilities are hemorrhaging financially from renewable subsidies and other market conditions, E.ON made the bold decision this April to spin off its coal, oil, gas, and nuclear assets to a new company, Uniper, while retaining its renewable business at E.ON. This December, RWE followed suit, splitting its company to bank on renewable and grid operations, saying that is the future for utility companies. According to RWE AG CEO Peter Terium, the restructuring move is in response to "the transformation of the European energy landscape."

Multinational energy giant GDF Suez also moved in the same direction. In April, it changed its name to "Engie," a name that it says reflects the global transition to a decarbonized, renewables-rich, energy-efficient, and digital economy.

Troubled French nuclear giant AREVA, which has been struggling financially for several years, plagued by delays and cost overruns at the Olkiluoto 3 EPR project in Finland, also announced an overhaul. France's state-owned utility EDF said it would buy between 51% and 75% of AREVA's reactor business. To capture a hefty chunk of the reactor export business, meanwhile, China's State Nuclear Power Technology Corp.-general contractor of the first four AP1000 units being built in China-and China Power Investment Corp. in June officially announced a merger.

A Climate Deal, Coal Shadowed by Gas

Perhaps the biggest story with international appeal was the landmark deal at the Paris COP21 conference. In the lead up to the summit, 195 nations made public goals to tamp down emissions of greenhouse gases, some noteworthy (China, India), and others, not so. The COP21 deal is voluntary, however, and it remains to be seen how governments will follow through.

One certainty this year is that the coal sector was battered by news of more coal plant retirements, legal challenges, and environmental concerns.

April was the first month ever in which natural gas surpassed coal, and the trend has continued in every month from July through October (the most recent month for which data is currently available). According to statistics from the Energy Information Administration (EIA), natural gas' monthly share of U.S. electricity generation has risen from about 25.2% in October 2010 to 35.1% in October 2015, while coal's share of U.S. electricity generation has dropped from about 43.0% to about 31.1% during the same time period.

On the technology front, too, 2015 was mediocre for coal. The world's first post-combustion carbon capture and sequestration (CCS) plant that came online in November 2014-a C$1.4 billion project at the Boundary Dam Power Station in Estevan, Saskatchewan, that was POWER's 2015 Plant of the Year-ran into design, operational, and cost problems. Mississippi Power also admitted that its carbon capture integrated gasification combined cycle facility under construction at Kemper County, Miss., is lagging two years behind schedule, afflicted by steep cost overruns.

Across the world, similar news portended slow progress for CCS. The UK canceled its flagship $1.5 billion competition to help commercialize CCS technology in November-just weeks after the government announced plans to phase out all coal burning over the next decade. And as POWER reported early in December, a new curtain is being drawn between Eastern and Western Europe-a coal curtain that will see Western Europe reduce its coal usage while the former Soviet bloc nations are moving in the opposite direction.

Meanwhile, despite the breathtaking collapse in crude oil prices in the fall of 2014-which saw benchmark prices plunge from $110 a barrel to $36.46 a barrel on Dec. 30-natural gas production continued and working natural gas inventories reached their highest recorded level this November. Natural gas consumption also surged in 2015, driven by the power sector. The EIA expects that the power sector's consumption will increase by 18.6% in 2015 compared to 2014 (but then decrease 2.3% in 2016).

Nuclear Retirements and a Rebirth

While the world-and specifically China-continued building new reactors to meet environmental and energy security goals [infographic], utilities took measures to safeguard the future of their merchant nuclear reactors in the U.S., saying low gas prices, renewable subsidies, and electric market flaws threatened their continued operation. Entergy Corp. shuttered its Vermont Yankee reactor at the end of December 2014, prompting the number of U.S. reactors to fall under 100 for the first time since the 1970s. In October-after months of speculation about which merchant nuclear plant would be the next calamity-Entergy announced it would permanently close its Pilgrim nuclear plant in Plymouth, Mass. Just a few weeks later in November, it said it would retire the James A. FitzPatrick Nuclear Power Plant in Scriba, N.Y.

On the flip side, despite much-publicized delays, and a major shake up in contractors, construction of four Westinghouse reactors at Plant Vogtle Unit 3 and 4 in Georgia and V.C. Summer Unit 2 and 3 in South Carolina trudged on. Meanwhile, the Tennessee Valley Authority's Watts Bar Unit 2 inched closer to start up, though a final timeline for completion is still not public.

In August, meanwhile, nearly two years after Japan's last nuclear reactor was shut down for safety checks, the Sendai-1 reactor came online. Sendai-2 followed suit in October. The two reactors are the first of 43 operable Japanese reactors that are expected to start coming back online over the coming months and years, and the events mark Japan's nuclear rebirth.

The (Re)Emergence of Renewables and Energy Storage

The renewables sector also saw tailwinds as well as lots of turbulence. In mid-December, Congress passed and President Obama signed into law an omnibus spending bill with provisions to extend the expired wind power production tax credit for five years and a solar investment tax credit.

In January, the controversial and much-delayed Cape Wind offshore wind project was thrown off-track as utilities canceled their power purchase contracts. But as wind is now "mainstream," as a key industry leader declared in July, it was unsurprising that the U.S. offshore wind sector saw a new boost with construction kicking off at the Block Island project in Rhode Island.

Emerging as the hottest new trend in renewable energy generation and backed with good economics, solar photovoltaic (PV) power penetrated new horizons all over the world.

And as noteworthy this year were energy storage announcements from Tesla Motors-it intends to market two new grid-oriented battery products-and a host of other companies. "Energy storage is now competitive on price with the lowest 20% of combustion turbines, and that number is constantly increasing," said Pratima Rangarajan, general manager of product and engineering for GE's new storage business Current, at an October conference.

To browse POWER issues from 2015 and learn about these and other issues in-depth take a look at our archives.

Here's to a fruitful 2016. Look for more on what to expect in the new year in POWER's forthcoming January 2016 issue.

-Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

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