Scale Matters

Abstract

This article highlights the need to reevaluate the size of power plants for electricity generation. For decades, the common wisdom has been that increasing the scale of new electric generating units would lead to declining electricity costs. However, since the economic crisis of 2008, the load growth has declined with the declining economy. The elements that argue for bigger scale have become less important, and new factors have arisen that may reduce or mitigate the advantages of scale. The rate of growth in electric demand has become much less predictable. It is also becoming more difficult to raise capital for large plants. The high cost of large new generations of baseload renewable, nuclear, or carbon-free power plants is difficult to support in today’s investment environment. Smaller plants today are both more efficient and more economical to operate than past designs—and thus offer the possibility of overcoming many of the advantages of scale. Moreover, the progress in this area is continuing, both at the grid level and at the distributed or community level.