Energy and OODA Loops
Post date: Apr 6, 2018 4:08:37 PM
The great Colonel John Boyd, USAF, developed many original theories that have since been applied in several competitive endeavors including military strategy, business, and sports. His most well-known theory is the OODA Loop. OODA stands for Observation, Orientation, Decision and Action. Simply put, this decision cycle is repeated endlessly until the competitive issue is settled. The timeline varies with the issue to be decided, be it an aerial dogfight lasting seconds or a long term multi-year corporate or national strategy. Boyd postulated that the competitor who most rapidly completed the OODA loop and “got inside” the decision loop of the adversary would be victorious.
Figure 1 Boyd's OODA Loop
How can this model inform today’s electric power industry stakeholders about the future? DKMT Consulting suggests applying the OODA Loop to Generation Technologies and Electric Markets to develop a concept of what the future U.S. electric power industry might look like.
Generation Technologies
The OODA Loop model favors the nimblest competitor. If we examine generation technologies in terms of speed to market and evolutionary cycle time we are left with the following observations.
Nuclear
While it has not always been the case, the current process to design, license, construct and startup a light water nuclear reactor in the United States can be conservatively estimated to take 20 years. In today’s markets, this is akin to driving a glacier. The “OOD” part of the decision cycle can be rapid, but the long time to Act means competitors will innovate and markets may change before a plant is completed. Note, that in the OODA model, cost is not mentioned as a distinct element, but would be considered under the Orientation part of the cycle.
Efforts are being undertaken to reduce the length of time to license new advanced nuclear reactors. Senate Bill S.2012- Energy Policy Modernization Act of 2015, passed the Senate on April 20th. The bill calls for the NRC to report on
“…any organizational or institutional barriers the Nuclear Regulatory Commission will need to overcome to be able to license the advanced reactor designs that are developed pursuant to this section by the end of the 4-year period...”
While the US government will not develop a process that repeats the rapid rate of advanced reactor development it achieved under the Power Reactor Demonstration Program (1955-1964), which supported the development of 11 commercial nuclear reactors utilizing various technologies within a span of 9 years. A shorter licensing process may reverse the flight of firms such as Terrestrial Energy and Terra Power to China and Canada for design approval[1]. Currently, it is estimated that there are approximately 40 independent advanced reactor design efforts underway in North America with private investment totaling $1.6 billion[2]. Shortening commercial nuclear power’s OODA loop for new plants would support the success of these new projects.
Coal
Coal plant development is stalled as the industry awaits the fate of the Clean Power Plan.
Combined Cycle
It takes approximately 3 years to get a new combined cycle plant permitted and constructed. Technology has improved the efficiency of each subsequent generation of turbines. An “A” model GE Frame 5 had a heat rate of 15,810 Btu/Kwh in 1957. Today’s GE Frame 7s have a heat rate of almost half that.
Solar
Utility Scale solar projects take approximately 3-5 years to receive permits and complete construction. The siting process for federal lands takes longer than those sited on private land.
Wind
As with other growing technologies, the time required to permit and build a wind farm can be 3-4 years. For example, MidAmerican Energy’s Wind XI project will be the largest economic development project in the Iowa, building an additional 2,000 MW of generation capacity. The project was announced in April 2016 and is expected to be completed in 2019.
Markets
PJM and ISO New England have 3 year forward capacity markets. Other markets such as CAISO and NYISO have shorter planning horizons. The 3 year forward markets dovetail nicely with the project development periods for all technologies except nuclear power.
When we consider future trends in energy markets using the OODA Loop model it becomes clear that nuclear power faces challenges far greater than economics. Its long development cycle, prolonged decision framework, and regulatory imposed technological constraints all hinder its future competitiveness.
[1] Nuclear Infrastructure Council, Feb 27,2016
[2] http://news.vice.com/article /chernobyl-anniversary-nuclear-power-what-we-can-learn