U.S. Electricity Infrastructure: State Initiatives for Advancing Security, Technology and Market Transformation

Sue GanderDirectorEnvironment, Energy and Natural Resources DivisionNational Governors AssociationCenter for Best Practices

202-624-7740sgander@nga.org

www.nga.org/center/eenr

Overview• Electricity infrastructure challenges• State leadership to address these through

transmission, technology and markets– Transmission

– Planning, cost allocation, environment – Smart Grid

– Pilots and road maps– Energy efficiency as a resource

– Best practices and opportunities

• ARRA (Recovery Act) support

The National Governors AssociationProviding Governors Ideas that Work

Center for Best Practices

• Comparative policy shop

• Provides governors and staff timely technical assistance

• Securing a Clean Energy Future (2007-2008)

• Strengthening our Infrastructure for a Sustainable Future (2008-2009)

Federal Relations

• Builds consensus on federal issues

• Committee structure

• Gives governors a collective voice on Capitol Hill

Transmission Benefits - If We Get it Right

Economic Environment Security

DOE study on 20% potential wind penetration creates $450 billion in economic gain and 500,000 jobs

Allows states to develop DG and off-grid renewable energy sources

Protects consumers and industry from blackouts, data theft, etc

Avoids transmission congestion -- costs homeowners and businesses $22 billion/yr

Increases energy efficiency opportunities, notably DR

Allows for better data collection, backup mechanisms, and analysis of benefits

Source: Energy Future Coalition and NGA Center

Transmission faces “old” challenges…

• Growing demand for electric services – Growing population/reliance on digital technology/PHEVs

• Aging infrastructure– Grid is similar to one envisioned by Thomas Edison– 70% transmission lines at least 25 years old

– 70% power transformers at least 25 years old – average age is 40 years

– 60% of all circuit breakers at least 30 years old

– By 2030, the electric utility industry will need to invest up to $2.0 trillion to maintain today’s level of service ($300 B in transmission)

• Concerns with reliability– Three major blackouts in last 9 years – Impacts quality of life, safety, bottom-lines

Transmission Faces New Challenges…

• Concerns about global climate change– Electricity use is 40 percent of U.S. CO2 emissions

• Greening of power supply– 20 states have CO2 reduction targets

– 33 states have Renewable Portfolio Standard (RPS) or similar goal for electricity

– Nearly 20 states with Energy Efficiency Resource Standards (EERS)

The Transmission Planning Process

Source: Energy Future Coalition

State Leadership on Transmission Needs

Three areas of focus:

• Doing more -- Addressing planning, cost allocation

• Doing it smarter -- Improving the grid

• Doing it better -- Reducing demand for transmission (deferring investments)

Improved Transmission Planning -- CA

• Renewable Energy Transmission Initiatives (RETI)– Statewide collaborative process between CPUC, CEC,

CAISO, other utilities, land managers, and enviros – RETI process will identify, plan and permit the “best”

transmission lines to meet CA’s 33% RPS – Includes significant investment by PG&E

Improved Planning -- MT, CO, UT

• Montana Alberta Tie Ltd. transmission line – 230 kilovolt, 214 mile-line that will connect state

energy to markets in Alberta, Canada• completed the permitting process in 2008

• expected to attract nearly $1 billion in wind development

• Colorado study to propose ways to achieve 1 GW of new RE capacity

• Utah statewide REZ study – Phase I completed

Improved Planning -- Regional Efforts

• Western Governors Association - WREZ– GIS based study on potential for large scale development of

renewable resources – June 15 phase I– Partner with utilities to evaluate needs to move power from

preferred REZs – 30,000 MW by 2015

• Upper Midwest Transmission Development – MGA Governors of IA, MN, ND, SD, and WI– Identify cost-effective wind resources and transmission

infrastructure projects – Cost allocation and planning working groups

ARRA Support for Transmission

• DOE provided $6.5 billion for transmission activities– Western Area Power Administration and

Bonneville Power Authority each given $3.25 billion in spending authority

• To construct transmission only for delivery of RE power

• Projects must repay the U.S. Treasury with interest

• Additional ARRA planning provisions • Regional Planning Entity must be established for 3

interconnections (Western, Eastern, Texas)

Smart Grid - The Potential

Source: http://www.urbanecoist.com/wp-content/uploads/2009/03/smartgrid_454570a-6.jpg

Smart Grid -- The Barriers

• New technology risk

• Lack of standards– Security and interoperability

• Cost recovery risk– Who pays, who benefits?

• Need a strategy– Statewide vision, plan or roadmap

State Meters Cost Technical DetailsSouthern CA 2-way interface for

household devices to communicate w/meter

$1.63 billion ($9 million and $304 million in benefits)

Programmable thermostats near real-time energy usage

informationIL 141,000 two-way smart

meters under proposed pilot

Com Ed plans to apply for stimulus funds

6-month review of pricing and technology options to best benefit consumers

established Statewide Smart Grid Collaborative to manage planning and develop vision

PA 1.3 million AMIs with fixed power line carriers

$163 million hourly interval data for all customers available on-line within two days

Boulder, CO 25,000 planned smart meters

TBD • First fully integrated “Smart Grid City”

Miami, FL Over 1 million wireless meters to every house in Miami-Dade County

TBD

Portland, OR 850,000 AMIs $132 million new outage management, energy usage and tools on Internet better consumer bill information

Ohio Three-year pilot (2009-2011) with AMI for 110,000 meters

$109 million over 3 years via $33.3 million rider for 2009

Distribution automation for real-time control

Monitoring of electrical equipmentCharlottesville, VA

14,700 meters TBD Microgrid: Interconnected network that can function connected to or separate from grid

Selected Smart Grid Pilots

ARRA Support for Smart Grid

• The Smart Grid Investment program - $3.4 billion available starting in the summer and DOE anticipates over 1,500 applications

• The Smart Grid Demonstration program has $615 million available through matching grants

EE as a Resource - New England• ISO New England and Forward Capacity Market

– Electricity resources compete for capacity payments – Accepts DR (e.g. EE, DG, load management, etc)– All resources that clear auction paid market clearing price &

receive up to 5-yr usage commitment – Offers price response and reliability response

• 2,029 MW of DR as of 12/2008• Played key role in July/Aug 2008 heat wave

– NYISO saved 948MW in peak demand– CT saved 217 MW

EE as a Resource - Mid-Atlantic

• Demand Response in PJM• Planning Auction for 2012/2013 held in May• 10,464 MW of incrementally new capacity available

– Auction resulted in 5,682 of DR, 400% over last year’s auction– Wind resources accounted for 323 MW– Combined results of six PJM capacity auctions = 27,640 MW

EE Barriers

• Upfront costs

• Measurement & verification

• Scale

ARRA Support for EE

• $3.1 billion to state energy offices

• $3.2 billion in energy efficiency conservation block grants

• Additional support for weatherization, green schools, bonding authority, tax incentives etc.

Conclusions

• States need combination of transmission, smart grid activities along with creative market mechanisms to ensure delivery of clean, affordable and reliable energy– Do more, Do it smarter, Do it better

• ARRA presents opportunities for states and regions to move ahead

Resources

• DOE/Office of Electricity

• EPA/National Action Plan on Energy Efficiency

• EPRI

• Edison Electric Institute

• National Council on Electricity Policy

• Regulatory Assistance Project

• Center for American Progress

• American Council for an Energy Efficient Economy