Transcript Setting a New Course for Electricity in Ontario

Issues Affecting the Electricity
T&D System in North America
Global Utility Summit
Los Angeles, Nov 17, 2008
Presented by
WK (Bill) Marshall
Senior Associate
Personal Background
Retired President, now
Independent Consultant
SPC
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Why Visit Southern California?
3
System Development Challenge
Balancing the policy drivers
Reliable Supply
Consumers
Acceptable
Prices
Environmental
Sustainability
4
Complicating Factors
• Generation issues
- Fuel costs and availability
- Climate change (and other emission issues)
- Renewable requirements
• Distribution issues
- Demand response
- Distributed generation
- “Smart” components
• Transmission ownership, access and benefits
5
Fossil Fuel Prices in $/MBtu
(Conventional Unit Electricity Cost in Cents/kWh)
20.00
18.00
16.00
14.00
12.00
Coal
10.00
HF Oil
8.00
Nat Gas
6.00
4.00
2.00
0.00
2002
|
2003
|
2004
|
2005
|
2006
|
2007 |
2008
Source – US DOE
NY Harbour HFO, NYMEX Appalachian coal, NYMEX Henry Hub natural gas
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Forecast
Demand
From David Hughes - NRCan
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From David Hughes - NRCan
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NE - Reliance on Natural Gas
Summer 2000
Pumped
Storage
1,679 MW
7.0%
Hydro
1,626 MW
6.8%
Other
Renewables
1,092 MW
4.6%
Summer 2006
Natural Gas
4,255 MW
17.7%
Pumped
Storage
1,672 MW
5.4%
Hydro
1,691 MW
5.5%
Othe r
Renewables
922 MW
3.0%
Natural Gas
11,803 MW
38.1%
Coal
2,846 MW
9.2%
Coal
2,814 MW
11.7%
Nuclear
4,448 MW
14.4%
Nuclear
4,359 MW
18.2%
Total: 23,975 MW
Oil
8,150 MW
34.0%
Oil
7,549 MW
24.4%
Total: 30,931 MW
Note: Units in the “Other Renewables” category include those fueled by biomass, refuse, and wind.
Original Slide
from ISO-NE
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Climate Change
• Growing international issue
• Increasing state and provincial issue
• Regional climate change initiatives
- Northeast and west
• Targeted reductions
-
Kyoto – 6% from 1990 by 2012
Canada – 20% from 2006 by 2020
G8 – 50% from 2006 by 2050 (Electricity??)
USA - ?????
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Renewable Development
• Major wind increases
- Texas, California, Mid West, Alberta, Maritimes
• Many aggressive state RPS requirements
- Partly climate change strategy
- Partly hedge on fossil fuels
• Possible national RPS of 20%
• Integration issues need resolution
- Transmission access and delivery
- Distributed distribution connections
- Balancing
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NE States Seek Renewable Energy:
Requirements to Increase 500%: 2006 - 2015
RPS Requirement as a % of
Energy in New England (2015)
•
– 3,750 MW of wind, or
– 1,600 MW of biomass
6.5%
•
93.5%
6.5% RPS requirement in
2015 equivalent to:
Proposed renewable projects
in New England total 1,900
MW
– Not all renewables qualify for
RPS
NE RPS Requirement
NE Energy From Other Sources
Original Slide
from
ISO-NE
www.nbso.ca
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Relative Transmission Costs
• Transmission benefits are large yet costs
are relatively small
Transmission
Distribution
Total Electricity Cost
Transmission 6-10%
Distribution 15-30%
Generation 60-75%
Generation
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Transmission Benefits
•
•
•
•
•
•
•
•
•
Increased Reliability
Lower system losses
Lower rates for end use customers
Reduced congestion
Improved competition
Greater supply diversity
Lower emissions
Environment siting of generation
National security
17
Transmission Development
• Investment has lagged load growth
• Significant congestion has resulted
• Regulatory changes have not helped
- OATT physical rights
- Locational pricing and financial rights
- Minimum interconnection standards
• Reliability margins have shrunk
• 2003 blackout focused attention
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Transmission Questions
• Why no investment?
• Why continued congestion?
• Some reasons
-
Cost differential across the congested interfaces
Winners and losers
Disproportionate value
Intra-state concerns
State versus regional interests
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New Transmission Paradigm
• Energy Policy Act 2005
- Add Section 219 to Federal Power Act
- Provide incentives for transmission development
• DOE identification of “National Interest Electricity
Transmission Corridors” (NIETC)
• FERC incentive rule issued July 20, 2006
-
Higher ROE
100% CWIP
Recover prudent pre-commercial costs
Approval by state or designation by DOE as NIETC not
required but worthwhile
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DOE NIETC East
Congestion in
the Eastern
Interconnection
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Transmission Projects
SPC
NIETC
Hydro
Renewable
Market
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Mandatory Reliability Standards
• FERC empowered through Energy Policy Act
- Approve standards
- Issue sanctions up to $1,000,000 per day
• Actions are a response to 9/11, 2003 Blackout and
security concerns
• NERC designated “Electric Reliability Organization”
• Consequences?
- Increased reliability
- Increased equipment, labour and related costs
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“Smart” Grid
• Transmission actions
- Reduce reliance on SPSs
- Increase demand response for market and control
- Improve SCADA systems
• Distribution actions
-
Real time monitoring
Two way smart metering and load control
Feeder balancing
Enhanced restoration and service
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Moving to the T&D Future
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HR - The Final Challenge
• Work force is old and retiring (CEA Study)
- 50% of transmission workers will retire in 10 years
- Only 7% of trades below age 30
• Looming shortfall at a time of significant growth
with new technologies
• Challenge is huge
-
Transfer existing experience and knowledge
Train new workers with new and old skills
Work smarter
Do more with less
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Time For Action!
“When you get to the fork
in the road, take it!”
Yogi Berra
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