drivers of the new transmission system 031910

Drivers of the New Transmission System

CLE International

Ritz Carlton, Denver

March 19, 2010

by: Ron Miller, P.E.

Copyright© 2010 Ronald L. Miller. Material can be shared or copied with attribution to the copyright holder. http://www.linkedin.com/pub/ron-miller-p-e/4/842/580 2

RE Project Ingredients

• Environmentally-permittable

• Technically-feasible

• Financially-viable

… and the linchpin of any utility-scale project is TRANSMISSION of energy to the end-user market


Market Drivers

• U.S. electricity demand, coal

consumption, & electricity

prices

• Renewable resource location

• Federal direction

• State renewable portfolio standards

• Price convergence

• Transmission use and constraints


U.S. Electricity Demand, Coal Consumption, & Electricity Prices

• Key electricity consuming areas:

Texas, California, Midwest

• Key coal consuming areas for

electricity: Texas, Midwest, Southeast

• Highest prices for electricity: Northeast, California, Texas

These key criteria define the “target market”for future renewable energy destinations


Electricity Consumption

Source: National Priorities Project Database

High energy

demand areas


Coal Consumption

Source: National Priorities Project Database

High coal,

NOX, SOX,

CO2


Average 2008 Residential Electricity Price in U.S.

High

energy

price

areas


U.S. Residential Electricity Price Historical Trend

Growing energy use/price, even with DSM/energy efficiency


Renewable Resource Location

• Wind in Intermountain / Great

Plains area, California

• Solar in desert Southwest

• Geothermal in Nevada, California

• Best resources tend to be in

more remote locations, not

near major population centers, areas of

highest coal use, or areas with highest

electricity prices


U.S. Wind Resources

Source: NREL


U.S. Wind Potential


U.S. Solar Resources

Source: NREL


U.S. Geothermal Resources

Source: NREL


Federal Direction

• Ensure that 10 percent of the nation's electricity comes from renewable sources by 2012 and 25 percent by 2025

• Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050

• Reduced GHG in tandem with retiring coal plants opens a window for alternative sources for energy mix, if it can be delivered to the end-user market


Renewable Portfolio Standards


Price Convergence


Grid Use

• Grid built to handle transmission & distribution needs for a utility’s service territory with ties to only adjoining utilities

• Never intended to handle cross-country transmission of energy

• Transmission investment and rate of return have historically lagged generation


Current U.S. Grid

Source: Global Energy Decisions, LLC, June, 2008


National Extra High-Voltage Overlay Proposal


Transmission Issues

• According to North American Reliability Council new generation supplies are forecast to outpace transmission, constraining wind development with a planned 145,000 megawatts of capacity over the next 10 years

• Generation growth over 10 years: 21%

• Transmission line growth over 10 years: 10% with 1,700 circuit miles


Transmission Solutions

• Texas approved a $4.9 billion transmission system upgrade moving power from West Texas to major population centers. Capable of transmitting 18,500 MW of wind power. Cost: $4/month/retail customer

• National upsurge in transmission investment due to Congressional action to increase transmission project allowed rate of return


Our Problem

High energy demand

& prices

Renewable resources


One Possible Future Solution

High energy demand & pricesRenewable resources

High voltage transmission


Value

• North / South grid allows leveraging natural variability of wind throughout Great Plains and complementary solar, just as a portfolio of different stocks lowers overall volatility

• East / West grid allows delivery to the target markets with greatest value to producers and producing states


Kinder Morgan Rockies Express

• Natural gas pipeline from Cheyenne, WY to Clarington, OH

• Limited “off-ramp” to deliver gas to ultimate destination, connecting market with discounted gas prices (CO) to one with premium prices (East Coast)


Kinder Morgan Northeast Express

Natural gas pipeline Clarington, OH to Linden, NJ


Summary

• Environmental concerns are leading generation source changes

• Renewable resources need connections to end-user electric markets which offer higher prices to spur renewable growth

• Price convergence will multiply the need for transmission to accommodate renewable energy generation

• Energy storage will dampen RE variability, adding greater reliability and value to its generation


Summary, cont’d.

• Choice between less-productive, local renewable resources vs. highly-productive resources connected to high-demand, high-priced markets

• Currently, intermediate states can derail renewable generation and its multi-state transmission to demand centers

• Need to incent the intermediate states to gain from transmission, not just producer and end user


Summary, cont’d.

• To harvest best resources with economies of scale, national extra-high voltage transmission system similar to interstate highway & natural gas pipeline system is needed

• Combine different RE technologies whose energy production profiles are complementary to improve transmission asset utilization and project rate of return


Contact Information

Ron Miller, P.E.

303-723-5465

303-748-3441 cell

[email protected]


Questions and Answers

drivers of the new transmission system 031910

Documents

nrel copyright

constraints copyright

highenergypriceareas

price convergence copyright

enduser market copyright

wind potential copyright

dsmenergy efficiency

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