Many decades before the term distributed energy resource (DER) was coined, another electric power technology transformed the industry. That technology was high-voltage transmission. Evolving into a highly complex network that integrates dispersed generation with a multitude of substations across great distances, the technology enables a portfolio approach to reliability and energy cost, and is literally the backbone of a modern power system.
Some are saying that DERs will render the transmission system obsolete in the future; others have serious doubts about that statement. In response to FERC’s dismissal of its petition urging stable equity returns for transmission projects, WIRES (the Working group for Investment in Reliable and Economic Electric Systems) counsel Jim Hoecker stated, “If other investments become more attractive to investors than transmission, the long-term impacts on the CPP (Clean Power Plan), renewable energy development and the commission’s pro-market objectives could be significant.”
Last year, writing in T&D World, our fellow Xpert Mike Heyeck said that the glue that will bind future power systems “…will be a reliable, robust, interconnected, transparent, resilient and secure transmission grid, seamlessly connected to transformed distribution networks that smartly interact with customers and their systems.”
I ask you these questions:
Will the transmission system remain a critical element of future power grids?
What role(s) will future transmission systems play?
If the need for transmission infrastructure remains critical, will current return on equity provisions be adequate enough to encourage investment in these systems?
MICHAEL HEYECK
I had the honor to serve on U.S. DOE’s Electricity Advisory Committee 2008-2014 and for many of those years as its transmission subcommittee chair. Before my term expired, I provided a personal viewpoint on the electric grid architecture of tomorrow that deals specifically with the role of transmission through mid-century. My intent was to provide input to DOE’s Quadrennial Energy Review (QER) and DOE’s Quadrennial Technology Review (QTR). I have excerpted my personal comments below related to the question. What it suggests is that the talk about the demise of transmission is premature to say the least.
Regarding returns, I strongly believe they will be commensurate with risks, and the risks for transmission development remain higher than other grid investments. The societal rewards for transmission development will also be higher as transmission will be the glue that allows markets to derive the value that customers will demand down to the individual DER level. Read on...
Electric Grid Architecture Tomorrow (excerpts)
One must look at the grid not in a “top-down” mode but in a “bottom-up” mode to envision a future electric grid architecture — a view from a customer’s perspective.
What will the customer want from tomorrow’s grid?
• Reliability improved substantially (near universal power supply)
• Choice of supply with transparency and reach
• Smartly interactive (either active, or set it and forget it, i.e., EPRI’s notion of “prices to devices”)
• Efficient, sustainable and affordable
The opportunities to solve this puzzle will dictate winners from losers. Status quo will not be acceptable. Inertia will play a role given it may take a generation to change the grid architecture to accomplish, but it can be accomplished.
Transmission will advance to enable the choices of supply and market reach. Although some see distributed energy resources as the death of transmission, it is quite the reverse. Transmission enables market reach across many states for aggregators and customers. A distributed energy resource may achieve a better price point (or better lease arrangement) if a customer or aggregator can use it in a greater marketplace. If energy storage is involved, greater benefits can be achieved.
Transmission will enable the fuel transformation in the United States. According to EIA’s 2014 Annual Energy Outlook, central station resources will remain a strong player through mid-century enabled by transmission. The combination of diverse central station resources, distributed resources, energy storage opportunities, and the growing variability of supply input, will require a next-generation energy management system (EMS) for grid operators. Add interactions with distribution systems, more control points, meta-data from phasor measurement units and the need for this next generation EMS is absolutely clear.
Some say that net energy for load will decrease over time due to efficiencies and distributed energy resources creating less need for transmission. In EIA’s 2014 Annual Energy Outlook, future uses of electricity are cited as a potential to increase demand. The United States has many choices for energy use. Electricity may be chosen to offset other forms of energy in transportation (e.g., electric vehicles and greater electrification of rail) and industrial processes for greater sustainability. In addition, although per capita energy use may decline per EIA's report cited above, population is projected to increase, and with GDP correlation still strong, a stronger economy can yield greater demand. Lastly, if electricity in a prosperous society is viewed as comfort rather than a commodity, greater use may occur. This is not to say wasteful use, but greater more thoughtful and environmentally friendly use.
Distribution will advance in visibility, control and network ability. One can imagine the emergence of grid operators at the distribution level more actively interfacing with transmission grid operators and markets. Aggregators can reach the resources at the roof-top level and have them play in the greater market enabled by a more advanced distribution grid interfacing with the breadth and scope of markets enabled by transmission. Demand response will lose its limited definition and be able to engage in more than just demand reduction (enabling more affordability to customers).
The transformation at the distribution level would be extraordinary. There are about 5 million miles of distribution in the United States and each feeder would advance in voltage regulation, visibility, automation, and networking ability. The technology is available today, but there is a need for a next generation grid operating system at the distribution level that interfaces seamlessly with the next generation EMS by transmission grid operators. Add the marketing side of the equation, and one can see the potential transaction velocity being not unlike financial markets today.
The supply side is a bit easier to envision with central station resource players and distributed energy resource players. Whether utilities own the resources or not can be subject to state regulations. Unregulated players (including unregulated utility subsidiaries), can develop various models for distributed energy resources, but making them affordable without subsidy will require them to play in the broader marketplace, especially if enabled by energy storage. Critical for the supply side are interconnection standards that allow all to technically ride through grid issues, to regulate the grid attributes (e.g., voltage) at their interface, and to communicate seamlessly with grid operators and marketers.
The customer in this architecture has greater choices to address affordability. One can imagine a customer in this digital age pursuing a universal power supply option at their site with distributed energy resources with energy storage or a microgrid option. Having market reach for their choice provides mitigation for rising prices to accommodate their needs. This is happening today at larger commercial and industrial sites. The customer may pay a fixed charge for grid connection to enable this business model and may be managed by an aggregator to help. As one looks at more efficient operations, smarter appliances, hot water heaters, HVAC systems, etc., can be managed in one equation to interface with supply choices and market choices adding to the affordability goal.
DOUG HOUSEMAN
Having researched the energy usage in New York City and several other major cities and created technical papers for engineering societies on the topic, I have a different take on the topic.
The simple answer is if we want to do away with transmission, we either need to:
1. Empty the cities to a density that can be supported by local solar and wind. For instance, most of Manhattan uses 10 times the available energy annually per square foot of land space that exists (including the sides of buildings and roofs) than the sun and wind can provide locally. We probably need to ban any building over three stories tall to get down to the right energy density to balance local production to commercial demand in most commercial buildings.
2. Find a way to use battery trains to move the electricity into the cities and plug in the train — or worse yet — use tractor trailers to move the batteries. At current battery density and power usage in Manhattan, we would only need 10 to 12 100-car trains a day to bring the batteries into and out of the city. Handling that number of trains in the city would be interesting to say the least.
3. Create energy-efficient devices and buildings that only use about 10% of their current energy. For some uses, the physics indicates that it is not possible to get to that level of energy efficiency.
4. Since most of the major cities are near the coast, develop ocean energy harvesting, but to do that they probably will be large plants, and if they are, then we will end up needing at least regional transmission.
5. Develop Mr. Fusion or Micro-cold fusion plants commercially.
In short, without completely rethinking urban (and rural) planning and the idea of centralized cities and how our society works, transmission is a necessary part of the fabric of our society. The fastest way to do away with Los Angeles, New York, Chicago, Toronto and other mega-cities is to tear down the transmission network. The cities will end within weeks of turning off transmission, probably in chaos.
BRAD SCHMIDT
When asked to comment on topics of this nature, I tend to try looking at the subject matter as Mike Heyeck noted, from the bottom up, and that starts through the eyes of what I believe is the normal, typical American consumer.
While there is an attempt by the media, even within our industry, to try and portray the average American as being highly interested, motivated and yearning to be more independent with regard to providing their energy needs, I believe quite the opposite is reality. In reality, they want more convenience, less responsibility and all of this at the lowest possible price. The trend in technology these days is faster, easier, convenient and arguably throw-away technology.
Applying that trend to lifestyles, I don’t believe the average American really wants to be responsible for owning, operating, and maintaining their own distributed generation resource. No different than the relatively few people who are now attempting to entice more people into owning/living in micro or tiny houses, there will always be the small minority that want to delve into producing their own energy, all while trying to convince the multitudes to consider doing the same. The problem is most people aren’t interested in that level of adventure in life when they so enjoy the comforts and conveniences afforded them in a ‘normal house.’
I do believe the industry might see businesses that sell a DG resource to the private homeowner as a service to them. It would provide the homeowner with the ‘feel-good’ reward of using renewable DG without the challenges of actual ownership. If something happens it’s a simple call and the service provider deals with it. Depending on how the economy and our government reward businesses like that with incentives will largely regulate their ability to succeed and/or survive.
That being said, those same business models will surely want to be certain that if their service fails, their customer, the American homeowner, isn’t sitting in the dark, and the real only true solution to providing that certainty is a central grid system, which almost necessitates a central transmission grid supply. I simply can’t envision a nation like the U.S. thriving as an industrial, economic contributor to the world anytime in the next 10 to 15 years without a strong electric system backbone unless some incredibly remarkable, economically affordable, energy storage system becomes available. While there’s a lot of chatter about ongoing research for electric energy storage, the fact of the matter continues to be the problem of getting the economics to work out; those darn economic facts just continue to get in the way.
If the numbers I’ve seen published by the EIA are anywhere near correct, renewables still only provide less than 15% of our nation’s electric energy needs. That leaves 85% to be provided through a central delivery system; arguably even more as the majority of that renewable resource energy is likely comprised of large-scale systems that can only operate with a central station transmission grid.
As a nation, we often forget that the notion of every (or nearly so) family ‘enjoying’ its energy independence is not a new concept; it’s one our nation evolved from over 100 years ago, and for reasons that remain quite relevant to this very day. Sometimes we’d do well to revisit our history lessons as to why our nation moved away from that model to what we enjoy today: comfort, convenience and economic realities.
MATTHEW CORDARO
The electrical transmission system will remain a critical element of the power supply grid structure for some time to come and does not inhibit the future development of renewables, distributed energy resources and microgrids. In fact, quite the opposite, a strong, reliable and economic bulk transmission system is vitally necessary for the growth and success of these applications.
With capacity factors for renewables in the neighborhood of 30%, it is obvious that other sources of energy also must be relied upon no matter what fraction of the total supply picture is based on renewables. This requires transmission to gain access to other types of generation as well as to provide a means for shuttling renewable energy from areas where it is highly concentrated to locations where it is needed. An excellent example of the latter is the surplus of wind energy in upstate New York that cannot be utilized by the downstate region during the high demand summer months because of a lack of adequate transmission capacity.
Diversity of supply in terms of the location and types of generating sources is also a major issue relating transmission to distributed energy resources and microgrids. As suggested by the CEO of ITC, the closer the user of electricity gets to the point of generation the greater the power necessary, because the ability to take advantage of the variability of usage patterns among consumers becomes reduced. It also affects reliability and economics by limiting the different fuels and types of generation that can be utilized. Interconnection with the transmission grid is the way to deal with these factors by providing access to more remote sources and forms of electric supply.
A thorough and convincing cost benefit analysis has yet to be produced that justifies moving away from the concept of a central transmission network in favor of other alternatives. It is doubtful one will emerge that does not call for a significant role for transmission well into the future and support the value of investing in it on much the same basis as it is done today. The U.S. dependence on transmission has helped produce one of the most effective electric systems in the world and it can continue to do so as additional concepts are implemented.
MANI VADARI
Distributed energy resources (DERs) portend a series of changes to the grid that Tesla (and Edison) triggered several tens of years ago. While DERs can mean many things to many people, the NY REV effort has defined it as a series of technologies that include PV, battery storage, fuel cell, wind, thermal, hydro, biogas, cogeneration, compressed air, flywheel, combustion generators, demand response and energy efficiency.
The main takeaways from DERs are that:
- They are very often small, distributed and can be installed almost anywhere with very little or simple permitting process.
- Many of them are generating energy from renewable sources
- Some of them can also consume energy – store energy
- Their prices are coming down and in some cases, very quickly
So what, who cares?
These new technologies are causing a dramatic shift in how electricity is generated, transmitted and consumed. Instead of depending on large remotely-located generators to bring in the power, some of the power can now be generated locally, thereby reducing the dependence on both the remote generators and also the transmission lines necessary to bring in the power from generating centers to the load centers.
These DERs also result in reduced losses mainly because of the potential for the generation and consumption located closely to each other.
So, where is the problem?
The real problem with DERs can be in the following:
- They are still expensive and not cost competitive with the centralized generation + transmission + distribution system paradigm that exists today. However, as identified before, the costs are coming down.
- The ones that generate from renewable sources, for e.g., when wind is blowing or when the sun is shining can be somewhat erratic and require support from other technologies such as storage to provide for a stable source of power, thereby increasing costs.
- The ones that are not generating from renewable sources have some of the same problems as the centralized generation such as pollution, release of GHG emissions and so on.
Lastly, as more DERs get installed into the distribution network, they create two-way power flow in a system that was designed for inherently for one-way power flow leading to a need for a (1) dramatic redesign of the system from radial to network and (2) redefinition of the protections in the system and (3) new mechanisms to control the flow of power — all of which lead to increased costs.
So, will the electric grid go local and there is no need for centralized transmission infrastructure?
The interesting fact is that regardless of all the upsurge in DERs coming into the grid, customers are still connected to the electric grid and that utilities are still responsible for maintaining a reliable and resilient grid. As long as this is the case, it is still their responsibility to ensure a reliable flow and availability of cheap electricity. This means that utilities need to plan for a grid that has access to cheap and reliable sources of electricity supported by a grid that is designed to bring those sources of power to the customer.
The electric transmission infrastructure is analogous to the highway system in North America or the rail infrastructure. Just because planes arrived, did not mean that the need for highways or railways lines went away.
As long as customers are connected to a utility and as long as the utility is still the responsible party to ensure access to cheap and reliable power, there will always be a need for a transmission and distribution grid that allows power to flow from the source to consumption.
MIKE BEEHLER
Transmission delivers one of the fundamental “values of the grid”; it provides access to the lowest cost generation. Here is why I believe that transmission will remain a critical element of our power grid(s) in the years and decades to come:
1. Energy and environmental policies that promote utility-scale renewables and cleaner, more sustainable sources of fossil generation need a reliable and robust transmission system. For example, in California, recently planned and constructed transmission lines are fully subscribed with renewable resources. Believing that “If you build it (transmission), they (renewable developers) will come,” California now must plan for more transmission to achieve the new and ambitious renewable goals (50%) set by Gov. Brown. (See the letter sent by the CEC and CPUC CEO’s to the CAISO CEO suggesting immediate planning of more transmission). Further, coastal, Midwestern and upper Midwestern states impacted by the elimination of once through cooling for seaside plants and the retirement of older, less efficient coal plants will likely install greenfield natural gas generation that could require new transmission interconnections.
2. Even in the most aggressive resource forecasts, existing clean(er) coal plants, nuclear and big hydro will still be relevant. The aging transmission systems connected to these important resources will need upgrades and enhancements in the near term that increase ampacity, maintain reliability and improve resiliency.
3. Big Canadian hydro built to serve New England and New York will require EHV transmission (and distribution) to deliver thousands of megawatts to dense urban load centers where property values alone will discourage DER. The energy density of a small, underground cable safely, reliably and efficiently serving the increasingly complex electric/energy needs of major buildings in our major cities will not change soon.
The return on equity (ROE) for transmission may decrease. However, single-digit ROE will not likely discourage most utilities and developers. They know the truth. Transmission is fundamentally important to the electric system, and it will be for a long time to come. It’s a sound investment.
CURT KIRKEBY
Today, the transmission system carries the bulk of the power generated by the U.S. power grid and has done so primarily because of economies of scale and the remote nature of generation with respect to loads. Can distributed resources eliminate the need for transmission assets? In the short term, there is little chance of this happening at significant scale. As each transmission upgrade or new transmission need is identified, regulatory and public pressure will drive utilities to provide detailed investigation of alternatives such as distributed energy resources (DERs).
Distribution resource planning efforts, now required in the state of California, will become pervasive, and these plans will include analysis that informs the integrated resource planning efforts normally limited to the bulk power system alone. DER costs will continue to fall. That reality, coupled with the potential for distribution resource plans to identify additional economic, environmental and societal values will result in DER alternatives that are competitive and perhaps preferred by regulators to traditional generation and transmission assets.
The transmission system is in no imminent danger of becoming extinct, rather it will be augmented and maybe slowly replaced by distributed resources. Future investment in transmission assets will continue to be funded with similar expectations for return on equity, however, specific project location, distributed energy resource alternatives, and regulatory oversight will be key factors that determine the investment decision outcome.
STEWART RAMSAY
There are a number of people in the market who suggest that electric transmission has outlived its usefulness and that, as a country, we should no longer be investing in or supporting investments in electric transmission. While that may be a goal for many, I believe that it is a goal that is neither practical nor realistic in the foreseeable future. There are a host of reason why we will continue to be dependent on transmission, not least of which is the role that transmission has played and will continue to play in increasing the percentage of renewable energy in the mix and its significant role in helping to significantly lower the costs of renewables.
Looking at the question of the need for, and longevity of, electric transmission, we can focus on four of the significant reasons why transmission will continue to be an integral part of the energy infrastructure, even with the proliferation of microgrids.
1. Energy Density
a. The energy density in most urban and semi-urban areas is beyond the delivery capability of distributed renewable technologies, even with storage. To eliminate transmission supplies to urban and semi-urban areas, we would have to deploy a combination of renewables, heavily augmented by distributed generation using conventional fuel sources. In the best case, where these conventional units are fueled by natural gas (or methane from sewage treatment facilities) there would be a need to significant increases in the fuel delivery infrastructure. Many of the urban areas in the country are already under restrictions on the amount of new emissions that can be allowed.
Hence, the addition of localized generation would be problematic and unlikely to be approved on a scale sufficient to eliminate the need for transmission. Moreover, the conventionally fueled local generation would supplant renewable generation (primarily wind) as well as more efficient or other non-emitting sources. Thus, we could be trading a desire to eliminate transmission for a degradation in air quality at a local level and an increase in GHG at a national level.
b. It is easy to see the complications for urban areas. In truth, the same situation exists for residential, commercial and manufacturing. In a large number of cases, roof top solar cannot meet all the needs of the home, even with storage. Whether driven by orientation of the home, design of the roof, or the fact that it is a multi-family dwelling, a great many of the homes with solar, do not have the capacity to generate 100% of the needs of the home during the available sunlight hours. It is logical that we would add community solar, using available public space, pole mounted units, and a combination of community based and personal energy storage. While adding all of these technologies to existing communities would no doubt reduce the level of loading on the transmission system during the day, it is unlikely that it would be able to meet the entire need of the community. If we add commercial and manufacturing into the equation, we are back to the energy density dilemma and are once again reliant on either transmission or localized generation using conventional fuels.
2. Policy Decisions and Promises
a. Most states have made commitments to increase the level of renewables in the power supply mix. Some are extremely ambitious while others more cautious. Given the state of current renewable technologies, the only way most states will be able to meet their policy goals, or stated commitments, within the timeframes is through a combination of grid-scale renewables, customer-based renewables and greater energy efficiency. The majority of grid-scale renewables require transmission to deliver the energy. Without the transmission (existing and planned), most of the states would be unable to come anywhere close to their goals.
b. Moreover, the renewables community has made significant financial investments in the grid-scale plants, based in large part on the basis of the policy and supporting regulation. A reduction in transmission capacity would undermine the financial viability of these investments. These investments have enabled the states to achieve their progress/success to date on their renewables goals. It is unlikely that policy makers and regulators would promote or support policies that would undermine these investments during the initial contract periods proscribed by the regulators.
3. Security of Supply Requires Diversity of Supply
Looking at the history of the electricity industry, we started out as a collection of disparate micro-grids. As the demand for electricity grew, so too grew the need for reliability of supply. The industry responded by interconnecting the micro grids. The increased reliability resulted in increased reliance, and thus greater interconnection. The greater interconnection led to economies of scale in energy production, lowering the cost, which of course increased the viability of electricity as a driver of productivity.
We are now heavily reliant on cost-effective and reliable electricity to sustain our economy. The link between the two is undeniable. One only has to look to second and third world countries as well as newly emerging nations to see the role that cost-effective, reliable electricity has played in their growth.
As an industry and as a nation, we have come to recognize the need for diversity of supply. National and state regulation relating to reliability have been developed factoring in diversity of supply. Our calculations on reserve margins and contingency planning are deliberate in considering the diversity of supply and recognizing vulnerabilities that come from being too dependent on any single generator or any single transmission corridor. This thinking has enabled the industry to be able to deliver its product at levels of reliability of 99.9%.
It is logical to expect that customers, regulators and policy makers will expect the same levels of reliability and security of supply, even as we move to greater reliance on microgrids and integrated distributed resources. Given the issues with energy densities, electric transmission will continue to be an essential asset in ensuring the levels of reliability that have become an integral part of our economic success.
4. Market Forces Drive the Costs of Renewables and Transmission Provides Access to the Markets
Over the last decade, the penetration of renewables has increased dramatically. There are several factors that account for the increase uptake in renewables. Clearly policy and regulation were major drivers. It is also true that transmission played a significant role in enabling this growth. Not only did it provide the connection to remote sites where the cost of renewables was attractive, it provided access to the markets where the value of the renewables could be fully leveraged. The combination of policies and regulation that favored renewables would not have been fully successful without access to the markets. The growth in renewables and the ability to trade in the market increased the competition in the renewables sector helping to spur efficiency (both capital cost and energy production per unit foot print). The result has been a steady decrease in the cost of renewables in real terms over this time period.
The effect of the market cannot be understated. CAISO and others in California are calling for standards for rooftop solar that would enable more effective aggregation of distributed solar, such that the aggregated resource can be bid into the market. The expectation is that this would drive greater penetration and greater efficiency into this resource pool.
If we assume that transmission will be removed from the equation, then we must assume that we will be removing market forces from the equation. There are those that would argue that the distribution system could serve as the market infrastructure for distributed resources. While this is true it would be limiting new technologies to neighborhood markets with similar load and supply patterns and would preclude them from being fully leveraged in regional markets where the diversity of load and demand are so much more pronounced.
Such an arrangement would not only stifle the economic drivers but would likely result in a much greater installed base of generation than is needed. Leveraging the transmission system to enable regional load balancing allows us to be more efficient in the amount of generation deployed and ensures greater access to the most efficient sources of energy.
Doing away with transmission would undermine the goals and objectives of the major proponents of renewable energy.
In short, electric transmission has been and should continue to be a major enabler of the growth of our economy. It has seen us through our industrial growth and can provide the same value to the growth of our low carbon, renewable energy economy.
RICHARD BROWN
Most cost estimates of locally-generated power do not consider redundancy. The bulk power system in the U.S. is designed so that generation capacity shortfalls only occur once every 10 years, including scheduled outages, forced outages, and the transmission capacity to move bulk power from generation to loads.
A typical residential customer experiences about 150 interruption minutes per year, which corresponds to an availability of 99.93%. A home disconnected to the grid will have to have generation sufficient to meet peak load and start all motors. Assume a single generator with an availability of 90%. Having two of these full sized generators results in an availability of 99%, still far below current levels. Having three of these full sized generators results in an availability of 99.9%, still slightly lower than current levels. Accounting for load diversity, our current transmission system allows for high reliability with only about one third of the generation capacity required for similar reliability at the premise level without transmission. Our transmission system is not going anywhere soon.
