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The Impact of a SuperGrid on the Existing Grid

The Impact of a SuperGrid on the Existing Grid. Fernando L. Alvarado The University of Wisconsin Workshop on a National SuperGrid November 8, 2002 Palo Alto, California. Jeff Dagle, PNNL. Historical Basis for Transmission. Renewable resources remote from load Hydroelectricity

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The Impact of a SuperGrid on the Existing Grid

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  1. The Impact of a SuperGrid on the Existing Grid Fernando L. AlvaradoThe University of WisconsinWorkshop on a National SuperGridNovember 8, 2002Palo Alto, California Palo Alto, November 7, 2002

  2. Jeff Dagle, PNNL Historical Basis for Transmission • Renewable resources remote from load • Hydroelectricity • Thermal generation economies of scale • Reduced transportation (“coal by wire”) • Reliability (pooling of resources) • Interregional exchanges (seasonal, daily)

  3. The key questions • What is a SuperGrid? • How much transmission do we need? • Why a “Super” Grid? • Can’t “conventional” grid expansion be made to work? • Won’t distributed generation do the job? • Won’t proper price signals to generators do the job? • How much will the SuperGrid cost? • Who will pay for it and how? • What will be the impact on markets? • What technical problems will it solve/create? • Will it solve the wrong problem? • Will it create new problems?

  4. What is a SuperGrid? • A high capacity transmission network “overlay” over the existing grid • Interface to HV only / at the substation / to the home • using new technology • Superconducting HVDC, MVDC (50 kV range), or LVDC cables, or AC cables • (DC lines and cables with new converters) • (Compact overhead line designs) • (Low capacitance AC cables) • and grid-arranged for reliability reasons • Flow control issues with DC grids! Palo Alto, November 7, 2002

  5. The “ideal” SuperGrid • would never congest. • would be invisible. • would be lossless. • would cost nothing. • would solve all problems and would create no new problems. Palo Alto, November 7, 2002

  6. In other words it would be… • an Interstate Highway system for electricity suitable for Interstate commerce • Pros of the I-system: • Faster transportation by car and truck • Increased commerce by truck • Increased safety • Cons of the I-system: • It was expensive to build • It created new types of insidious congestion • It precluded alternative solutions (e.g., trains) • It increased “dependency on oil” and pollution? • It encouraged urban sprawl • It affected neighborhoods, farms, towns Palo Alto, November 7, 2002

  7. How would the SuperGrid differ from the Interstate Highway system? • Electricity is fungible • It can be produced locally • It does not have to be transported • Goods and people are not as fungible • When you use the highways to transport a grandmother, you must deliver the same grandmother at the other end (Shmuelism) • The SuperGrid is only for electricity • Highways carry food, people, goods, etc. • The Internet carries voice, pictures, data, etc. Palo Alto, November 7, 2002

  8. How much transmission is needed? • This is the wrong question! • How much transmission makes sense? • This is the right question! • Can generation replace transmission? • Distributed generation will reduce the need • Deregulation and proper price signals help Palo Alto, November 7, 2002

  9. Why is “need” a bad question? • Need assumes no response to price • Nothing is insensitive to price • Other bad questions: • How much energy do we need? • How much reliability do we need? • How many cars do we need? • How much health care do we need? Sure there are minimums to all the above to be able to sustain an adequate human level of comfort, but we must either ask about price or restrict the supply.

  10. Low costHigh benefitSome risk Medium costMedium benefitLow risk High costNegative benefitMedium risk Justifying transmission Benefit Cost Cost/benefit Project size There is also uncertainty in cost Palo Alto, November 7, 2002

  11. The distribution of benefits • Not everyone benefits equally • Not everyone benefits! Palo Alto, November 7, 2002

  12. Distribution of benefits Total Benefit Individual Benefit Cost Cost/benefit Three parties benefit One party loses Palo Alto, November 7, 2002

  13. Do Travelocity and Orbitz serve a useful purpose? Specifics of benefits • For consumers on fixed rates • Benefit means a lower (sustainable) tariff for a given level of consumption* • This is not an optimal way to assess benefit • For consumers on real time prices • Benefit means total integrated surplus* • For producers • Benefit means an increase in surplus* • Benefit means incentives for expansion • For traders ensuring liquidity and efficiency • Benefit means a sufficient profit to stay in business (*) Depends on location

  14. Locational price duration curve And there is a lot ofuncertainty about bothprices and durations! Fixed tariff customerssee a benefit only if theaverage price is lower Price Average price Time at price level

  15. Impact on consumer surplus Consumersurplus Highestvaluedenergy Price Low valued energy use during high price period will disappear and improve surplus if price signal is given Lowervaluedenergy Time at price level AND percent of low vs. high valued energy

  16. Is a locationally uniform price the objective of a SuperGrid? • Should electricity cost the same everywhere? • Should gas prices be the same everywhere? • Should real estate cost the same everywhere? • Should all airline tickets cost the same? I don’t think so Palo Alto, November 7, 2002

  17. Can generation replace transmission? • In many cases, yes! • Reliability may increase • Voltage regulation may improve • Competition may increase • Transmission siting problems may diminish • Spatial price differences are essential • A completely uniform price at all times: • will ensure a bad spatial distribution of supply • is a signal that we have overbuilt Eliminating all congestion would be a very expensive policy

  18. Presumed pros of a SuperGrid • Enable national-level competition • Eliminate or greatly reduce market power • Eliminate transmission bottlenecks • Reduce the impact of bottlenecks is better • Increase system reliability Palo Alto, November 7, 2002

  19. Alleged cons of the SuperGrid • The costs will be socialized • There will be large cross-subsidies • It will distort markets • It will create new problems • And will fail to solve many current problems • It will not generate more power • It will reduce reliability Do we want the government running the power grid? Palo Alto, November 7, 2002

  20. Why a SuperGrid? • We have to do something! • Transmission is not being built • The government must help • There are economies of scale and lumpiness • Markets don’t work well in these cases • There is the tragedy of the commons • Some spend, all benefit • There are the jurisdiction issues • NIMBY syndrome • There are market power issues • A SuperGrid would eliminate market power (maybe) Palo Alto, November 7, 2002

  21. Grid utilization trend in New York • Transmission use appears to be on the decline • However, not always so in other cases • More “intra-regional” problems surfacing • The supergrid will not address inter-regional issues • Load pockets, load pockets, load pockets • “Grid utilization” is a bad metric! Palo Alto, November 7, 2002

  22. The persisting need for transmission • The historical basis for transmission need remains intact: • Sustainable resources remote from load • (Some) generation economies of scale • Reduced transportation (“coal by wire”) • Reliability (pooling of resources) • Interregional exchanges (seasonal, daily) Palo Alto, November 7, 2002

  23. Nuclear Coal Hydro Photovoltaic Wind Biomass Geothermal Gas turbines/Fuel cells Spent fuel, safety Emissions Environmental impact Cost, intermittency Low density Very low density Limited sites Needs hydrogen source Our sustainable resources Technology Issues and concerns

  24. Transmission needs by technology

  25. Jeff Dagle DER • DER can offset local adequacy constraints • Grid security can be enhanced through proper design and operation of DER • Safety considerations properly addressed • Localized voltage support, stability enhancement • Planning takes on a whole new dimension • Grid utilization factors may decrease

  26. Deregulation & markets • Deregulation changes grid utilization • Congestion pricing limits peak flows • Flow control (PAR, FACTS, DC) increase use • Inter-regional price differences are the result of grid congestion (and losses) • Nodal pricing makes results unintuitive but efficient • Reliability has become a concern • Regulatory and governmental stability essential to foster investment • “Tragedy of the commons” issues

  27. Impact on the current grid • It will depend on specific features and SuperGrid technology details • Are flow controls possible/easy? • What is the consequence of a fault? • What is the effect of a component failure? • How likely is a component failure? • Can failures cascade? • Will it allow us to “split the grid”? Replace (yes, replace) many HVAC lines with newtechnology superconducting high capacity linesand split the system into separate AC islands? Palo Alto, November 7, 2002

  28. Likely Supergrid Features • Large capacity • True grid (vs. point to point) but with few large interconnection points • Limited redundancy due to high cost • Underground – failures could persist for extended periods • Less likely to congest, but • Did Interstate roads eliminate congestion? Palo Alto, November 7, 2002

  29. SuperGrid “Limitations” • Each connection point equivalent to a large power plant or a large load • “Load pockets” are complex, nested and interacting • The SuperGrid is unlikely to resolve all load pocket issues • DER can help with load pockets • Targeted projects can also help (Neptune?) • Proper price signals help with load pockets! Palo Alto, November 7, 2002

  30. Other current-grid issues • Impact on short-circuit duties and stability must be considered • Common-mode failure possibilities must be considered • Since electricity prices are not the primary determinant of (most) personal and business activities, the possible impact of shifting patterns must be considered Palo Alto, November 7, 2002

  31. Additional technical issues • What will it really look like, in detail? • Inter-regional island connectivity only? • Will it be an overlay or a replacement? • Will it be used for high capacity lines only? • Will it be used all the way to substations? • Will it be used all the way to customers? • How do we design the “connection points” for the SuperGrid? • Inverters/rectifiers into a synchronous grid? • Converters into radial parts of the system? • Are connection points bidirectional by design? Palo Alto, November 7, 2002

  32. Additional concerns • “Big brother” issues • It will produce no new MWs • Congestion will just move around • It will not solve the load pocket problem • Will it increase or lower reliability? • And the most important question of all: who pays for it and how Palo Alto, November 7, 2002

  33. Conclusions • Traditional reasons for a grid still here • Pooling resources, interregional exchanges, etc. • Central generation (coal, nuclear) and renewable (hydro) key to the supply portfolio beyond 2020 • SuperGrid economic justification is essential • Goldplating will result in inter-regional subsidies • Subsidies lead to inefficiencies • The design details are important and need study • Load pockets and other problems will persist • Economic signals needed to deal with them

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