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Introduction
This paper seeks to create energy profiles for two companies namely, Tenaska Energy and NRG Energy. The two firms are fortune 500 organizations and industry leaders in the US energy market. The core activities of both companies include generating and distributing of electricity. They mainly use nonrenewable sources of energy to generate electricity.
Tenaska Energy
Nonrenewable Sources of Energy and their Effects on the Environment
The nonrenewable sources of energy that are used by the company include coal, natural gas and oil. Coal is a type of fossil fuel that exists in solid form. Atmospheric pollution is the main short-term effect of using coal. When burnt, “coal produces toxic gases such as carbon dioxide, nitrogen oxides, carbon dioxide and heavy metals”. Its long-term effects include soil erosion and destruction of habitats due to mining activities.
The gases produced during its use cause global warming. Oil is a “fossil fuel that exists in liquid form”. Its use is associated with the production of harmful gases which include carbon monoxide and this leads to air pollution in the short-term. The long-term effect includes destruction of habitats and marine organisms due to oil spills.
Natural gas consists of other gases which include methane and propane. It is considered to be a clean fossil fuel thus it does not have negative effects on the environment.
Vision for Power Production
The company’s vision is to increase its production capacity in the US market. It aims at achieving this objective by investing in power production using coal. The company also intends to invest in modern production technology in order to reduce environmental pollution. In the overseas markets, the company seeks to increase its output by investing in an “integrated gasification and combined cycle technology” in Lebanon.
Fuel Mix
The company’s fuel mix consists of both nonrenewable and renewable sources of energy such as hydropower. The nonrenewable sources of energy do not produce electricity directly. They are used to facilitate the process of generating electricity and this can be explained as follows.
They are used to produce heat through a chemical process called combustion. The produced heat is used to heat water in order to produce the steam that is used to “turn large magnetized rotor inside a generator”. Electricity is then generated as the rotor turns.
Customer Base
The company serves three categories of customers namely, utilities, industrials and independent power producers. The independent power producers account for 42% of sales while the utilities and industrials account for 30% and 28% respectively. In order to meet the customers’ demand, the company manages 17500 MW of electricity.
Electricity reserve is the generation capacity that is maintained and used to generate power in the event that the normal supply system is interrupted. There are three types of reserves namely, spinning, supplementary and backup reserve.
The spinning reserve is usually available by adjusting the capacity of the generator in order to increase output. The supplementary and backup reserves are available by connecting additional generators. It is important to have reserve electricity capacity in order to avoid interruption in power supply due to technical failures.
Major Barriers
The main barriers include regulation on environmental pollution that restricts the use of nonrenewable sources of energy to generate electricity. The company also faces financial barriers since a lot of financial resources are needed to construct new power generation plants. Finally, the renewable sources of energy are becoming more expensive as their availability reduces.
The following strategies can be used to overcome the challenges. First, appropriate research and development will lead to the use of efficient production technologies. This will help in reducing environmental pollution and energy consumption. The company can also merge or partner with its peers in order to overcome the financial challenges.
NRG Energy
Nonrenewable Sources of Energy and their Effects on the Environment
The types of nonrenewable sources of energy used by the firm include natural gas, oil, nuclear energy and coal. The short-term effect associated with the use of both coal and oil is atmospheric pollution.
These sources of energy usually produce harmful gases such as carbon dioxide and nitrogen oxides that cause global warming. Their long-term effects include destruction of vegetation, habitats and ecosystems due to mining activities.
Vision for Power Production
The company’s vision is to be the leader in producing electricity in the future. It intends to achieve this by investing in multi-fuel and carbon-diversified electricity generation system. It also has plans to expand its production capacities in the overseas markets especially in Europe and Australia. The company is focusing on reducing environmental pollution by investing on efficient production plants.
Fuel Mix
The company’s fuel mix is characterized by a hybrid system that uses both renewable and nonrenewable sources of energy to produce electricity. Wind energy is the main renewable source of energy that is used by the firm while the nonrenewable sources include coal, oil, nuclear energy and natural gas.
“The nonrenewable sources of energy are used to produce steam that is used to turn turbines in the electric production plants”. Electricity is then produced as the turbines rotate in an electromagnetic field.
Customer Base
The company’s customer base consists of residential customers, commercial and business customers as well as industrial customers. The industrial and business customers account for the largest percentage of the company’s sales.
In order to meet the customers’ demand, the firm manages 24,000 MW in the US market, 605 MW in Australia and 400 MW in Europe. The firm has a reserve capacity that enables it to continue supplying its customers in the event of an interruption in the normal supply system.
Major Barriers
The main challenges that are associated with the firm include the following. First, regulation on environmental pollution especially in the overseas markets has made it difficult for the firm to obtain and use energy sources such as oil and coal.
Second, the competition posed by renewable sources of energy is undermining the firm’s expansion efforts by limiting sales. These barriers can be avoided by investing in modern power plants that enhance efficiency and reduce pollution.
Comparison of the Cost of Producing Electricity
A comparison on the cost of producing electricity by the two firms reveals that they spend on similar cost items. Such items include purchasing the nonrenewable sources of energy, operating the power plants and paying their workers. However, the amount of funds allocated to each of the items varies from company to company.
For example, in 2010 NRG Energy spent $ 1.2 billion to produce electricity. Tenaska Energy spent $1.8 billion to produce its electricity over the same period. The difference in production costs is based on the fact that NRG Energy relies heavily on nuclear energy which is cheaper as compared to coal that is mainly used by Tenaska Energy.
Differences in Management Requirements
The differences in the management requirements between the two firms include the following. First, the compliance requirements associated with Tenaska Energy aims at preventing environmental pollution. This is because the firm uses a lot of coal energy to produce electricity and this increases the production of harmful gases.
The compliance requirements associated with NRG Energy on the other hand focus on safety among employees. This is because the firm uses nuclear energy that is very dangerous if misused.
Second, since nuclear energy is dangerous, NRG Energy’s electricity plants must conform to the standards set by the government. However, Tenaska Energy constructs its electricity plants without government interference since coal energy is not associated with serious health risks.
The creation of a positive rapport with the community is the main advantage associated with managing environmental pollution by Tenaska. The disadvantage associated with this requirement is that it involves high costs and this makes it difficult for the firm to create competitive advantages.
Maintaining high efficiency and safety standards is the main advantage associated with regulating the construction of nuclear plants. Its disadvantage is that the companies that use nuclear energy such as NRG can not be in full control of their growth plan. This is because their electricity plants must be approved by the government before being constructed.
Works Cited
NRG Energy. Annual reports. 31 May 2010. Web.
Solway, Andrew. Renewable energy sources. New York: Heinemann, 2009. Print.
Tenaska Energy. Power generation. 15 March 2011. Web.
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