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Truman National Security Project
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Energy 101
Power Plants
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U.S. Power Industry: 3 Step Process
2
Generation
Transmission
Distribution
Natural Gas: 25%
Coal: 42%
Nuclear: 19%
Hydro: 8%
Wind: 3%
Solar: >1%
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3 Different Kinds of Providers
3
Investor Owned Utilities (IOUs)
Municipality Owned (Muni’s)
Co-operatives (Co-Ops)
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Regulated vs. De-Regulated
4
• Majority of US electric companies are regulated by state-run Public Utility Commissions (PUCs)
• Utilities must get approval from their PUC in order to build power plants, run programs, etc. The PUCs grant the Utility a rate of return on their investment. This regulatory situation is how Utilities operate as monopolies
Regulated
De-Regulated (also referred to as Competitive)• Some states, most notably Texas, have broken up the parts of the
Generation, Transmission, and Distribution process• Independent Power Generators produce power and sell it directly to
consumers• Consumers can select which power provider to get their power• The Utility owning the T&D lines must allow all power to travel
through their systems• Has lead to price increases when tried in the past
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Energy 101
Nuclear Energy
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US nuclear plants deliver electricity
The US nuclear fleet is aging, and concentrated largely in the eastern US
Source: Energy Information AdministrationSource: Nuclear Regulatory Commission
, 2011
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Complex science… simple concept
7
Fuel rods make steam, steam spins turbines, turbines generate electricity
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Nuclear power’s share of the DOE R&D budget: large but shrinking
8Source: Congressional Research Service
DOE Energy Technology Share of R&D Funding, Comparison Over 3 Periods
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Nuclear power plants enjoy high subsidies, across the value chain
9
Source: Union of Concerned Scientists, ‘Nuclear Power: Still Not Viable Without Subsidies’, Feb 2011
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Unresolved nuclear power issues linger, particularly after Fukushima
Radioactive waste disposal Future of Yucca Mountain facility in
Nevada? Nuclear reactor safety
Pebble bed reactors Nonproliferation New reactor designs
Bill Gates’ TerraPower traveling wave reactors
10
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Energy 101
Natural Gas
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Natural Gas vs. Coal The price of natural gas is at a 10 year low
and has recently dropped below the price of coal (EIA 2011)
Natural gas power generation costs have also fallen
For power generation, natural gas has environmental advantages over coal Natural gas produces lower quantities of
nitrogen oxides and carbon dioxide (CO2) than coal
Emissions of sulfur dioxide and mercury compounds are negligible
Despite environmental benefits of natural gas power generation, over 600 coal fired plants producing between 45% of our electricity (vs. 23% for gas)
Natural gas power generation demand outlook is mixed
Demand for natural gas power generation may increase if policies to place a price on CO2 emissions are adopted
But renewable energy generation resources may reduce natural gas demand for electric power generation
Gas cheaper
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Natural Gas: Conventional vs. Unconventional Sources
CONVENTIONAL SOURCES “Free gas” Easier to produce. Accounts for about 94 percent of
the gas produced in the U.S.
UNCONVENTIONAL SOURCES The increasing availability of
Shale gas (which is natural gas trapped in shale formations) has raised its profile among unconventional sources.
Other sources include Deep Natural Gas, Tight Natural Gas, Coalbed Methane, Geopressurized Zones, and Methane Hydrates.
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Natural Gas: Where’s the Gas?
Conventional Sources Shale Gas
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Natural Gas: Extraction Technologies
Technologies like hydraulic fracturing (aka “fracking”) has helped produce a shale gas boom…
…BUT, there are also environmental concerns.
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Natural Gas Production Expected to Increase Globally
Natural gas production expected to increase
But depends on Environmental concerns, particularly
regarding fracking Climate policy (carbon pricing,
renewable energy requirements for power generation)
Fuel price relationships, which can be altered by technology and policy, affect long term demand trends
Upstream costs
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Energy (and Environmental) Security Implications
Development of U.S. shale gas resources has significantly reduced need for the U.S. to import LNG for at least two to three decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy.
Rising shale gas supply has led to lower domestic natural gas prices, which lowers the costs to average Americans of reducing greenhouse gases as the country moves to lower carbon/non-oil based fuels (e.g., electricity, compressed natural gas).
Potential increase in demand for natural gas which can displace high carbon fuels.
Increased production by U.S. and other countries weakens ability of long-term potential monopoly power of a “gas OPEC” or a single producer (such as Russia) to use energy resources as a tool for political gain.
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Energy 101
Coal
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Why do we need coal? Coal is largest domestically produced source of
energy in United States. Coal is abundant in United States (WY, WV, KY,
largest producers). 200 years+ available Half US electricity from coal and cheapest.
Separated ingredients used in plastics, tar, synthetic fibers, fertilizers, and medicines.
Coke from coal smelts iron ore. Coal provides jobs in remote areas. Coal companies support entire communities.
19
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The challenges of coal Highest carbon dioxide emissions linked to
climate change. Sulfur dioxide, nitrogen oxide, and mercury,
linked to acid rain, smog, and health issues. Mountaintop removal in KY/WV linked to land
and water contamination. Cheap coal makes renewables expensive and
efficiency unnecessary. Economic dependence not sustainable. Aging coal fired plants.
20
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‘EPA stay off our backs’
Politicians in coal states must promote coal
Coal industry feels itself at war with EPA
KY suing EPA
No new surface mining permits under Obama Administration based on amendment to Clean Water Act.
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Can there be ‘clean’ coal?Carbon capture storage
22
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What to do about coal? Fund carbon capture and storage projects.
More ‘scrubbers’ on plants to reduce toxic release. Fund ways to re-use waste as byproducts such as cement.
Support EPA air and water regulations for future generations.
Reclaim former coal mine lands for other use.
Assist coal communities in creating a ‘life besides coal’
Assess impact of state subsidies to coal on economy.
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Energy 101
Wind Energy
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There is strong bi-partisan support for Wind Energy in the United States.
U.S. Wind Energy
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Wind Energy Costs & Productivity
The Wind Energy Industry has evolved tremendously over the past 20 years. Consistent energy policy is needed in order to allow for
continued growth.
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Installed Wind Energy Capacity Through 2011
State level Renewable Portfolio Standards (RPS) have served as the primary demand driver for the U.S. wind energy industry.
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The wind industry is facing the recurrence of the boom-bust cycle it has seen in previous years when the PTC was allowed to expire.
•60% of a wind turbine’s value is now produced here in America, compared to 25% prior to 2005.
•Over 90% drop in the price of wind power since 1980, benefiting utilities and consumers.
• The industry has made ,ore than $60 billion of investment in the U.S. since 2005.
Wind Production Tax Credit (PTC)
Unlike the previous PTC expirations, over 60% of the wind turbine components are now made in the United States by American workers.
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Wind Industry - U.S. ManufacturingWith the threat of the PTC’s expiration, wind project developers are not making plans in the U.S. and American manufacturers are not receiving orders
•Over 400 facilities across 43 states manufacture for the wind energy industry.
•Layoffs have started already
•Historically, in the years following the PTC expiration, installations dropped between 73 and 93%, with the corresponding job losses. If the PTC is not extended, the loss of wind industry
manufacturing jobs will impact Americans across the United States.
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U.S. Transmission
•A congested and obsolete power grid limits consumers’ access to low cost power.
•The U.S. Department of Energy has identified transmission limitations as the largest obstacle to realizing the economic, environmental, and energy security benefits of obtaining 20% of our electricity from wind power.
•Currently, around 270,000 megawatts of proposed wind projects, are waiting in line to connect to the grid because there is not enough transmission capacity to carry the electricity.
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U.S. Transmission – Planned Expansions
High voltage transmission line expansions are planned throughout the United States. These capital intensive investments, however, require
stable energy policy.
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Energy 101
Solar
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Residential1-10 kW
Commercial Rooftop10 kW – 1 MW
Utility Scale1 MW– 250 MW
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Solar Growing Rapidly, Averaging 65% Compound Annual Growth Rate for the Past 5 Years
17 nuclear power
plants worth
of solar peak
power
shipped in 2010
Source: PV Industry Growth Data from Paula Mints, Principal Analyst, Solar Services Program, Navigant
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Global Solar Industry Growth has Produced Steadily Falling Prices
Sources: 1976 -1985 data from IPCC, Final Plenary, Special Report Renewable Energy Sources (SRREN), May 2011; 1985-2010 data from Paula Mints, Principal Analyst, Solar Services Program, Navigant; 2011 numbers based on current market data
Module Pricing Trends 1985-2011
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Solar is Less Expensive Than New Nuclear
Cen
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Average time to permit and build a nuclear 1 GW power plant – 13 years. Average time to permit and build 1 GW solar – 1 year. The last nuclear power plant completed in the US, Watts Bar 1 in Tennessee, took 23 years 7 months to construct.
$0.139
$0.07
$0.129
$0.095
Sources: 2011 nuclear price is the mid-point of the LCOE range given by Lazard, version 5.0. 2020 nuclear price is illustrative, calculated assuming 3.5% annual escalation; 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011, 2020 PV price illustrative, assuming 4% annual cost reduction from 2016
(further validated by prices bid by solar developers into the California markets).
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Solar Beats Natural Gas Peak Power TodayC
ents
per
Kilo
wat
t Hou
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$0.226
$0.139
$0.086
$0.238
250 MW Gas CT
Sources: 2011 gas price is the mid-point of the LCOE range given by Lazard, version 5.0. 2016 gas price is illustrative, calculated assuming 1% annual escalation; 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011 (further validated by prices bid by solar developers into the California markets).
Gas peakers pollute 3 times more than natural gas power plants.
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Coal Plant 5%500 MW
New Coal Can’t Deliver Power for 6-8 Years, When Solar Will Be Competitive
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$0.139
$0.07
$0.109
$0.07
Source: 2011 coal price is the mid-point of the LCOE range given by Lazard, version 5.0. 2020 coal price is illustrative, calculated assuming 5% annual escalation: 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011, 2020 PV price illustrative, assuming 4% annual cost reduction from 2016
(further validated by prices bid by solar developers into the California markets).
$0.08
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Solar Meets Critical Peak Power Demand
Sources: For summer peak load shape – California Independent System Operator (CAL-ISO); For time of use rates – Pacific Gas and Electric Company (PG&E); For PV Tracking Output – Solaria Corporation
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Germany, with Less Sun than Seattle, is Largest Solar Market in the World
Solar Energy Capacity (2009) in GW
Lazard: Compiled from multiple industry sources, May 2011
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Germany, with Less Sun than Seattle, is Largest Solar Market in the World
Solar Energy Capacity (2010) in GW
Lazard: Compiled from multiple industry sources, May 2011
Italy and
Germany added
13 GW in 2010
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U.S. Solar Market Is Small but Growing
US Total Installed PV Solar Energy Nameplate Capacity and Generation
DOE, NREL, Renewable Energy Data Book, 2009; Lazard: Compiled from multiple industry sources, May 2011SEIA and GTM Research’s U.S. Solar Market Insight Q2 1011
SEIA and GTM Research’s U.S. Solar Market Insight Year in Review 2010SEIA® and GTM Research’s U.S. Solar Energy Trade Assessment 2011
69% Year-over-year
Domestic
Market Growth
$1.9B Net Global
Exporter$6B Total U.S.
Market Value
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California Adding Multiple GW of Solar in the Next 5 Years
California could be 20% solar by 2020
1Of the 8.6 GW under contract, 4.4 GW is below the Market Price Referent (MPR), defined as the 20-year levelized cost of energy from a new natural gas plant in California. Source: Greentech Media, February 2011
2009 Utility RFO submittals: 30 GW2011 Utility RFO submittals: 45 GW (expected)
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Utilities Recognize Solar’s Advantages
Completed US PV Projects
Total USA Installed PV 2 GW in 50 States
Global Installed 26 GW
Source: Solar Electric Power Association (http://www.solarelectricpower.org/solar-tools/solar-data-and-mapping-tool.aspx)
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Equal to 12
nuclear
plants
in 4 years
US Utility Solar Announcements1
Over the next 4 years 12 GW
1Note: Utility purchases only - Does not include residential and commercial marketsSource: Solar Electric Power Association (http://www.solarelectricpower.org/solar-tools/solar-data-and-mapping-tool.aspx)
Utilities Recognize Solar’s Advantages
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Solar Subsidies Pale in Comparison to Fossil Fuels
Fossil Fuel and Solar
[ELI, SEIA]
[SEIA, Blumenauer, Treasury]
$72.4 billion
$2 billion
$40 billion
$7-10 billion
Estimating U.S. Government Subsidies to Energy Sources: 2002-2008Environmental Law Institute, September 2009SEIA (Solar Energy Industries Association) Federal Energy Subsidies in the United States: A Comparison of Energy Technologies, February 24, 2011“Ending Oil Industry Tax Breaks”Congressman Earl Blumenauer, Third District of Oregon, www.blumenauer.house.gov, April 2011
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Solar Creates U.S. Jobs
7x more jobs per MWthan coal
Sources: Kammen, David M et al, 2004, Report of the Renewable and Appropriate Energy Lab, Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy, University of California, Berkeley.Wei, Max et al, 2010, Putting Renewables to Work: How Many Jobs Can
the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy and the Haas School of Business, University of California, Berkeley, in Energy Policy, vol 38, issue 2, February 2010.
Solar Foundation 2011 National Jobs CensusU.S. Bureau of Labor Statistics: May 2010 National Industry-Specific Occupational Employment and Wage Estimates
100,237 Americans work in solar today
Solar employment grew 6.8% while the general economy grew 0.7%
20k
40k
60k
80k
100k
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Solar is Ready Now
Solar17 GW
Solar added more than 17 GW worldwide2010
Major combined sources of polluted energy only added 12.2 GW in the US2010
Coal6.7 GW
Natural Gas5.5 GW
Source: Erik Shuster, National Energy Technology Laboratory, Tracking New Coal-Fired Power Plants, January 14, 2011(Natural as includes NGCC at 4GW and NG GT and 1.5 GW.)
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Bipartisan Public Support for Clean Energy
91 percent of Americans say developing sources of clean energy should be a priority for the President and Congress
85% of Republicans
89% of Independents
97% of Democrats
Sources: Public Support for Climate & Energy Policies in May 2011, Yale Project on Climate Change.
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Solar Less expensive than new nuclear and cost competitive with new coal and gas started today Delivers Gigawatts of power fast – 8 to 20 years faster than coal or nuclear
Delivers strong ROI in the form of American jobs and global economic competitiveness
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Energy 101
Energy Storage
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Definitions and Benefits?
• Energy is the ONLY major sector of the economy in which the product MUST be consumed the moment it is created
• Transmission provides energy where it is needed –linking Generation and Consumer in Space
• Energy storage provides energy when it is needed - linking Generation and Consumer in Time
• Energy Storage buffers disruptions on all levels of the Grid• Load and Generation must be balanced on the Grid
• Traditionally, generation was controlled while the load was variable. • With increasing renewable penetration, generation has also become variable.• Penetration of Electric Vehicle use inserts a new and unknown variable
• Each type of energy storage technology has its own capital and operating cost structures
• The 3 characteristics that matter most in storage are:• Discharge Capacity (MW), otherwise referred to as Power Rating. Is a
measurement of how much electricity can be released or absorbed at a given time
• Energy Storage Capacity (MWh). Is a measurement of how long energy can be discharged at 1MW Power
• Energy Density (MW/volume). This is a measure of how much energy can be stored in a given volume of. The higher this is, the more energy can be stored in a smaller battery.
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Bulk energy storage• Mitigates intermittency of renewable
energy resources• Balances supply and demand by
providing ancillary services• Responds quickly to system
contingencies, e.g. equipment failure, power plant outages
• Balances load and relieves transmission congestion
• Smooths thermal power plants used for frequency regulation or load following
Size MattersDistributed energy storage• Managing electric grid peak
demands• Improving reliability and outage
mitigation• More effectively using capital
expenditures for new grid infrastructure
• Accommodating distributed renewables and plug in vehicles
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What can Storage do for US? Reduce risk of grid failure Defer the need to upgrade power-lines and other
infrastructure Allows better renewable energy integration System applications (e.g. whereby energy storage provides
wholesale market opportunities, energy arbitrage, reduced transmission congestion, lower consumer marginal prices)
Commercial, industrial, and residential uninterruptible power supply
Make power generation more efficient Reduce greenhouse gas emissions Diminish our reliance on fossil fuels through EV applications
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Global Storage Today
Total: 125,520 MW
Pumped hydro: 123,390 MW
Total minus pumped hydro: 2,129 MW
Thermal: 1002 MW
Molten Salt: 142 MW
Compressed Air: 440 MW
Batteries: 451 MW
Flywheels: 95 MW
What does “thermal storage” mean? Is this like freezing water at lower power prices to cool buildings during the day when prices are higher?
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Storage Tomorrow
“Deployment of storage technologies will make our nation’s electricity grid more reliable while also enabling more efficient use of existing energy sources as well as new ones, such as wind and solar.... These technologies have the potential to cut electricity bills, reduce peak power demand and lower greenhouse gas emissions.” - Senate Energy and Natural Resources Committee Chairman Jeff Bingaman
"If one can get wind and solar and energy storage down to where the whole package is cost competitive with any form of energy, then it takes off and this is what we're very focused on in the Department of Energy… We want these things without subsidies just to take off.” – Secretary Steven Chu
When we learn how to store electricity, we will cease being apes ourselves; until then we are tailless orangutans. You see, we should utilize natural forces and thus get all of our power. Sunshine is a form of energy, and the winds and the tides are manifestations of energy.-Thomas A. Edison, 1910
I’d like to get a picture of one of these guys speaking for
this page, and maybe cut out another quote. I already cut
the quote from the Lux Research guy, as I don’t think
analysts will care.
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Energy 101
Smart GridThe smart grid is a simple upgrade of the 20th century power grids which generally ‘broadcast’ power from a few central power generators to a large number of users to be capable of routing power in more optimal ways to a very wide range of conditions to charge a premium to those who use energy at peak hours or inefficiently.
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The U.S. electric power infrastructure (grid) is the largest interconnected machine on earth
•9,200 Generating Units•1M MW of Generating Capacity•300,000 Miles of Transmission Lines•150,000 Miles of Transmission Lines > 230kV•99.97% Reliable
But it is old and has LIMITATIONS:• Inefficient, Antiquated &
Passive• No system-wide intelligence,
Minimal Customer Involvement, Labor Intensive
• Size (Demand is growing)• Security/Reliability is an Issue• Limited Adaptability (as
climate security concerns grow, renewables becoming more attractive)
Electricity Consumption in U.S.
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Today’s GridCentralized Command & Control
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Enter the Smart Grid
Research & Development and Fundamental Technologies that will
move the Smart Grid forward:Integrated Communications To connect components to open architecture to
drive real-time information and control allowing every part of the grid to both “talk” and “listen” at the same time
Sensing and Measurement Technologies To support faster and more accurate responses
such as remote monitoring, time-of-use pricing, and demand-side management
Advanced Components To apply the latest research in superconductivity,
storage, power electronics, and diagnosticsAdvanced Control Methods To monitor essential components that enable rapid
diagnostics and precise solutions appropriate for any event
Use of digital technology to improve reliability, security, & efficiency of the electric system with applications for dynamic optimization of system operations, maintenance, & planning
“Modernize the grid.” -- Energy Independence and Security Act, 2007
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Smart Grid’s Value Streams
CapacityCapacity Power Quality & Power Quality & ReliabilityReliability Energy EfficiencyEnergy Efficiency Operational Operational
EfficiencyEfficiencyClean Clean
TechnologyTechnology
Foundation / InfrastructureFoundation / Infrastructure
visi
bilit
y
cont
rol
2121stst Century Smart GridCentury Smart Grid
Load Curtailment
Demand Management
Grid Self-Optimization
EmergencyPower
Local Power Parks
Highly Differentiated
Reliability
EE Programs
Online Energy Efficiency &
Management
AutomatedEfficiency
Advanced Metering
DistributionAutomation
End-to-EndAutomation
DistributedRenewables
Electric VehicleManagement
Clean ResourceOptimization
CapacityCapacity Power Quality & Power Quality & ReliabilityReliability Energy EfficiencyEnergy Efficiency Operational Operational
EfficiencyEfficiencyClean Clean
TechnologyTechnology
Foundation / InfrastructureFoundation / Infrastructure
visi
bilit
y
cont
rol
2121stst Century Smart GridCentury Smart Grid
Load Curtailment
Demand Management
Grid Self-Optimization
EmergencyPower
Local Power Parks
Highly Differentiated
Reliability
EE Programs
Online Energy Efficiency &
Management
AutomatedEfficiency
Advanced Metering
DistributionAutomation
End-to-EndAutomation
DistributedRenewables
Electric VehicleManagement
Clean ResourceOptimization
Smart Grid Enables Dynamic Optimization of Grid
Resources & Operations
Enables Informed Consumer Participation & Demand Response
Accommodates All Generation & Storage Options
Enables New Products, Services, & Markets
Provides Power Quality for Range of Needs
Optimizes Grid Asset Utilization & Operating Efficiency
Reduces Greenhouse Gas Emissions
Enhances Energy Security
Smart Grid Characteristics and Benefits
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• Costs and their Recovery• Interoperability Standards• Technical Challenges
• Demand Response– What incentives will change consumer behavior?
• Network Communications – Requires public & private communication networks, both wired & wireless
• Energy Storage– Smart Grid requires a means of storing energy, directly or indirectly
– New storage capabilities—especially for distributed storage—would benefit the entire grid, from generation to end use
• Distribution Grid Management– Maximize performance of feeders, transformers, & other components of
networked distribution systems – Integrate transmission systems and customer operations
• Integration of Renewable Energy Sources– Again, we need advancements in energy storage technology
• Social/Political Challenges• Consumer Interest and Engagement• Workforce Development
– Lack of power systems engineers• Growing public backlash (several states are now removing smart meters)
– Cybersecurity & privacy concerns– Health related concerns
EfficientBuildingSystems
UtilityCommunications
DynamicSystemsControl
DataManagement
DistributionOperations
DistributedGeneration& Storage
Plug-In Hybrids
SmartEnd-UseDevices
ControlInterface
AdvancedMetering
Consumer Portal& Building EMS
Internet Renewables
PVSmart Grid Challenges
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Energy 101
Carbon Pricing
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Electricity comes from many different kinds of fuel. We chose which to use based (largely) on how much each fuel costs to buy.
64
As you can see, coal and natural gas (known as “fossil fuels”) currently dominate. That’s because they are relatively cheap.
Non-fossil sources – such as nuclear, hydro electric and “renewables” – play a smaller role, largely because they are relatively expensive.
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But while cheap to buy, fossil fuels come with other kinds of costs ….
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Those costs are not factored into the market. Instead they are bared by society.
For example:
Say a you catch asthma from pollution...
Who pays the medical bills?
You do. The polluter (decision maker) does not.This is called a
“market failure.”
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Renewables – such as sun and wind – are more expensive to buy, but using them comes with benefits…
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But those benefits are not factored into the market either.
For example:
Say your medical bills drop after a local business replaces a coal generator with a windmill.
Who keeps the savings?
You do. The business (the decision maker) does not.This is also called a “market failure”
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How do you fix a market failure?
One way is to adjust the price of fuels to reflect the true costs of their use.
67
Create A Market.
Require power plants to buy a “permit” for each ton of
pollution emitted.
The price per ton is set by supply and demand of
“pollution permits”
Two ways to do that:
Charge a Tax.
Require power plants to pay a flat fee per ton of pollution emitted.
The price per ton is flat.
Whichever way you chose, power plants that pollute more (or use more fossil fuels) pay more; those that pollute less (or use more renewables)
pay less
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This encourages the electricity sector to go from….
To….
Coal
Nat-ural Gas Nu-
clear
Hy-dro-elec-tric
Con-ven-
tional
Wind
Solar
2050 U.S Electricity Generation By Source
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