1. Evaluating Economic and Institutional Issues and Opportunities in Commercializing Super Conducting Technologies Center for Advanced Power Systems (CAPS) Conference July 29-30, 2001 National High Magnetic Field Lab Tim Lynch, Ph.D.. Director Center for Economic Forecasting and Analysis Florida State University Tallahassee, Florida

2. DEFINING THE INSTITUTIONAL NEEDS FOR ELECTRICAL GENERATION AND CAPS RELATED TECHNOLOGY

3. CAPS TECHNOLOGY SPINNOFF URBAN USES HIGHER DENSITY TRANSMISSION USES HIGHER ECONOMIC PRODUCTIVITY NEW TECHNOLOGICAL EXPANSIONS REDUCED ENVIRONMENTAL IMPACT` INDUSTRIAL USES ELECTRICAL / MANUFACTURE PRODUCTION - STORAGE - TRANSMISSION EXPANSIONS TRANSPORTATION USES STORAGE AND TRANSMISSION GAINS LEAD TO: RAPID GAINS IN VIABILITY OF MAGLEV TECHNOLOGY ADVANCES IN ELECTRIC CAR \ BUS

4. From: Electricity Technology Roadmap: 1999 Summary and Synthesis, (1999).

5. Value of Electrical Energy in the US Economy Increases In the last decade, there has been a four- fold increase in the value of bulk power transactions in the U.S. Electricity is sold in wholesale markets and transported over increasingly larger distances. Growth in bulk power transactions is continuing while theNorth American transmission system is already at full capacity and taxed to its limits. From: Electricity Technology Roadmap: 1999 Summary and Synthesis, (1999).

6. Projected Energy Needs Years From: Electricity Technology Roadmap: 1999 Summary and Synthesis, (1999). Percent (%)

7. Economic Costs Due to Breakdowns in Electric Transmission August 10, 1996 power outage in California resulted in an estimated loss of $1 billionAugust 10, 1996 power outage in California resulted in an estimated loss of $1 billion Nigeria loses $1 billion annually due to poor-quality electric services. *Nigeria loses $1 billion annually due to poor-quality electric services. * Latin American power shortages result in a $10-15 billion annual loss *Latin American power shortages result in a $10-15 billion annual loss * *World Bank, 2000

8. Measuring the Economic Value of Super Conducting and Other Advanced Technologies to the US Economy

9. The Good News from a Technology Perspective The transition to a more efficient economy on both the demand and supply sides is not about ratcheting down the economy; rather, it is about The transition to a more efficient economy on both the demand and supply sides is not about ratcheting down the economy; rather, it is about v Investing in new technologies; v Putting America’s technological leadership to competitive advantage; and v Developing new ways to make things, and new ways to get where we want to go, where we want to work, and where we want to play.

10. Opportunities for Efficiency Improvements in the U.S. Production and Use of Electricity U.S. wastes in the production of electricity (~24 quads annually) is more energy than is used by the entire Japanese economy for all end uses. U.S. wastes in the production of electricity (~24 quads annually) is more energy than is used by the entire Japanese economy for all end uses. According to the study, Scenarios for a Clean Energy Future, cost effective end- use technologies might reduced electricity consumption by ~1,000 billion kWh by 2020. This level of savings is more than Japan now uses for its entire economy. According to the study, Scenarios for a Clean Energy Future, cost effective end- use technologies might reduced electricity consumption by ~1,000 billion kWh by 2020. This level of savings is more than Japan now uses for its entire economy. For more background, and a full copy of this study, visit the CEF website at http://www.ornl.gov/ORNL/Energy_Eff/CEF.htm. For more background, and a full copy of this study, visit the CEF website at http://www.ornl.gov/ORNL/Energy_Eff/CEF.htm.

11. The Case of the Information Economy Many different information and communication technologies contribute to increasing opportunities for energy savings and large productivity gains in business.Many different information and communication technologies contribute to increasing opportunities for energy savings and large productivity gains in business. The Lawrence Berkeley National Laboratory indicates that the Internet and all electronic equipment only consumes 1 and 3 percent, respectively of the nation’s electricity.The Lawrence Berkeley National Laboratory indicates that the Internet and all electronic equipment only consumes 1 and 3 percent, respectively of the nation’s electricity. Yet, further efficiency gains are emerging. LCD screens consume one-half to two-thirds less energy than CRT devices. And new server technology may reduce the energy needed to move data bits by one-half or more.Yet, further efficiency gains are emerging. LCD screens consume one-half to two-thirds less energy than CRT devices. And new server technology may reduce the energy needed to move data bits by one-half or more.

12. Historical Trend in U.S. and Florida Electric Grid Efficiency Years

13. Comparing U.S. Trends in Overall Energy Efficiency with Electric Generating Efficiency Nation’s Overall Energy Efficiency Electric Generating Efficiency

14. Fuel Mix Use in U.S. and Florida Percent (%)

15. Electricity Generation in U.S. and Florida Percent (%)

16. The Value of the Florida Electric Industry to the Economy & The Potential Impact of Deregulation

17. Florida’s Largest Utilities Source: Energy Information Administration/State Electricity Profiles

18. Electricity Prices in Florida $/1000 Kwh (1978 – 2000) Source: Florida Public Service Commission Nominal Price Real Price

19. Florida Revenue From Sales To Consumers by Sector (Thousands 1999$) TOTAL REVENUE: $12.8 Billion

20. EXISTING NUMBER OF MILES AND COST OF EXISTING FLORIDA ELECTRIC TRANSMISSION LINES

21. NUMBER OF MILES OF NEW TRANSMISSION LINES NEEDED NUMBER OF NEW TRANSMISSION LINE MILES AND ACRES OF LAND NEEDED IN FLORIDA (2000-2009)* *FLORIDA PSC, DEP, 2001

22. Florida Summer and Winter Peak Demand by Year (1999)

23. Florida Energy Use By Customer Type (1999)

24. REMI Inputs For Ten Percent Price Shock Analysis COST POLICY VARIABLE CATEGORIES DETAIL SELECTION Electrical Utilities Sales (In State) Output Block  Detailed Industry Output  Transportation and Other Public Utilities  Public Utilities Electrical Utilities Annual Fuel Cost to Commercial and Industrial Wage, Price and Profit Block  Electricity Fuel Costs (Share) Commercial and Industrial Annual Fuel Cost to Residential Wage, Price and Profit Block  Prices (housing and consumer) Household Operation Government Spending (or more state taxes collected) Output Block  Government Spending (amount) State

25. Summary of the Results of a Ten Percent Increase in Florida Electricity Prices A loss of employment of 27,740 for 2001. This corresponds to a reduction of approximately half-percent of Florida’s total current employment levels.A loss of employment of 27,740 for 2001. This corresponds to a reduction of approximately half-percent of Florida’s total current employment levels. A decrease in GRP ($1.5 Billion) and real disposable income ($1.6 Billion) for 2001.A decrease in GRP ($1.5 Billion) and real disposable income ($1.6 Billion) for 2001.. Both of these levels drop to statewide losses of ($2.6 Billion) by 2021.

26. DROP IN FLORIDA EMPLOYMENT RESULTING FROM A TEN PERCENT INCREASE IN ELECTRICITY PRICES

27. DROP IN FLORIDA PRODUCTIVITY AND INCOME RESULTING FROM A TEN PERCENT INCREASE IN ELECTRIC RATES

28. Measuring the Potential Economic Impact of Deregulation

29. Summary Chart of Emissions Results (for Texas, Massachusetts and Differences in 2001 Dollars) Expected Result TexasMass.Difference NOx Reductions (TPY) 20,94077,99457,054 SO2 reductions (TPY) 53,985291,426237,441 Capital Outlay (million dollars) 3972,3731,976 Fixed O & M (million dollars/yr) 30185155 Variable O & M (million dollars/yr) 2110180

30. The Potential Market for and Value of HTS Technologies to the US and Florida Economy

31. GDP = Investment + Personal Consumption + Government Spending + Net Exports Recalling a Basic Economic Relationship Hence, a “technology-based” energy efficiency strategy could lead to: (1) greater investment in energy efficient/ highly reliable reduced emission low-carbon technologies; (2) increased spending as a result of energy bill savings; (3) R&D, incentives, and market development programs; and (4) reduced oil imports Therefore, an investment-led innovative high tech investment strategy can lead to a net positive gain for the economy

32. Price/Performance Ratio: First Generation HTS Cable* $/kA-m 0 200 400 600 800 1000 1200 1995199619971998199920002001200220032004 Price/Performance Ratio $/kA-m Source: Modification of American Superconductor Inc, 2001 US Military SMES/Motors- Generators/Cable Applications Commercial SMES/Motors- Generators/Cable Applications Residential SMES/Motors- Generators/Cable Applications

33. Economic Analysis of HTS Technologies One recently study of HTS technology in the electrical utilities industry was completed by L.R. Lawrence and Craig Cox, examine currently available HTS products and benefits.*One recently study of HTS technology in the electrical utilities industry was completed by L.R. Lawrence and Craig Cox, examine currently available HTS products and benefits.* The authors attempted to quantify market entry dates and total annual savings HTS annual benefits, to 2020The authors attempted to quantify market entry dates and total annual savings HTS annual benefits, to 2020 –Electric motors –Transformers –Generators –Underground cable –Fault current limiters and, among other variables.

34. The Projected Entry Dates where HTS is Expected to Capture 50% of the Potential Market

35. Total Annual Benefits for Motors based on 2.5% Annual Growth in Capacity and Generation (Billions $) Source: Lawrence Study, 2000

36. Total Annual Benefits for Transformers based on 2.5% Annual Growth in Capacity and Generation (Millions $) Source: Lawrence Study, 2000

37. Value of Annual Benefits of Saved Energy from Installing HTS Generators based on 2.5% Annual Growth in Demand (Millions $) Value of Annual Benefits of Saved Energy from Installing HTS Generators based on 2.5% Annual Growth in Demand (Millions $) Source: Lawrence Study, 2000

38. Value of Annual Benefits of Saved Energy from Installing HTS Underground Cable based on Annual Growth in Capacity and Generation (Millions $) Value of Annual Benefits of Saved Energy from Installing HTS Underground Cable based on Annual Growth in Capacity and Generation (Millions $) Source: Lawrence Study, 2000

39. Total Value of Annual Benefits of Saved Energy from Installing HTS Motors, Transformers, Generators, and Underground Cables based on 2.5% Annual Growth in Capacity (Billions $) By the end of 2010, benefits accrue totaling $1.086 Billion. By the end of 2020, the accrued benefit is $61.2 Billion Source: Lawrence Study, 2000

40. Using Regional Economic Models (REMI) to Measure The Potential Value of HTS Technologies to the Florida Economy

41. GDP = Investment + Personal Consumption + Government Spending + Net Exports Recalling a Basic Economic Relationship Hence, a “technology-based” energy efficiency strategy could lead to: (1) greater investment in efficient/ (environmentally desirable choices such as HTS and low-carbon technologies; (2) increased spending as a result of energy bill savings; (3) R&D, incentives, and market development programs; and (4) reduced emissions, energy consumption and foreign oil imports Therefore, an high tech investment strategy can lead to a net positive gain for the economy

42. HTS Model Framework (Basic Assumptions) Two scenarios were developed that simulated the Lawrence study benefits applied to the State of Florida.Two scenarios were developed that simulated the Lawrence study benefits applied to the State of Florida. One model simulated the 2.54% growth rate and the other model represented the 1.4% growth rate in demand for the electrical industry.One model simulated the 2.54% growth rate and the other model represented the 1.4% growth rate in demand for the electrical industry. Additional assumptions used for both REMI models included for HTS technologies: a decrease in the price of electricity of 0.9%/year in the commercial and industrial sectors (from the Lawrence study), and a decrease in household consumer expenditure price index of 0.03% (household savings/household consumption).Additional assumptions used for both REMI models included for HTS technologies: a decrease in the price of electricity of 0.9%/year in the commercial and industrial sectors (from the Lawrence study), and a decrease in household consumer expenditure price index of 0.03% (household savings/household consumption). The HTS technologies are assumed to save the U.S $18.24 Billion per year in presently envisioned equipment (10% market penetration is assumed within the first five years, and 50% market penetration is assumed after five years. These assumptions are incorporated into the $18.24 Billion annual benefits).The HTS technologies are assumed to save the U.S $18.24 Billion per year in presently envisioned equipment (10% market penetration is assumed within the first five years, and 50% market penetration is assumed after five years. These assumptions are incorporated into the $18.24 Billion annual benefits).

43. REMI Inputs for HTS Technologies Analysis COSTPOLICY VARIABLE CATEGORIES DETAIL SELECTION Electrical Utilities Sales (In State) Output Block  Industry Output  Sales Public Utilities Sales Share (Electrical Utilities) Annual Fuel Cost to Commerc- ial and Industrial Wage, Price and Profit Block  Electricity Fuel Costs (Share) Commercial and Industrial Prices (housing and consumer) Wage, Price and Profit Block  Prices (housing and consumer) CEPI All personal household consumption expenditures

44. Implementing HTS technologies across the Florida commercial, industrial and residential sectors would result in: At the 2.5% growth rate initial new net employment increase of 9,889, for 2001 – –This new net employment continue to decrease through the forecasted years, ending with an additional thousand employed in 2021. At the 1.4% growth rate additional employment of 8,557 jobs for 2001 and 300 by 2021 would result. *This analysis assumed both a 2.5% and 1.4% future annual growth rate of demand for electricity in Florida. Source: CEFA/FSU Results of Growth in Economic Productivity from Use of HTS Technologies in the State of Florida*

45. GRP for both models for the State of Florida would be approximately $500 million for 2001 and decline incrementally throughout the forecast period. Likewise, the real disposable income for both models would be approximately $300 million for 2001, and decline incrementally throughout the forecasted period. Results of Growth in Economic Productivity from Use of HTS Technologies in the State of Florida (Continued)

48. HTS Technologies Have the Potential to Provide Significant Future Additional Benefits to the State of Florida. The higher efficiency of electric generation, transmission, distribution and utilization results in reduced emissions of: Localized pollutants Long distance transport pollutants Greenhouse gas emissions and Associated environmental and Socio economic effects

49. Examples of How Air Pollution Environmental Economic Impacts Are Modeled in Regulatory Settings

50. Hagler BaillySection Name50 Applying the Damage Function Approach Impact Concentration Dose-Response Function Emissions and Resource Use (e.g., Changes in SO 2, NO X Emissions) Changes in Environmental Quality (e.g., Changes in PM 2.5, Ozone,....) Environmental and Social Impacts (e.g., on human health, visibility, materials) Changes in Well-Being or Damages (measured by willingness to pay) Aggregation of Impacts Across Effects, Individuals, and Time

51. $50 Billion in Health Benefits from Title IV SO 2 Reductions

52. Annual Health Benefits of A Multi- pollutant Strategy’s Fine Particle Reductions in 2010 10,600 cases of premature mortality avoided10,600 cases of premature mortality avoided 5,400 new cases of chronic bronchitis avoided5,400 new cases of chronic bronchitis avoided 3,100 cardiovascular and respiratory hospital admissions avoided3,100 cardiovascular and respiratory hospital admissions avoided 2,000 asthma emergency room visits avoided2,000 asthma emergency room visits avoided 17,600 cases of acute bronchitis avoided17,600 cases of acute bronchitis avoided 8.5 million respiratory symptom days avoided8.5 million respiratory symptom days avoided 1.5 million work-loss days avoided1.5 million work-loss days avoided

53. Monetary Value of Selected Health Events (in 1997$) Mortality $5.4 millionMortality $5.4 million Chronic Bronchitis$319,000Chronic Bronchitis$319,000 Hospital Admission$10,600 to $13,600Hospital Admission$10,600 to $13,600 Emergency Room Visit$280Emergency Room Visit$280 Respiratory Symptoms$7 to $47 per dayRespiratory Symptoms$7 to $47 per day Acute Bronchitis$55Acute Bronchitis$55 Work Loss Day$102Work Loss Day$102

54. Florida Economic Impacts from Achieving the U.S. Global Warming Solutions Would Result in the following: Reduce carbon emissions by 36 percent in 2010 (back to 1990 levels)Reduce carbon emissions by 36 percent in 2010 (back to 1990 levels) Increased annual savings, $300/household by 2010Increased annual savings, $300/household by 2010 An additional 27,000 jobs would be created in Florida by 2010An additional 27,000 jobs would be created in Florida by 2010 Source: The Impacts in Florida of a U.S. Climate Change Strategy, by Tellus Institute