By Kathleen Davis, senior editor
An Electric Power Research Institute (EPRI) report released in March touts a “holistic” approach to power.
Given that almost every item and entity in the power industry is categorized, separated, compartmentalized and labeled, the “Vision for a Holistic Power Supply and Delivery Chain” report envisions a 180-degree turn from the way the power system is laid out under the choppy, interconnected status quo.
Questions remain whether such a vision is practical and feasible. To get answers to those questions, Utility Automation & Engineering T&D asked Stephen Lee, EPRI project manager and author of that holistic vision. In the first installment of this discussion (May 2008), Lee explained how he crafted this holistic vision and how the power industry’s state is divided.
In this installment, Lee explains the holistic vision’s distribution pathway, how renewables will tie in and what area needs the most research and development (R&D).
Thermostats
The distribution-enabled pathway in Lee’s report on a holistic approach to the power system envisions establishing interoperability standards and implementing AMI, which isn’t unusual when discussing the power grid’s future. In this vision, however, the smart grid comes about from the thermostat back up the chain rather than a traditional top-down approach. This approach is a fiscal one, Lee said.
“From a simple investment perspective, innovation for the mass market draws the most attention and financial support from our capitalistic society,” Lee said. “This explains why devices for electricity customers are easier to introduce into the market than phasor measurement units (PMUs) for the transmission grid, and why new products for energy control centers are even harder to launch than hardware and software for substations and distribution systems.”
The smart grid will be built from the consumer up, rather than the utility out, because the market is on the consumer end.
In Lee’s vision, that flow works back up the chain to transmission, an idea that can be seen in the sudden acceptance of AMI in the T&D industry. It took the smart grid ideas—and the potential cash value associated with those concepts—to push AMI into the forefront, despite “the pervasiveness of mobile phones, personal computers and Internet access including Wi-Fi” in the last few years, Lee said.
“Distribution companies, which are regulated, did not have a financial incentive to invest in automatic meter reading. The holistic benefits of AMI had to wait for its role in a smart grid to be recognized,” Lee said.
An end-based route is the most logical, he said.
“So, not only is the bottom-up path the natural way to start this renewal of the electric utility business, it is also a key enabler to engage the entire society into a holistic power supply chain,” Lee said.
Renewables and Renewal
With that renewal of the electric utility business Lee mentioned, a bigger role for renewable energy emerges. The grid-enabled pathway of this EPRI plan lays out a 20 to 30 percent renewable factor, which is doable, Lee said.
“Yes, 20 to 30 percent of generation capacity coming from renewable is achievable with available technological options,” Lee said. “But, I also envision that breakthroughs in the cost and efficiency of solar PV (photo voltaic) will come soon.”
Lee said that a challenge exists to “firm up the variability” with solar and wind, but he’s a proponent on the potential leaps of energy storage at the grid and customer levels. He is concerned about the “backlash against clean coal and the lack of serious consideration of the nuclear power alternative.” A mindset prevents real changes on the fuel side of this holistic equation, he said.
“Instead of a technology gap, I see a regulatory-societal gap which stands in the way of this goal,” he said.
Focused R&D Funding
Instead of the technology gap centering on renewables, Lee focuses that gap on the grid, citing the lack of funding that arose after all the unbundling and restructuring during the past decade. Like that vision of the new grid that starts from the customer up, this issue is all about cash flow.
“Grid operations and planning no longer has single organizations with R&D incentive and sufficient funding to call its main research funding base,” Lee said. “After restructuring, transmission companies stopped building transmission, and their control centers turned over grid operations to the new ISOs and RTOs. So, they see less of a role to continue supporting R&D in grid operations and planning because it no longer provides direct business benefits or value to their customers.”
Because those new ISOs and RTOs have limited budgets, R&D has suffered, although Lee said that the stimulus plan is one potential source of funding that offers hope in this area. He prescribed advancing with caution.
Still, Lee said that the major issue with R&D is yet another gap, or multiple ones. Grid adjustments don’t happen without a lot of testing, making acceptance difficult and time-consuming. In addition, grid operators don’t have the resources or time for R&D, and vendors find testing expensive. And then, the additional learning curve for each new technology introduced exists. All those gaps add up.
“My sense of the challenges facing our national goal to modernize our power grid tells me that the length of time it takes to bring in the next generation of grid operations and planning is along the critical path,” Lee said. “If the power industry does not solve it, an alternative path may emerge ... but that is the subject of my next white paper.”
This article is the second installment of a multipart series on EPRI’s “Vision for a Holistic Power Supply and Delivery Chain.” Read all of the interview with Lee—direct question, direct answer—online at www.utilityautomation.com.
Q1 T&D Market Index Continues to Fall
Reflecting continued economic distress, Denali Intelligence’s T&D Market Index decreased 5.5 percent in the first quarter of 2009 (see Figure 1). Leading the downward pull were underlying commodities, including a 26 percent decrease in crude oil and continued sharp decreases across all base metals. Energy costs posted declines, and diesel fuel prices fell 26 percent in Q1. Metal and energy prices have retreated on eroding demand, both domestic and international. A slow U.S. economy and production cuts in China continued to drive market softness in all base metals, with aluminum seeing the sharpest declines (see Figure 2).
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The overall unemployment rate reached 8.5 percent in March, up markedly from 7.2 percent in December 2008. Though more stable than at year-end, the financial markets continue to be questionable, which exacerbates recessionary forces. In turn, these market forces place even more emphasis on corporate cost restraint.
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Looking to 2009, Denali Intelligence expects the T&D Market Index to reflect continued price flattening overall for materials and a slight rise for services as a result of increased heavy construction (see Figure 3) in response to economic stimulus measures, with an overall decrease of 4 percent on the year.
Market Forecast
- Recessionary forces are expected to continue and intensify, with economic forecasts indicating the United States will begin to recover in mid- to late 2010 at the earliest.
- The Energy Information Admin-istration forecast for 2009 global oil demand was revised down by 1 million barrels per day after a reassessment of gross domestic product assumptions and much lower-than-expected 1Q09 demand data. The pace of contraction is similar to early 1980s recessionary levels.
- The U.S. unemployment rate is forecasted to increase to 9.3 to 10.1 percent in mid- to late 2009.
- Reflective of recessionary and slowing T&D project loads, the Denali Intelligence T&D Market Index expects a 4 percent decrease in 2009 before flattening out in 2010. Services will remain flat across the outlook period, but materials will show resilience.
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Denali Intelligence provides subscription-based, category-specific market intelligence designed for utilities sourcing professionals. While the free, abbreviated version of the T&D Market Index offers topline insight regarding 12-month T&D price trends and forecasts, Denali Intelligence subscribers receive detailed trends and forecasts for each of the 11 critical spend categories, as well as the company’s analysis of supply market risks and trends specific to the T&D organization.
Call Denali Intelligence for more information on the full version of the T&D Market Index or other reports at 888-824-8866 or e-mail info@denaliintelligence.com.
EYE ON EUROPE
- Report Available: The Union for the Coordination of Transmission of Electricity (UCTE) released its 2008 compliance oversight report, including audits. Member transmission system operators were evaluated on compliance with UCTE standards. On the Net: www.ucte.org
- ABB Wins Order: Eirgrid, the Irish transmission system operator, has ordered a 500-MW transmission system using HVDC Light (high-voltage direct current), an ABB technology. The transmission link to the UK will run underwater for 186 km and underground for 70 km.
- CERA: Efficiency MAY Reshape Europe: A Cambridge Energy Research Associates (CERA) study, “Strategies for a Leaner Europe: Meeting the Energy Efficiency Challenge,” concludes that action on the EU goal of reducing energy usage 20 percent by 2020 could change Europe’s energy landscape by 2030. Reduced energy consumption at the level desired by the European Commission would cost at least 250 billion euros, according to the study. The study notes that smart meters are an “uncertainty” and that an EU-wide smart meter roll-out could add an additional 40 billion to 60 billion euros to the total investment required. On the Net: www.cera.com
KUA Stages Mock Disaster
To test the response time and operational readiness of its per-sonnel, Kissimmee Utility Authority (KUA) recently conducted a full-scale mock disaster exercise. The drill involved activities including live-action training and tabletop exercises. Activities included pre- and post-hurricane scenarios handled with the same intensity as real-life incidents.
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A team of evaluators were on scene to observe the strengths and weaknesses of the utility. These observations were shared with utility management in a post-debriefing.
“One of the primary goals for us is to learn where our shortfalls are,” said Jef Gray, vice president of information technology and this year’s drill coordinator. “We want to identify these shortfalls now so they can be addressed prior to the start of hurricane season.”
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The Atlantic hurricane season begins June 1 and ends Nov. 30. The nation’s top hurricane forecaster, Dr. William Gray of Colorado State University, predicts 12 named storms this year, with six becoming hurricanes.
Founded in 1901, KUA (www.kua.com) is Florida’s sixth-largest community-owned utility providing electric and telecommunication services to 62,000 customers in Osceola County, Fla.
