The key to keeping the lights on? A balanced energy approach

Thomas F. Farrell II, Chairman, President & CEO – Dominion

With this speech, there is no need for suspense.I will give you the punch lines right up front.

Do we need to keep the lights on?

Yes. There is almost universal agreement on that.And we need to do so in a manner that is reliable and affordable in order to promote economic vitality.

Do we also need to protect the environment, reduce greenhouse gases, and move toward a low-carbon society?
Yes, we do.But we will need a coherent national energy policy, unprecedented international cooperation, global leadership, and massive technological innovation to get us there—innovation that calls for more than $10 trillion in investment over the next 20 years, according to the International Energy Agency.

You heard me right. That was trillion with a "T"—$10 trillion worth of investment in carbon-reducing technologies.
There is an old story about Virginia legislators during the era of Prohibition.Someone pointed out that they tended to vote dry but drink wet. This led someone else to say that Virginia had produced the first amphibious politicians.

The public is a lot like that when it comes to energy. They like all things green. They want more energy efficiency. They believe in conservation. Then, after extracting a beverage from their second refrigerator—the one in the garage—they reach for the remote control of their 52-inch, wall-mounted, plasma high-def TV.

And do not assume they have just one of those monsters.The typical American household now has about 25 different electronic devices—up from three in 1980.

What I am saying is this:There are some fundamental contradictions in stated public desires and demonstrable public habits—the very human trait of saying one thing but doing another.Those types of contradictions directly influence our national choices on energy.

This may not be what you want to hear, but tomorrow's energy system is going to look a lot like today's energy system—at least for the foreseeable future.And when I say foreseeable, I mean for decades.

First of all, transitioning from one type of energy supply system to another—from fossil fuels to renewable energy sources in our case—takes a great deal of time and lots and lots of money. History teaches us that these transitions are best measured, not in years, but in decades—or in some cases, generations.

Our best bet, in my view, is to focus on diversifying our energy sources, of making use of every resource at our disposal—coal, natural gas, oil, nuclear, and renewable power—as well as smarter and more aggressive conservation and energy efficiency programs.

Obviously you are familiar with the concept of maintaining a diversified investment portfolio as a hedge against market risk; of not putting all of your eggs in one basket. Well, the same is true of energy. We do not have the luxury of limiting ourselves to a few sources of energy and excluding others.

When it comes to energy, there is no silver bullet, no perfect remedy waiting in the wings.There are tough trade-offs that come with every method of generating electricity at commercial scale.And the scale of energy demand is huge—and growing—here and around the world.

Our renewable energy options—including hydro power, solar, wind, ocean waves, fuel cells, and biofuels—are growing in importance.They have great promise for the future.But for now, they are expensive and useful only in limited applications.

Take wind and solar power.Their operating characteristics are less than ideal.They are intermittent and unpredictable.The wind does not always blow, and the sun does not always shine.And because we have not found a way to store electricity efficiently on a large scale, they are unsuitable as 24/7 sources of energy.

But the single greatest barrier to the growth of renewable energy is probably congestion on the power grid. We will need to invest heavily in new transmission lines—which take years to site, permit, and build—if we are going to bring more green energy to market.

To succeed, we must think big.We must have a plan that adds up—a plan that truly reflects how we live and work, a plan that takes into account our strong reliance on electricity and the fuel sources we need to keep the lights on.

We need a coherent energy strategy that serves as a reliable roadmap for achieving a secure and sustainable future for America. This strategy needs to be comprehensive, workable, and understandable.It needs to address both sides of the energy equation—the way industry supplies energy, and the way consumers use it.

I believe the best we can do—for this and future generations—is to adopt the outlook of the late, great Englishman, Winston Churchill, who said: "A pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty."

For the Record is an edited excerpt of a speech by Thomas F. Farrell II,Chairman, President & CEO, Dominion, to theDarden School of Business at the University of Virginia in January 2011.

July/August 2011

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The key to keeping the lights on? A balanced energy approach