1. Electricity Infrastructure: Overview and Issues (2) H. Scott Matthews February 19, 2003

2. 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  Power system design principles shifted from ‘isolation’ to ‘reliability’  Caused formation of reliability councils and coordinating groups up along the chain  Generation and transmission still large problems in terms of management and siting

4. Electric “Utilities” (Utils)  Recap: electricity businesses eventually crossed jurisdictional lines and became regulated  Oversight on management and pricing  Regulated as “natural monopoly”  Strategy was vertical integration (ownership of all local pieces - generation, trans, dist)  Easier to regulate, but hard to control price  Recently USA decided to ‘deregulate’ and push for wholesale markets to trade power  Now industry is more competitive with smaller firms inside and less regulation

5. 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/ (Annual Energy Outlook) http://www.eia.doe.gov/oiaf/aeo/

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

7. 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

8. NERC  Voluntary organization to promote reliability and security through self interest  Sets standards, collects data, etc.  No longer sufficient after dereg. Three major interconnected power systems in US that coordinate actions to keep reliability

9. 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  But not built to handle present-day system!  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!

10. Deregulation (cont.)  Now > 50% of power sold wholesale first  Congestion - demand & construction of new generation not matched with new trans.  Compounded by imperfect dereg. Transitions  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

11. Electric Power ‘Jurisdiction’  FERC - Fed Energy Regulatory Comm.  Regulates trans/sale of energy and fuels  Oversees environmental issues  Budget from fees to regulated firms  NERC (already done)  RTOs - Regional Transmission Org’s  ISOs - Independent System Operators (FERC approved) - open and fair access to regional grid; non-discriminatory governance structure; facilitating wholesale electric rates; ensuring efficient and reliable bulk power  NAESB - North Am Energy Stand Board

12. 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

13. 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

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

15. 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%