A PRIMER ON THE U.S. ELECTRIC GRID

1 A PRIMER ON THE U.S. ELECTRIC GRID ©2012 Image: Public Domain, NOAA, NASA.Mayhew, C. & Simmon, R. (2000) Sage Kochavi PART ONE: FOUR GRID COMPON...
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A PRIMER ON THE U.S. ELECTRIC GRID ©2012 Image: Public Domain, NOAA, NASA.Mayhew, C. & Simmon, R. (2000)

Sage Kochavi

PART ONE: FOUR GRID COMPONENTS •Physical Infrastructure •Control Network •The Marketplace •Regulatory Agreements A Primer on the U.S. Electric Grid ©2012 Sage Kochavi

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INTRODUCTION TO THE US ELECTRICAL GRID 3

How did it come to be this way? A Brief History of the U.S. Electric Grid: Vertical Monopoly to (somewhat) De-Regulated Marketplace

INTRODUCTION TO THE US ELECTRICAL GRID 4

A Brief History of the U.S. Electric Grid Natural Monopoly: More efficient

Broadway, New York City, 1890

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CONSEQUENCES OF SECURING RIGHT-OF-WAY

• The Gray Wolves of Chicago • Samuel Insull Time Magazine, Nov 4, 1929

Brief history of the U.S. Electric Grid

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ESSENTIAL GRID QUALITIES: THERE IS NO STORAGE ON THE GRID SUPPLY AND LOAD ARE MATCHED IN REAL TIME LOAD USES THE NEAREST SUPPLY PHYSICAL INFRASTRUCTURE

FOUR GRID COMPONENTS •Physical Infrastructure •Control Network •The Marketplace •Regulatory Agreements

A Primer on the U.S. Electric Grid ©2012 Sage Kochavi

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PHYSICAL INFRASTRUCTURE 8

Bulk Power System

Generation Image: xedos4 / FreeDigitalPhotos.net

Transmission Image: tungphoto / FreeDigitalPhotos.net

Distribution Image: K.Tietz / www.freerangestock.com

PHYSICAL INFRASTRUCTURE 9

Bulk Power System

Transformers

Usage Meters

PHYSICAL INFRASTRUCTURE 10

Transmission of Energy As electricity flows through power lines, some of the electricity is ‘wasted’ by heat. This heat can cause lines to sag. This ‘line loss’ of energy means that more energy is needed to be produced to account for predictable losses in transmission. Line loss is less in higher voltage lines, but cumulatively increases over distance and during high demand. It can be as high as 30%.

PHYSICAL INFRASTRUCTURE 11

Bulk Power System

U.S. DOE 2004

Generation, Transmission, and Distribution

PHYSICAL INFRASTRUCTURE 12

3 Interconnections (Synchronous Grid)

WESTERN

EASTERN

TEXAS

8 Regional Reliability Councils

PHYSICAL INFRASTRUCTURE 13

Transmission Line in USA (DC and AC, over 230kV) 1999: 157,810 miles 2011: ~ 211,000 miles (FERC)

(NERC)

PHYSICAL INFRASTRUCTURE 14

Types of Generation Fossil • Natural Gas • Coal • Petroleum

• • • •

Renewable

Other

Wind Solar Geo-thermal Solar Thermal

• Nuclear • Hydro (dams) • Hydro (tidal)

PHYSICAL INFRASTRUCTURE 15

Pseudo Generation Storage

• Flywheel • Pumped Hydro • Chemical • Hydrogen • Solar Thermal

FOUR GRID COMPONENTS •Physical Infrastructure •Control Network •The Marketplace •Regulatory Agreements

Introduction to the U.S. Electrical Grid Sage Kochavi

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CONTROL NETWORK 17

2000:

912 Rural electric co-ops 239 Investor-owned entities 2,009 Public (non-federal) entities 10 Federal entities 811 GW capacity (Casazza & Delea 2003)

2009:

17,876 Generators online 1,122 GW Capacity (EIA 2011)

CONTROL NETWORK 18

NERC Regions (8) & Balancing Authorities North American Electric Reliability Corporation

CONTROL NETWORK 19

CONTROL NETWORK 20

PJM Control Room

From: http://pjm.com/about-pjm/learning-center/pjm-overview/ pjms-role-in-energy-industry.aspx?faq={48DAB9A3-A800-4432-A1FC-0CC49C004EFF}

CONTROL NETWORK 21

CONTROL NETWORK 22

CONTROL NETWORK 23

• RTOs and ISOs act as “Balancing Authorities” • Non-profit entities • Goal: Reliability, Fair Market ISO New England: “ISO New England meets this obligation in three

ways: by ensuring the day-to-day reliable operation of New England's bulk power generation and transmission system, by overseeing and ensuring the fair administration of the region's wholesale electricity markets, and by managing comprehensive, regional planning processes.”

FOUR GRID COMPONENTS •Physical Infrastructure •Control Network •The Marketplace •Regulatory Agreements

A Primer on the U.S. Electric Grid ©2012 Sage Kochavi

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THE MARKETPLACE 25

An Analogy: Coffee • Ground Beans • Whole

Brewed

Grown

• To-go • Table Service

• Wholesale • Picked

Image: public domain, courtesy of http://thumbs.dreamstime.com/thumbimg_113/11687911420XgfQ7.jpg

THE MARKETPLACE 26

Overview • Auctioned Whole -saler • Day Ahead • Real Time Broker Sold (retail)

• Bought from a Utility • Contracted

• Wholesale Power Plant • Home Generation

THE WHOLESALE MARKET Generator

Capacity

$/MW

A B C

500 250 100

$25.00 $21.00 $18.00

Capacity Needed 95

325

Supply, Demand & Price Matching Scenarios

400

700

900

Generator

Price Paid/MW

MW Supplied

A B C A B C A B C A B C A B C

0 0 $18.00 0 $21.00 $21.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00

0 0 95 0 225 100 50 250 100 250 250 100 500 250 100

extra-regional supply

>$25.00

50

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THE MARKETPLACE: Generation Competition

THE WHOLESALE MARKET Generator

Capacity

$/MW

A B C

500 250 100

$25.00 $21.00 $18.00

Capacity Needed 95

325

Supply, Demand & Price Matching Scenarios

400

700

900

Generator

Price Paid/MW

MW Supplied

A B C A B C A B C A B C A B C

0 0 $18.00 0 $21.00 $21.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00

0 0 95 0 225 100 50 250 100 250 250 100 500 250 100

extra-regional supply

>$25.00

50

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THE MARKETPLACE: Generation Competition

THE WHOLESALE MARKET Generator

Capacity

$/MW

A B C

500 250 100

$25.00 $21.00 $18.00

Supply, Demand & Price Matching Scenarios Both generators get paid the highest price that was taken up.

Capacity Needed 95

325

400

700

900

Generator

Price Paid/MW

MW Supplied

A B C A B C A B C A B C A B C

0 0 $18.00 0 $21.00 $21.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00

0 0 95 0 225 100 50 250 100 250 250 100 500 250 100

extra-regional supply

>$25.00

50

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THE MARKETPLACE: Generation Competition

THE WHOLESALE MARKET Generator

Capacity

$/MW

A B C

500 250 100

$25.00 $21.00 $18.00

Supply, Demand & Price Matching Scenarios All of the generators receive highest price: LOCATIONAL MARGINAL PRICING

Capacity Needed 95

325

400

700

900

Generator

Price Paid/MW

MW Supplied

A B C A B C A B C A B C A B C

0 0 $18.00 0 $21.00 $21.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00

0 0 95 0 225 100 50 250 100 250 250 100 500 250 100

extra-regional supply

>$25.00

50

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THE MARKETPLACE: Generation Competition

THE WHOLESALE MARKET Generator

Capacity

$/MW

A B C

500 250 100

$25.00 $21.00 $18.00

Who are A,B,C? A-expensive to build, fuel, run B-moderate costs C-low investment cost, cheap fuel

Capacity Needed 95

325

400

700

900

Generator

Price Paid/MW

MW Supplied

A B C A B C A B C A B C A B C

0 0 $18.00 0 $21.00 $21.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00

0 0 95 0 225 100 50 250 100 250 250 100 500 250 100

extra-regional supply

>$25.00

50

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THE MARKETPLACE: Generation Competition

Market Design 32

CALIFORNIA DAY-AHEAD AVERAGE WHOLESALE PRICES, APRIL 2000 – DECEMBER 2000

Dollars per MWh: from ~$25 to >$250 in 9 months

Source: California Energy Commission, California Energy Almanac, www.energy.ca.gov/electricity/wepr/monthly_day_ahead_prices.html

FOUR GRID COMPONENTS •Physical Infrastructure •Control Network •The Marketplace •Regulatory Agreements

A Primer on the U.S. Electric Grid ©2012 Sage Kochavi

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REGULATORY AGREEMENTS 34

• PUCHA (1935) • PURPA (1978) • FERC Orders 888/889 (1996) • FERC Order 2000 (1999) • State Restructuring Regulations

REGULATORY AGREEMENTS 35

FERC Order 888 (1996)

• Required utilities that controlled the transmission of energy to have open access non-discriminatory transmission tariffs.

• Unbundling transmission from generation is necessary to achieve nondiscriminatory open access transmission of energy

REGULATORY AGREEMENTS 36

Deregulation Effects •Price Volatility •Hedging Contracts •Overall price increases

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End of Part One: The Four Grid Components Questions

PART TWO: SYSTEM EVALUATION •Demand-Side Management •Market Deign •Regulatory Agreements

A Primer on the U.S. Electric Grid ©2012 Sage Kochavi

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BASIS FOR EVALUATION 39

Goals: -Reduce Need for More Infrastructure -Increase Reliability -Reduce Costs

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DEMAND-SIDE CONSERVATION: A COMPARISON OF ELECTRICITY CONSERVATION MEASURES Sage Kochavi © 2012

A Metaphor for Electricity Pricing 41

WHAT IF?

A Metaphor for Electricity Pricing 42

YOU NEVER SAW THE PRICES ON THE GROCERIES YOU BUY?

A Metaphor for Electricity Pricing 43

A Metaphor for Electricity Pricing 44

A Metaphor for Electricity Pricing 45

?

Poor Price Signals DAILY USE

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Flat-rate Pricing Lacks Incentive to Conserve when Demand is High.

Grid capacity is based on peak demand, a period of 20 – 60 hours per year. 47

PEAK SHAVING Reducing the peak demand: results in lowering grid capacity and the use of peaker plants.

Left side: normal daily usage.

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Right side: energy use redistributed to off peak hours (OTI 2011).

LOAD SHIFTING Change usage to periods of lower demand, reducing the need for peaker plant power generation.

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1. IN-HOME DISPLAY 2. TIME-VARYING PRICING – SEVERAL TYPES 3. REAL TIME PRICING WITH ADVANCED METERING

THREE EXPERIMENTAL TREATMENTS

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1. IN-HOME DISPLAY 2. TIME-VARYING PRICING – SEVERAL TYPES 3. REAL TIME PRICING WITH ADVANCED METERING

THREE EXPERIMENTAL TREATMENTS

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1. IN-HOME DISPLAY 2. TIME-VARYING PRICING – TWO TYPES 3. REAL TIME PRICING WITH ADVANCED METERING

THREE EXPERIMENTAL TREATMENTS

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1. IN-HOME DISPLAY 2. TIME-VARYING PRICING – SEVERAL TYPES 3. REAL TIME PRICING WITH ADVANCED METERING

THREE EXPERIMENTAL TREATMENTS

Time – Varying Pricing 53

• Customers notified in advance of “Critical Peak • • •

Pricing” when $ per kW will jump much higher for a few hours. 20 – 60 hours per year, mostly in the summer Requires new communication but no new equipment Customers avoid using electricity or they get a rebate for curtailing usage. (CPP vs. CPR)

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1. IN-HOME DISPLAY 2. TIME-VARYING PRICING – SEVERAL TYPES 3. REAL TIME PRICING WITH ADVANCED METERING

THREE EXPERIMENTAL TREATMENTS

Advance Meter Infrastructure 55

Advance Meter Infrastructure 56

Conclusions and Recommendations: 57

• Begin with IHD’s (In-Home Displays), with temporary installations.

o -Enduring behavior change o -Absolute energy usage reduction

Conclusions and Recommendations: 58

• Begin with IHD’s (In-Home Displays), with temporary installations.

• Add Critical Peak Pricing or Rebates for peak days. o -Targets inefficient peaker plants o - Reduces the need to add more generators & grid structure o - Downsides: unknown persistence & load-shifting

Conclusions and Recommendations: 59

• Begin with IHD’s (In-Home Displays), with temporary installations.

• Add Critical Peak Pricing or Rebates for peak days. • Avoid hourly pricing and AMI until it is necessary – electric cars, remotely control house functions, energy market structure stabilizes.

DEMAND-SIDE-MANAGEMENT RESULTS 60

Goals: ? -Reduce Need for More Infrastructure ? -Increase Reliability ? -Reduce Costs

MARKET DESIGN RESULTS 61

Goals of Deregulation: -Reduce Costs -Reduce Need for More Infrastructure -Increase Reliability

MARKET DESIGN RESULTS 62

Price per kW in cents 1990 2011 % change 38 States regulated 12 States deregulated 50 States* Deregulated States' Price Difference from the Average Price

5.9

8.86

50.2%

8.07

13.27

64.4%

6.42

9.92

54.5%

25.7%

33.8%

*Compiled From EIA 1990 - 2011 data. Excludes HI, Includes DC. 12 Deregulated States: CA, CT, MA, MI, ME, MD, RI, TX, NH, DE, NJ, NY.

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MARKET POWER, COMMUNITY POWER: AGGREGATION FOR BETTER PRICING AND EFFICIENCY MARKET DESIGN RESULTS

MARKET DESIGN RESULTS 64

Municipal Aggregation over 21 towns Municipal Aggregation over 36 towns and cities

MARKET DESIGN RESULTS 65

$4,700,000 savings in 33 months (May ‘02-Dec ‘04)

$28,386,000 savings in 116 months (July ’99-March ’09)

MARKET DESIGN RESULTS 66

Goals: ? -Reduce Needs for More Infrastructure ? -Increase Reliability ? -Reduce Costs

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REGULATORY RESULTS

REGULATORY RESULTS 68

Goals: -Reduce Need for More Infrastructure -Increase Reliability -Reduce Costs

MA Retail Customers Who Chose Non-Default Energy Suppliers 69

By 2000:

0.002%

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MA Retail Customers Who Chose Non-Default Energy Suppliers 70

By 2011:

14%

......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... .........................

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Status of Deregulation by September 2010 GREEN = Deregulated YELLOW = Suspended WHITE = Not Active

Source: Energy Information Administration

REGULATORY RESULTS 72

• Reliability: • FERC Order 2000 • Seven minimum functions of an RTO: • #7 Plan new transmission price stability, grid security, adequate infrastructure and

control network to assure uninterrupted service, adequate reserves & reactive power.

expansion and cost allocation

TRANSMISSION 73

Agencies Involved in Transmission Siting FERC Army Corps of Engineers U.S. Fish & Wildlife EPA BLM USFS DOT FHA RTOs

BATFE Federal Aviation Administration State Utility Commissions Private Landowners State Courts/Eminent Domain Commissions Federal Eminent Domain Court Council on Environmental Quality

REGULATORY RESULTS 74

NIMBY: Not in My Back Yard LULU: Locally Undesirable Land Use BANANAs: Build Absolutely Nothing Anywhere Near Anything

TRANSMISSION LINE INSTALLATION COSTS 75

FROM AMERICAN ELECTRIC POWER (AEP 2008): Typical installed costs for 765 kV, 500 kV and 345 kV transmission lines are: Voltage Class Cost Range/Mile* 765 kV Single Circuit $2.6 – 4.0 Million 500 kV Single Circuit $2.3 - 3.5 Million 345 kV Double Circuit $1.5 - 2.5 Million 345 kV Single Circuit $1.1 – 2.0 Million *Average construction costs in 2008 dollars; rural terrain with rolling hills; elevations up to 4000 feet above sea level; includes siting and ROW costs; excludes station costs.

REGULATORY RESULTS 76

SCADA & RELIABILITY “Supervisory Control and Data Acquisition” Detects congestion Suggests best locations Algorithms for ‘better’ failures

REGULATORY RESULTS 77

SCADA & RELIABILITY NORTH AMERICAN BLACKOUT OF 2003 ISLANDING & CASCADING

Image from: (2011)Lokal_Profil https://en.wikipedia.org/wiki/File:Map_of_North_America,_blackout_2003.svg

REGULATORY RESULTS 78

? ? ?

Goals: -Reduce Need for More Infrastructure -Increase Reliability -Reduce Costs

Knowing all this, what do we do to make the grid more reliable, less expensive, and better for the environment? 79

RECOMENDATIONS 80

 More involvement in local Public Utility boards  More outreach and education about alternative

competitors for retail sales  More publicity about PPAs (Power Purchase Agreements)  Better SCADA procedures to eliminate cascading blackouts  Wider-spread usage of meters to encourage conservation* *Until we have more energy that we need and everyone has a large hadron collider in their backyard.

RECOMENDATIONS 81

 Distributed Generation  Aggregated Market Power

Copyright © URL National Fuel Cell Research Center, University of California, Irvine, CA

PUT LOADS NEAR GENERATORS

Less Power Wasted from Line Loss over Long Distances Less Need for Reactive Power Generation Greater Distribution of Generators Increases Grid Resilience Intermittent Power Sources (Wind, Solar) Smoothing Effect Ability to Sustain Power During Transmission Outages System Designed for Peculiarities of the Locale

PUT LOADS NEAR GENERATORS

84

THANK YOU

[email protected]

Image: Public Domain, NOAA, NASA.Mayhew, C. & Simmon, R. (2000)

A Primer on the U.S. Electric Grid