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

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

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

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”

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

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! 

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

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

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

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

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

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

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

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

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!

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

Energy Policy Act  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

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

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%

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

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

Energy Balance for Typical Coal Plant efficiencyinpowerstat/energylosses/energylosses.htm