Issues Affecting the Electricity T&D System in North America
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Transcript of Issues Affecting the Electricity T&D System in North America
Issues Affecting the Electricity T&D System in North America
Global Utility SummitLos Angeles, Nov 17, 2008
Presented by WK (Bill) Marshall
Senior Associate
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Personal Background
Retired President, nowIndependent Consultant
SPC
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Why Visit Southern California?
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System Development Challenge
Balancing the policy drivers
Consumers
Reliable Supply
Acceptable Environmental Prices Sustainability
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Complicating Factors
• Generation issues- Fuel costs and availability- Climate change (and other emission issues)- Renewable requirements
• Distribution issues- Demand response- Distributed generation- “Smart” components
• Transmission ownership, access and benefits
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Fossil Fuel Prices in $/MBtu(Conventional Unit Electricity Cost in Cents/kWh)
Source – US DOE NY Harbour HFO, NYMEX Appalachian coal, NYMEX Henry Hub natural gas
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2.00
4.00
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Coal
HF Oil
Nat Gas
2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008
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From David Hughes - NRCan
Forecast Demand
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From David Hughes - NRCan
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NE - Reliance on Natural Gas
Summer 2000 Summer 2006
Total: 30,931 MWTotal: 23,975 MW
OtherRenewables1,092 MW
4.6%
Pumped Storage1,679 MW
7.0%
Hydro1,626 MW
6.8%
Coal2,814 MW
11.7%
Nuclear4,359 MW
18.2%
Oil8,150 MW
34.0%
Natural Gas4,255 MW
17.7%
Oil7,549 MW
24.4%
Nuclear4,448 MW
14.4%
Coal2,846 MW
9.2%
Hydro1,691 MW
5.5%
Pumped Storage1,672 MW
5.4%
Other Renewables
922 MW3.0%
Natural Gas11,803 MW
38.1%
Note: Units in the “Other Renewables” category include those fueled by biomass, refuse, and wind.
Original Slide from ISO-NE
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Climate Change
• Growing international issue
• Increasing state and provincial issue
• Regional climate change initiatives- Northeast and west
• Targeted reductions- Kyoto – 6% from 1990 by 2012- Canada – 20% from 2006 by 2020- G8 – 50% from 2006 by 2050 (Electricity??)- USA - ?????
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Renewable Development
• Major wind increases- Texas, California, Mid West, Alberta, Maritimes
• Many aggressive state RPS requirements- Partly climate change strategy- Partly hedge on fossil fuels
• Possible national RPS of 20%
• Integration issues need resolution- Transmission access and delivery- Distributed distribution connections- Balancing
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14www.nbso.ca
NE States Seek Renewable Energy: Requirements to Increase 500%: 2006 - 2015
• 6.5% RPS requirement in 2015 equivalent to:
– 3,750 MW of wind, or
– 1,600 MW of biomass
• Proposed renewable projects in New England total 1,900 MW– Not all renewables qualify for
RPS
RPS Requirement as a % of Energy in New England (2015)
93.5%
6.5%
NE RPS RequirementNE Energy From Other Sources
Original Slide from ISO-NE
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Relative Transmission Costs
• Transmission benefits are large yet costs are relatively small
Total Electricity Cost
Transmission 6-10%
Distribution 15-30%
Generation 60-75%
Transmission
Distribution
Generation
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Transmission Benefits
• Increased Reliability• Lower system losses• Lower rates for end use customers• Reduced congestion• Improved competition• Greater supply diversity• Lower emissions• Environment siting of generation• National security
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Transmission Development
• Investment has lagged load growth
• Significant congestion has resulted
• Regulatory changes have not helped- OATT physical rights- Locational pricing and financial rights- Minimum interconnection standards
• Reliability margins have shrunk
• 2003 blackout focused attention
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Transmission Questions
• Why no investment?
• Why continued congestion?
• Some reasons- Cost differential across the congested interfaces- Winners and losers- Disproportionate value- Intra-state concerns- State versus regional interests
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New Transmission Paradigm
• Energy Policy Act 2005- Add Section 219 to Federal Power Act- Provide incentives for transmission development
• DOE identification of “National Interest Electricity Transmission Corridors” (NIETC)
• FERC incentive rule issued July 20, 2006- Higher ROE- 100% CWIP- Recover prudent pre-commercial costs- Approval by state or designation by DOE as NIETC not
required but worthwhile
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DOE NIETC East
Congestion in the Eastern
Interconnection
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Transmission Projects
SPC
NIETC Hydro Renewable Market
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Mandatory Reliability Standards
• FERC empowered through Energy Policy Act- Approve standards- Issue sanctions up to $1,000,000 per day
• Actions are a response to 9/11, 2003 Blackout and security concerns
• NERC designated “Electric Reliability Organization”
• Consequences?- Increased reliability- Increased equipment, labour and related costs
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“Smart” Grid
• Transmission actions- Reduce reliance on SPSs - Increase demand response for market and control- Improve SCADA systems
• Distribution actions- Real time monitoring- Two way smart metering and load control- Feeder balancing - Enhanced restoration and service
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Moving to the T&D Future
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HR - The Final Challenge
• Work force is old and retiring (CEA Study)- 50% of transmission workers will retire in 10 years- Only 7% of trades below age 30
• Looming shortfall at a time of significant growth with new technologies
• Challenge is huge- Transfer existing experience and knowledge- Train new workers with new and old skills- Work smarter- Do more with less
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Time For Action!
“When you get to the fork in the road, take it!”
Yogi Berra