Power Struggle - Part 3
In mid 60s the four regions of the ISG interconnect and commence operating normally-in-parallel and shortly thereafter interconnect with PJM that has organized itself as a single control area for that purpose. Interconnection is finally extended to utilities in New York, New England, Canada and Northern Michigan that had been operating together as CANUSE (Canada and US Eastern) to form a single Eastern Interconnection operating normally-in-parallel from the Rocky Mountains to the Atlantic Ocean and from Canada to Florida. Group name is changed to NAPSIC or North American Power Systems Interconnection Committee. Utilities in parts of Michigan and Texas decline the invitation to interconnect so they may avoid Federal regulation.
Later, Texas and Oklahoma operating companies in a holding company system, find it desirable to connect the two parts of its system for operation normally-in-parallel so as to leave no doubt it qualifies for an exemption from the “death sentence”, Section 11 of the Public Utility Holding Company Act. At midnight one dark night, it closes a switch connecting the two parts of its integrated system, and gets an order from a State of Texas judge ordering the switch to remain closed.
Instant fury in South Texas!
South Texans get an order from a Federal Judge permitting opening the switch and they weld it open. They tear down a half a mile of transmission line so it cannot easily be reconnected. A war of litigation starts with battles before two or three administrative agencies and several courts.
Meanwhile, for two years there is an attempt to operate normally-in-parallel with another large Interconnection west of the Rockies to the Pacific Ocean but that proves infeasible because of weakness in the transmission lines across the Rocky Mountains. Some utilities in the Eastern Interconnection create institutional arrangements (power pools) to make it economically feasible to install still larger generating units and they strengthen interconnections among their members using "ehv" extra high voltage transmission of 345 kV and above, necessary to carry out power pooling.
After the 1965 Northeast blackout, institutions later called "reliability councils" are formed to fund necessary computer simulation studies of the paths power flows will take normally and in emergencies so that cascading outages might be prevented. Before that, studies were carried out informally by engineers of the electric utilities that were interconnected but they had to struggle to get funds for those studies.
[Author's Comment: I was a Federal Power Commission attorney at the time of the blackout and participated in the investigation albeit at a pretty low level, In an article I wrote in 1966 entitled “Northeast Electric Bulk Power Supply” I suggested that institutions were needed to fund these studies. The regional councils weren’t formed because of my suggestion but for other reasons. ]
These councils ultimately cooperated to form NERC, North American Electric Reliability Council and it assumed responsibility for developing rules for the operation of interconnected systems as well as for monitoring reliability.
Airlines push the turbine manufacturers into making more efficient jet engines, up to 42% efficiency (electric utilities didn't care because regulatory authorities permitted them to pass on their fuel costs promptly to their customers) and these are used also for aero-derivative turbine-generators, permitting even lower cost electric power when energy from natural gas is available at costs not too much higher than coal. Then waste heat from the combustion turbine is recovered by a HRSG (heat recovery steam generator) and used in a steam turbine to generate still more electric energy bringing the efficiency up to first 50% and then 60%. Their greater efficiency and lower cost of construction permit use of natural gas as a fuel for base load generation.
Department of Justice, Antitrust Division promotes competition by requiring utilities building nuclear generation to permit smaller utilities to participate in institutional power pooling arrangements previously limited to the dominant utilities in each region. Prior to 1970, all these nuclear licenses were being applied for and granted as “experimental and medical therapy reactors” which were exempt from the antitrust review of the Atomic Energy Act. In 1970, Congress plugged the loophole (1).
These institutional arrangements which were inserted in nuclear power construction licenses as conditions of the license, included wheeling power for other power pool members, engaging in programs of reserve sharing with other members, and joining others in programs for the coordinated development of large scale base load generation by joint and staggered construction or by shared equity participation in newly formed generating companies.
A Brief Digression
A digression on the coordinated development of large scale base load “base load units”. Base load units are those which can turn out very low cost kilowatt hours to satisfy the load that is on most of the time. Prior to 1970 they were the more expensive generating capacity which efficiently turned out low cost kilowatt hours. Since they were designed to be on line possibly 85% of the time, or more, one could afford to pay more for the capacity since their higher cost could be spread over so many kilowatt hours, perhaps as many as 80% of the total number of kWh produced.
For base load units, the costs per kW decline drastically with scale. In its 1960 Federal Power Survey, the Federal Power Commission found that one could construct a base load generating unit of 200,000 kW for only 50% more than the cost of a 100,000 kW unit. One could construct a 400,000 kW generating unit for only 50% more than a 200,000 kW unit. As the size of an individual generator increased, the cost per kW of capacity of the generator dropped drastically. And as the generating unit size increased, so also did its fuel efficiency.
The FPC urged utilities to take advantage of the opportunities for economy by pooling their load growth and building generating units sized to supply the pooled load growth. This was necessary because these immense generating units were “lumpy” in the economic sense. If a single utility built such a large generating unit it would have idle surplus capacity for several years. So the dominant utilities in each area pooled their load growth and satisfied the pooled growth by constructing units in which they had joint tenancy, or they staggered their construction of such units and in the interim would sell a portion of the capacity to the others joining in the arrangement, or a third alternative was to form a separate generating company to own the unit and share the output in accordance with the ownership of the stock in the enterprise.
1978 change in Federal Power law called PURPA (Public Utilities Regulatory Policies Act), promotes use of cogeneration to help with the fuel shortage. Co-generators are exempted from several Federal power Act requirements and law requires adjacent utilities to purchase capacity and energy surpluses from qualified co-generators. Cogeneration is the use of byproduct heat energy for some useful purpose such as process steam.
All electric power production involves the generation also of thermal energy. Most central stations throw it away because they are too far from thermal loads to use it. It can’t be used effectively more than about 5 miles from the generator. Independent Power Producers seized the opportunities to build gas aero-derivative and combined cycle central stations near industrial sites with electric loads and also big thermal loads. There aren’t that many of these sites with big thermal loads but the co-generating central stations can’t serve the many small ones because they are too far away. The small loads can generally use thermal energy for domestic hot water, space heating, and air conditioning. Use of the thermal energy as well as the electric energy provides fuel use efficiencies up to 80% or more, as much as double the usual efficiencies from central stations which throw away their thermal energy. Law also changes FPC’s name to FERC (Federal Energy Regulatory Commission.)
1992 change in Federal Power Act compel electric utilities to wheel power for IPPs (Independent Power Producers) over the electric utilities’ transmission lines if they have extra capacity. The IPPs who flourished under the 1980 solution are delighted. Small utilities, municipals and coops also get access to wheeling. IPPs which can build lower cost aero-derivative units and combined cycles are now able to deliver their product over transmission lines owned by establishment utilities who had thought that because they owned the only transmission lines in their service area, their customers were captive.
The establishment utilities typically had sunken investment in less efficient coal fired steam turbine generating capacity which at 1990 gas prices wasn’t competitive. Some utilities, citing need for restructuring in aid of competition, seek and obtain state legislation requiring them to divest themselves of their non competitive generation and they persuade federal regulatory authorities to permit their recovery of so called "stranded costs". Commodity exchanges commence selling contracts for futures and options for "financially firm power". Utilities now seek lowest cost power available anywhere, resulting in larger electric power flows no longer restricted mainly to the backbone transmission of electric utilities and power pools. This increases vulnerability to cascading outages.
The Philosphy of System Engineering and Cascading Outages
Murphy's Law tells us that any machine can fail and therefore it eventually will fail. It follows that no machine can supply continuous service. How then can we supply continuous electric power service from a machine? We can't The answer to the problem is a "system" of machines. To supply continuous, or at least almost continuous service with an acceptable interval between outages, we will need an electric power "system".
We can design an electric power system with a collection of machines, each of which is subject to failure, so long as there are redundant machines, put together in a way that there will be enough machines left over after the failure of some, to continue to provide the service.
The bulk power supply system is exactly such a system. Its purpose is to deliver electric energy in bulk as continuously as possible to distribution substations. It is now doing so over a broad area extending from the Rocky Mountains to the Atlantic Ocean. Its major elements are electric turbine-generators and electric power transmission lines. It can provide power almost continuously if there are always sufficient turbine-generators and transmission lines left over, after expected machine outage of either turbine-generators or transmission lines, to continue to provide the service. But the system approach works only if one important factor is designed into it -- that is, each outage must be random. No outage may cause another outage. If the design does not provide for only random outages, the elements of the system become like a row of dominoes and the size of the system becomes a danger rather than a help because in that case the larger the system, the more exposure to outage causing events it will have.
Non-random outages are called "cascading outages". They are the nemesis of the system planner and the system operator.
Can you design for more than one outage at a time? Sure, you can design for two outages at a time, or even three. However there is a cost for having excess capacity sitting around, waiting for an outage to occur. The cost is much higher if there are economies of scale in large individual machines as there are in individual conventional turbine generators and individual transmission lines. The larger each single element of the system, the more it costs to provide reserves for an outage of it.
Can you design a system that will never be unable to supply power? Probably you cannot. Even with random outages, there is always the likelihood that you will have a combination of outages that is greater than the number you have provided for. Even under the law of permutations and combinations there is always the probability, although very small, that a group of monkeys sitting at typewriters, will reproduce the Encyclopedia Brittannica. But you can design a system such that the chances of such a multiple collection of random outages are so low, that the interval between system outages is acceptable. You call its output “firm power”.
Restructuring in the 1990s also diminishes incentive to invest in new transmission that further increases vulnerability by decreasing redundant transmission. IPPs commence selling “financially firm” power which doesn’t carry the same promise of power from a ‘system” – only that you will receive money compensation if you have to go elsewhere, and if you can find the contracted for power elsewhere when the seller can’t deliver. Consequential danages are not covered. Commodity exchanges help manage risk by selling futures and option contracts for monthly deliveries of electric power.
Cascading outage strikes in 2003. Is the solution to spend $100 billion dollars on upgrading transmission lines and installing new ones?
While one can put power system planning and operating principles in a nutshell, as has been aptly said, it is another thing to keep them there.
Is there a 21st century solution with Distributed Generation (DG) particularly fuel cells which are sited at or near the load to be served?
Distributed Generation refers to small generating units sited at or very near the load. These can be solar photovoltaics, wind generators, diesel engines, backpressure turbines and just on the scene are low and high temperature fuel cells.
Fuel cells have an extremely high efficiency, up to 57% for simple cycle fuel cells and up to 78% efficiency for combined cycle or “hybrid” fuel cells, but are tiny compared to central stations. These are the efficiencies at the customer’s meters, not at the site of the generating plant because they are small enough to be located on site or very near it. Central station efficiencies have to be adjusted for electrical transmission and distribution losses to determine their efficiency at the customers’ meters. The size of fuel cells more closely equals the size of individual loads or small load centers. They need no transmission lines and may not need any distribution lines. Their small size permits them to be installed in amounts more closely approximating growth in load so as to reduce idle investment. Their installation at or near load permits their heat energy to be used as well as their electric energy with combined heat and power efficiencies up to 85%. Fuel cells investment costs per kW are high now, but are largely offset by operating economies and in any event the equipment costs would decline drastically with volume production.
With fuel cells or other DG, cascading outages would no longer be a problem. Fuel cells and other DG reduce existing loads on transmission.
Say goodbye to toxic pollution. Say hello to electric power reliability suitable for a digital economy -- no voltage sags or blinks. (No computer crashes. No digital clocks blinking on and off. No online computer controlled processes frozen in the pipes.) With natural gas three times the cost of coal, is the aero-derivative gas turbine's day over? The fuel cell can be integrated with a coal gasifier and use gas manufactured from coal, a marriage made in heaven according to EPRI.
No more legal battles over NIMBY (not in my backyard). Fuel cells mean stopping construction of additional transmission lines snaking through the wilderness or through the Connecticut suburbs in Southwestern Connecticut. Fuel cells will reduce and ultimately, when better methods of hydrogen production are available, will eliminate greenhouse gases completely, emitting only electricity, heat and pure water. Until then they make more efficient use of scarce hydrocarbons.
Tiny base load generators means an electric energy product market can have lots of sellers as well as lots of buyers. That sounds like real competition can be available in your local area, not the phoney kind of competition we have been getting with deregulation where your supplier is dependent on use of his competitor’s distribution lines with the result that more than half of his cost of service is not under his control.
Last, but not least, fuel cells can lower electric energy cost.
Cost of integrating load is rapidly rising. Historic cost per kW of transmission, and distribution is only $500 per kW based on studies by Detroit Edison Energy and Arthur D. Little but average current cost, nationwide, a few years ago, according to the study by Arthur D. Little, is $1,260 per kW and cost of substations adds from $50 to $300 per kW. Overall nationwide average cost may now be $1,500 per kW. According to DOE the production cost curves of fuel cells decline rapidly with volume, soon achieving costs lower than the costs of integrating load.
Central station cost per kW benefits greatly from load diversity achieved by integrating load but 95% of the cost of the integrated system is the cost of the wires that integrate it. Look at the cost of integration for determining the price entry point for fuel cells serving isolated load. Before that time, the high first costs of the fuel cell is offset by its lower fuel cost.
About 10% of the cost of fuel cells is inverting the DC energy output of the stack to AC power which is currently used almost universally in the US and elsewhere. With a return to small but generators, maybe we will also return to Direct Current which can already supply energy to the incandescent bulbs in your house and your stove, hot water heater, and any resistance load. It will be easy to obtain major appliances powered by DC. Electric motors and electronics manufacturers might prefer DC to AC.
So a 21st Century optimal power system may, based on the current technology, lead us back to small power systems supplying direct current. Someone once interpreted Albert Einstein’s theory of the curved universe as saying: “If you can see far enough, you will ultimately see the back of your head.
Would this be a return to Edison’s system as some have suggested. No.
Edison had a small system with a relatively inefficient generator, with an efficiency of only about 8%. His DC technology could not accommodate the large AC generators that were needed for efficiency and low cost at the time as the technology for small efficient generators did not exist. He did his best to stop introduction of the polyphase AC technology that gave us the low cost energy that put our economy in the top rank of nations worldwide. The modern day small system will have an efficiency of close to 60%, not 8% and if powered by coal gas may be as large as 40,000 kW but if so will have an efficiency of close to 80%. With introduction of the fuel cell generator we are not returning to Edison’s idea. We are making a new world, Quod Erat Demonstrandum.
(1) I was one of the Antitrust Division trial attorneys carrying out the Antitrust Review and litigating to impose license conditions where necessary.
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