Electricity Infrastructure: Overview and Issues (2)

1. Electricity Infrastructure: Overview and Issues (2) H. Scott Matthews February 5, 2004

2. Admin Issues • HW #2 Out Today • Semester Projects • Groups of 1 or 2 (max) • Topic on managing infrastructure • Pricing can be component but should have higher-level, decision type model

3. Recap of Last Lecture • Source of energy changed dramatically in 100 years in US • Now mostly fuel for transport, elec all else • Electricity still mostly fossil fuel dependent • Nuclear / renewables still very limited • Electricity grid has developed as needed over time with changing requirements/demands affecting it

4. Interstate Commerce (IC) • In early US history, states treated each other like foreign countries • Taxes, licensing, port restrictions, etc. • States had their own agreements with foreign countries (e.g. Britain) • This activity was not in ‘spirit of Union’ • Constitution gave Congress power to regulate IC (as well as foreign nations) • Note regulate was intended to mean “make uniform”

5. Electric “Utilities” (Utils) • Electricity businesses eventually crossed jurisdictional lines and became regulated • Economies of scale - cheaper to have many users • Regulated as “natural monopoly” • Strategy was vertical integration (ownership of all local pieces - generation, trans, dist) • Started to interconnect - helps reliability, cost • Easier to regulate, but hard to control price • Recently USA decided to ‘deregulate’ and push for wholesale markets to trade power • End result: electricity sent over longer distances and through more systems than originally designed for

6. System Statistics (End 2000) • 127 million “customers” (all sectors) • Total electric power demand = 3500 TWh/yr • Number of power plants • Non-utility: 6500 units, 208 GW (growing - dereg) • Utility: 9350, 600 GW • 154,000 miles of AC transmission lines • 3,300 miles of DC transmission lines • Next 10 yrs: 6% transmission (line-miles) growth, but 20% capacity/demand growth • Not a problem, if plants sited near demand • But, of course, its not! • http://www.eia.doe.gov/oiaf/aeo/

7. Electric System Challenges • Unique • Instantaneous management of supply and demand • Imagine having built infrastructure that dynamically reconfigured itself to get you to your destination efficiently, without delay • Maintain 60Hz frequency • Passive Transmission • Few control valves • Just open and close switches to dispatch transmission lines

8. Implications • Every action can affect everyone else • Need to coordinate • Cascading problems • Need to be ready for next contingency dominates design • “what if” planning • Flows near speed of light - need to act fast

9. Diagram of U.S. Electric Power Grid Removed Due to National Security Implications (Seriously!)

10. Blackout of November 9, 1965 • By 1965, electricity part of everyday life • Most of NE US (and Canada!) dark • Sign that we were not managing well • Six days to realize source of problem • 1 relay failed at station in Canada (Niagara Falls) • Caused transmission line to go ‘open’ • Caused series of cascading failures all the way back to New York City • Took only 15 minutes to blackout NE US • Caused people to rethink dependence • Until then, power systems design geared around ‘isolation’ to prevent damage

11. As a Result of 1965 Blackout.. • Consumers made contingency plans • As did firms and large industrial users • At high/policy levels, coordinating entities were formed to manage • North American Elec. Reliability Council (NERC) • New York Power Pool (NYPP) • Developed industry equipment standards • Developed reserve gen. capacity • Interconnection and reliability methods • Isolation had led to islands/points of failure • Now we more heavily ‘network’ the system so there are multiple paths for power to flow

12. NERC • Voluntary organization to promote reliability • Alternative to being regulated • Sets standards, collects data, etc. • No longer sufficient after dereg. Three major interconnected power systems in US that coordinate actions to keep reliability

13. Reliability Components • Adequacy • Does (projected) Supply = Demand? • A long-term planning process • Security • Robust system against failures (short-term) • NERC transitioning to have enforcement power to meet reliability

14. Electric Power ‘Jurisdiction’ • FERC - Fed Energy Regulatory Comm. • Regulates trans/sale of energy and fuels • Electricity : regulate bulk power • Oversees environmental issues • Budget from fees to regulated firms • NERC (already done) • Control Areas - fundamental entity (150) • Vary: PJM (50,000 MW) others 100 MW • Regional Reliability Councils (10) • Interconnects (3) • Note State PUCs not mentioned

15. Deregulation Effects • Transmission built primarily over 100 years by vertically integrated utilities • Originally built close to fuel supply • Recap: at first only local transmission built • Some interconnections built for reliability, relief • Utils cooperated - in mutual best interest • Dereg. sought to lower elec prices by: • Making capital available for new capacity • Increasing efficiency of operations • Trans. grid ‘interstate’ for wholesale electricity • But highway congestion just means delay • Electric transmission congestion = lost energy!

16. Deregulation (cont.) • Now > 50% of power sold wholesale first • Congestion - demand & construction of new generation not matched with new trans. • Incentives to cooperated reduced • What happened in California? Depends! • Imbalance in supply/demand - not much new supply approved for construction, demand higher • Big part of problem was faulty market design • Lack of adequate transmission for competitive power to come into market to ease prices • 1996: FERC opened ‘wires’ to non-utilities • Basically opened market to competition

17. Energy Policy Act - 1992 • 1980s: electricity trading had taken off • Act pushed trading: Gen & Trans competition • Non-utils to have power plants • By 1998: nonutils 13% market share • Called Independent Power Producers (IPP) • Don’t forget regulatory process! • Congress : laws + authority, implementation : agencies • FERC Order 888: encouraged ISOs • Independent System Operators • Independent of commercial interests • Could own no generation

18. Recent changes • ISOs - Independent System Operators • Open and fair access to regional grid; non-discriminatory governance structure; facilitating wholesale electric rates; independent - don’t own gen/trans • 1999: FERC Order - RTOs • Regional transmission organizations

19. Factors for Transmission and Distribution Losses • Location of generating plant and load connection points (how close to demand) • Types of connected loads • Network configuration • Voltage levels and voltage unbalance • Dynamic factors (e.g. power factor, harmonics, control of active and reactive power) • Length of the lines - almost linear relationship • Current in line - a square law relationship • Design of lines, particularly the size, material and type of cables • California / US about 10%

20. Cost Issues • Average electricity price 7 cents/kWh • Decreasing by new const and coal prices • Expected demand growth 2%/yr til 2020 • Transmission costs ~10% of total cost • Resulting bottlenecks cause short-term price increases and thus higher costs! • Problem areas California, PJM, NY, New England • $500M / yr in these areas alone

21. Management Metrics • Capacity Margin = Generation/Demand • Base load - min. amount electricity required over a given time interval, at steady rate • Peak load - max load requirement during a given time interval • Intermediate load - between base & peak

22. Energy Balance for Typical Coal Plant http://www.energy.qld.gov.au/electricity/infosite/elec&env7/roleofenergy7_3/efficiencyinpowerstat/energylosses/energylosses.htm Energy Balance for Typical Coal Plant