United States: Top 10 Game Changers Impacting The US Energy Sector Today

Any surviving illusion that the US energy industry can remain static without dramatic adaptation to new and unexpected circumstances has been displaced by recent developments. The domestic energy sector today is faced with a host of challenges, including rising costs, coupled with flat consumer demand; a deteriorating infrastructure that is highly vulnerable to physical attack, cyber threats and extreme weather; the introduction of disruptive technologies, outpacing the ability of traditional companies to adapt;  cost-saving efficiency measures cutting into bottom lines; water scarcity; on-again-off-again renewable energy policies; and the urgent need to address an aging workforce.

Major trends in the US energy sector have always been driven primarily by fuel availability and by policy/regulatory decisions. This is still true today. However a number of transformative and disruptive "game changers" have emerged recently that are that are fundamentally altering how we approach energy production and use.

Shale gas revolution

The development of domestic shale gas resources has had the single most transformative impact on the US energy sector in recent memory. Just a few years ago, we operated in a paradigm of energy scarcity. Gas prices were highly volatile as domestic production declined. The Federal Energy Regulatory Commission was flooded with applications to construct liquefied natural gas import facilities; the benefits of "clean coal" were touted; wind farms began to spring up across the nation; and federal legislative and agency initiatives set the scene for what we thought would be a nuclear energy "renaissance". Then, quite unexpectedly, the use of a long-standing oil and gas production technique known as hydraulic fracturing, combined with new horizontal drilling technology, allowed the country to unlock natural gas resources that were previously thought to be unrecoverable. This set off an energy boom unlike any the US had ever experienced.

In a very short time, an abundance of cheap, domestic natural gas has redefined the US electric generating sector. With only a few exceptions, gas has brought nuclear development in the US to near standstill. Gas has prompted a decline of coal new builds and retrofits in favor of combined cycle gas turbines (CCGTs), and has done more in the past few years to decarbonize the US generation fleet than tighter environmental regulations, notwithstanding complaints from the coal industry that EPA regulations are killing coal. CCGTs will not replace all generation. Nuclear and renewables will still be needed to decarbonize the US fleet, and local community, water, and environmental issues associated with natural gas production and use need to be addressed in the short term. But, with decades – and perhaps even a century – of supply, gas is becoming an ever-longer "bridge" fuel to take the US to a greener energy economy.

Read about this issue in greater detail in "The Legal Landscape of 'Fracking", published in the Texas Review of Law & Politics.

Resurgence of North American oil

The International Energy Agency has forecast that by 2020, the US will surpass Saudi Arabia in crude oil production for a period of time, and by some predictions, may do so much sooner. Together with the new gas discoveries, this development will allow the US to become "energy independent." Of course, this does not mean that the US will isolate itself, nor that the US will cease to import oil. Among other things, our refineries are designed to process heavy crude from Latin America and other regions, not the light sweet crude that is being produced in North American shale plays. However, it will lead the nation to be a net exporter, and will have significant implications not only for world trade, as export patterns shift, but also for the geopolitical balance of power.

Rooftop solar

How will this game changer play in our domestic energy mix? According to some predictions, up to 220 gigawatts of distributed solar will be installed worldwide by 2018. Executives in leading US utility companies are already witnessing the impact of this trend on their US business models and are examining opportunities to participate profitably in this wave of change, or risk being overtaken by it. Related to this trend, we will also see a revolution in energy efficiency and demand-side management driven by existing low cost technologies, especially in building construction.

Climate change

Increasingly turbulent weather, super-storms, severe droughts and extreme heat and cold are the new normal, according to scientists and industry experts. Whether you believe this is caused by human activity or a natural phenomenon, the fact is that we have already surpassed earlier predictions about rising temperatures. Leading think tanks such as the World Resources Institute are recommending that we focus on adaptation and restoration as well as mitigation. Cities and towns in vulnerable regions are already working on plans to adapt and mitigate the impact of severe weather.

Read an interview with partner Jeff Fort about trends and developments in Climate Change, as well as our latest Climate Change newsletter

Cloud scale computing, big data, and social media interaction

These are expected to completely revolutionize the energy and utility industries, impacting everything from forecasting to dispatch to storm restoration.

Threats to the power grid and other critical energy infrastructure

Both physical and cyber threats will have a transformative effect on the energy sector. Recent surveys and reports indicate that cyber attacks are already occurring with increasing frequency and intensity and physical threats are beginning to follow. Hardening critical infrastructure against these threats is an urgent, but highly complicated responsibility. The task of defending an industry that is undergoing rapid change, but that is also the foundation of so many aspects of our daily lives, is daunting.

Congressional gridlock

The inability of Congress to pass meaningful legislation has caused a shift in regulation and policy determination in the US, with the legislative branch being overtaken by the executive branch. Significantly, the federal court system is making more energy and environmental policy than either Congress or the federal agencies.. The military, the business and investment community, state and local governments and NGOs all have far greater impact on energy policy than Congress at present. The Obama Administration's "all of the above" approach to energy development has met with mixed reaction. On the one hand, it acknowledges the role that abundant conventional fuel sources can play in transitioning to a greener economy and in securing energy self-sufficiency. On the other hand, it has raised more than a few eyebrows among those who favor a direct shift to a greener energy future, and those who question whether it is a rational energy policy. It appears to establish incompatible goals; among them energy independence, pollution reduction, reliability, job creation, technology leadership, low prices, and low taxes. The policy apparently advocates both expanding and reducing the role of government. Meanwhile, every step that the Administration takes to further its policy is litigated, which leaves the courts to make the final policy call.

China and other emerging economies

Events occurring beyond US borders will have a huge impact on world energy both in terms of scale and pace. China will be particularly significant. In terms of scale, China's population is larger than the combined populations of the US, Canada, the EU and Russia. In terms of pace, China is expected to install more generation capacity in the next 15 years than the entire existing US fleet. China will lead the world in nuclear, clean tech, solar and coal investment. It is estimated that China will use more coal than the rest of the world combined in the upcoming years. China is and will remain the world's largest emitter of greenhouse gases.

In addition to China, other rapidly industrializing and developing countries will have a huge transformative impact. Substantial capacity builds are anticipated over next ten to fifteen years for all fuel sources in these emerging economies. These countries will be major exporters and consumers. We should expect them to bring a lot of renewable technology development to scale. Brazil will develop and export its oil reserves. Russia will continue to export gas. India will be an enormous consumer, with growth likely surpassing China. In the US and worldwide, this will affect climate policies and consumption trends.

Water scarcity

The availability of water will impact not only the power sector, but all industrial activity, economic growth, and world health in coming years. Aggravated by climate change, but also by a growing world population expected to exceed nine billion by the year 2050, this issue is especially daunting.

Innovations, storage technology and super-capacitors

These will transform the energy sector beyond what we are able to imagine right now. These game changers are farther in the future than the others listed

above, but are approaching.

Conclusion

What all of this means is that the energy sector in the future may look dramatically different from how it looks today. The companies that will be best positioned to succeed are those that are taking steps now to anticipate and manage the effects of these game changers. Many of the biggest players, including some utility and oil and gas companies, are moving fairly fast to ensure that their businesses remain productive and profitable. One question, to which there is no answer at present, is whether they will be able to move fast enough. Another open question is the effect that the inevitable regulatory lag will have on these game changers as they develop. Government players must decide the rules of the new game. In some cases, their slow pace may frustrate the ability to take advantage of or respond to developments; at other times, it presents opportunities. A third question is what new technological breakthrough, unanticipated trend, or new market participant will disrupt the industry next. And whether this unknown disruption will be a curse or a boon for the energy sector, the one certainty is that the future will be interesting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
24 Jan 2018, Seminar, San Francisco, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

24 Jan 2018, Seminar, New York, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

31 Jan 2018, Seminar, Singapore, Singapore

Dentons Rodyk Academy is pleased to present a series of Breakfast Seminars covering various domains of IP, IP in tax planning, as well as Data Privacy.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions