I have had occasion to speak at a couple of industry conferences in the last month. I not only spoke, but I also listened. It was interesting that virtually all the issues faced by the U.S. utility industry were represented and expressed in those conferences. Here is a list of my observations from what many speakers said:
- Virtually everyone is in agreement that the technology to modernize the U.S. transmission and distribution networks exists now. That technology includes all the tools necessary for self-healing grids and Intelligent Utility Enterprises. Automation can and should replace most of the manual switching and control now being done on the grid. A new system will be much more efficient and reliable, and will reduce the need for replacing the "Baby Boomers" who are in their retirement cycle now. The grid can be and must be integrated with the enterprise so that utility leadership can see the whole picture in real-time, something very few, if any utilities have yet achieved. Finding out how much money you did or didn't make, or energy delivered, 30-to-90 days later will no longer work, nor will having to rely on your customers to tell you when they aren't receiving service.
- Our system, while aged, represents the most effective system ever built. But the demands being placed on it now, are vastly different from when it was designed and built. When it was built everyone had a few light bulbs and maybe an electric washer and a radio. Today's homes and businesses are filled with electricity-gobbling devices. We have not kept up with the exponential growth in demand.
- There are two reasons why widespread conversion to automated grids--though a highly necessary conversion, and a part of the answer--will be difficult:
- Utilities still have many internal, cultural problems from their development as quasi-state organizations. At one of the conferences, a responsible, high-ranking official said: "IT (Information Technology) doesn't understand SCADA and DA." That isn't true, and even if it was true, it doesn't matter. What matters is that the tons of SCADA and DA "data" poured out by these systems in real time needs to be reduced to usable "information" for leadership in the utility to make wise decisions. It doesn't matter who does the conversion, it has to be done. The old "silo" mentality dies very hard, and is a huge handicap in developing the Utility of the Future.
- The external pressures on utilities, the political storms around "Global Warming", pressure to install new and unproven "Green Energy" generation, legislation and regulation forcing utilities into areas that aren't economically viable make it hard for utilities to know what to do first, or where to spend limited amounts of money. The fact is that even with "enlightened utility leadership" that sees the problems and knows how to go about repairing them, utilities are being hamstrung and constrained by being thought of as "state enterprises" by politicians, legislators, the media and society at large. Many responsible utility leaders can't make decision because they have ten thousand and one bureaucrats looking over their shoulders. That is a recipe for the type of systems built in Socialist Russia, with the same outcome to be expected--collapse from dead weight. If utilities are being forced to divert funds to cover the political/regulatory "flavors of the month," they will not have the funds to modernize the grid.
- Demand for electricity in the U.S. is approaching the critical point and "public debate"--which includes all those bureaucrats--have so hamstrung the industry that there is no realistic way that demand can be met. It is estimated the U.S. will need the equivalent of between 1,500 and 3,000 new large generating plants in the next 20 years to meet anticipated demand. Regulatory, environmental and legislative constraints on utilities make it impossible to build that many plants, or the transmission assets necessary to get the power to where it is needed. And that doesn't even address the issue of money--I'm not sure there is enough money to do what needs to be done, especially when 50% of all real income in the United States now goes to taxes at the federal, state and local levels. The other 50% is what we call the "free enterprise system," which built this nation, but which many bureaucrats and politicans seem determined to dismantle. Those who believe "green power" can supply that demand have no idea of the technological and economic limits of all the green power out there--currently at about 2.3% of current U.S. demand. Requiring 20% of U.S. power to be "green" by 2020--a proposal to be voted in by Congress in late July--won't make it happen. The technology and private funding to support such a demand doesn't exist.
I am not a prophet, but there are two precepts I have taken to including in all my presentations:
- There will be more large-scale blackouts and they will continue to get worse before they get better.
- There will be more terrorist attacks. Many of those same politicians who keep hamstringing the U.S. utility industry don't want to fight the terrorists where they are, so we will eventually have to fight them where we are, and it will be impossible to keep them all out. Terrorist attacks on the homeland will make it even harder to keep our marginally stable grid working and divert more resources from building out what we need.
Another one I'm thinking about adding is: "The cost of electricity is going to continue to go up and it will get much worse, maybe even astronomica, before it gets any better."
These are interesting times we live in and they are about to become even more interesting!
I continue to think many of the industry's challenges could be solved if competition up and down the electric supply chain became the rule rather than the exception. Free the industry from the worst of the dead weight of regulation, lift price controls or at least lift the ceilings, and limit the industry's ability to consolidate for a time. Then the combination of grid-interconnected central station technologies can compete with distributed technologies, conservation and demand response. Higher prices with softer caps will force product providers and consumers to think harder about conservation and work harder to create better, more efficient energy-consuming products that thepublic will be clamoring for.
I see how the "sausage" gets made first-hand these days. Chip makers don't spend three days locked in a room debating cost-effectiveness methodologies for evaluating demand response programs. The put those people to work creating ways to make more energy-efficient semiconductors. That is not going to happen in power until and unless the political and regulatory dynamic changes.
Your article is indeed a great contribution to the understanding of power industry reality. With the interpretation of your input, I wrote the article The Anti-System Utility, which I recommend to yourself and all readers.
Most of the issues in the same room are caused by the native load requirement that orders the grid and the enterprise under one institution. The solution is not to integrate them as you suggest, but to restructure the industry with the Electricity Without Price Controls market architecture and design.
Only by turning down the native load barrier, the resources of the demand side can be developed. This is a mean to satisfy Mr. Ellis observations and it is the best way to reinvent the utilities worldwide.
I forgot to say you are welcome under my article The Anti-System Utility, so I'm doing it here.
I find your first and third conclusions typical systemic responses. The first is a natural consequence on the delay to take action in reinventing the U.S. Utility. To break the deadlock of the wait and see attitude of some states and the difficulties regulators have in states that are moving forward to decide rates for AMI/ Smart Grid investments which are non-trivial (meaning that intelligent and important people don't understand them), I suggest my post Solving Smart Grid Cost Recovery.
In addition, the AMI projects are very risky and candidates for early obsolescence. Under EWPC the mechanism is the market with competition as the driver for investments of the much larger federal market under prudential regulation.
The third conclusion has to do with the systemic delay of the transformation period and the development of new sources and innovations, which will impose higher costs during the transition to the reinvention of the utility.
To the second conclusion, which I agree with, I suggest adding the increasing costs of higher frequency and duration of climatic effects being experienced by power systems.
Best regards,
José Antonio Vanderhorst-Silverio, Ph.D.
Thanks for talking about the "elephant in the room", namely the status quo culture aspects of our industry leadership.
However, I would like to specifically respond only to one of your points:
"It is estimated the U.S. will need the equivalent of between 1,500 and 3,000 new large generating plants in the next 20 years to meet anticipated demand. Regulatory, environmental and legislative constraints on utilities make it impossible to build that many plants, or the transmission assets necessary to get the power to where it is needed."
Like you, I have many opportunities to speak, listen, and participate in industry panels on these various topics. Also, I am part of a team that has been looking at the robust trends in the electric industry over the last 10 years. A couple of the trends touch your statement above.
1. Due in large part to the pressures on generation that you state, we see a large uptrend in the number of smaller generators being connected to the grid. As renewables mature, this is likely to continue. Now, one might think this relieves the pressure that the utilities are trying to avoid, but this is not really the case. With a large influx of smaller units, the number of generating nodes on the grid will greatly increase. Maybe, instead of 1,500 to 3,000 large generators we will see 150,000 to 300,000 smaller generators (including a portion of the 12 million consumer DG fleet). This is a problem for reliability and controllability of the grid because it relies on a monitoring and control system geared to a few thousand, not few hundred thousand, nodes. We are doing nothing to address this industry trend.
2. The trends show that the "constraints" you list (regulatory, environmental and legislative) are not by law, but by practice. We have found that the regulations and environmental laws are more open to new ideas than the industry leadership. We have found that most good ideas for addressing and integrating our grid and generation needs are eliminated at the utility - commission STAFF interface. This is not based on law or engineering principles, but on maintenance of the status quo, a cultural norm.
So, what we see in the "constraints on utilities" are constraints on the business-as-usual approach which is probably fine since business-as-usual has led us here. The death of those ideas that will truly address the robust trends in the industry R.I.P. at the utility-commission staff interface.
The constraint is in how STAFF consider the benefits of a proposed change (business case). Many of the new ideas for fixing the grid issues yield much consumer benefit, but commission STAFF have not typically allowed this argument to surface in public debate, so the utility STAFF stop presenting these cases because they feel the benefits will be thrown out by the commission STAFF. So, the "elephant in the room" never gets discussed. I think this is the true "constraint".
Again, thanks for raising the level of debate.
Dear Mr. Pullins,
Your comments are very interesting and timely. If I understand correctly your post, your opinion is that:
1) Nothing is being done about the trend of integrating distribute resources to control, operation and planning of the grid.
2) Good utilities ideas die at the utility-commission interface.
My opinion is that to integrate distributed resources and to absorve good ideas, power sectors all over the world need to undergo a proper paradigm shift as explained in article "Free Market and Central Planning, Under R1E2," which I posted today on EnergyBlogs.com.
Regards,
José Antonio Vanderhorst-Silverio, Ph.D.
I breathlessly await the response of incumbent utilities to these near-immediate events.
These are fuel free systems. For more information see my blog or magneticpowerinc.com
The challenges for this revolutionary approach to Distributed Generation are many. It is time for a concerted effort to recognize that we are facing a need for an emergency effort such as was the case during WWII. Nobody anticipated the remarkable speed with which factories turned out aircraft and tanks. The challenge now is less difficult, but the industry and the nation are still asleep.
Transmission lines also need major attention. See my post regarding an UltraGrid, using room temperature Ultraconductors.
These remarkable polymers may also be capable of storing energy in Ultraconducting Magnetic Energy Systems. We expect to determine if that will prove practical within the next year.