Clean Electrical Power Planning For the Future

One of the things to watch, because it will hold a significant impact on the future of this industry and
its model, is the Clean Power Plan. This plan was a cornerstone of the Obama administration's focus, on mitigating climate change. It has also has been a lightning rod. As you may recall from a previous lesson where we touched on it, the plan called for cutting carbon dioxide emissions from coal-fired electric plants by 32 below 2005 levels. And states needed to meet this goal by 2030. A really critical part of the plan is that the EPA plans to regulate power plant emissions under this act. Each state has its own specific goals to meet under the Clean Power Plan. Almost half of the states
in the US are using. And the case against the Clean Power Plan is compromised of 38 separate cases. I know you're thinking that math doesn't add up, but the states aren't the only ones suing. Utilities and
coal companies have also issued lawsuits.

The states believe this plan is illegal and even unconstitutional, and feel that it is a way to
reorganize the US electric grid. They also believe it's an all-out attack on the coal industry that will drive electricity costs, sky high. The EPA fired back saying, the plan will lead to lower residential bills. Remember how earlier we talked about the fact, that states had jurisdiction over electricity generation and distribution? Well, this gets to the very heart of the controversy. The states are protecting their authority, to regulate carbon emission for their states. New Jersey Environmental Protection commissioner, sums up many of their concerns in three words, unprecedented regulatory overreach.

With the EPA, they're clearly looking at increasing and more restrictive standards, specifically on coal fire generation. But not just coal. When you look at where regulation is in the extractive industries, well that impacts any sort of baseload power we have in this country. And it drives cost. One of the frustrations I think the industry has with the EPA right now, is sort of the laundry
list of regulations.

Before one is finalized, you are met with an additional regulation. And there's no harmony between them. And the cross counting of benefits, counting the benefits of one regulation under the requirements of another. And really, that is an area where I think our country is really ripe for some reforms and just some common sense rethinking. That you can accomplish the same goals and achieve the same ends, without as being disruptive to industry and business as we are right now. because frankly, a lot of companies when they're looking at making long-term resource decision, their hands are tied. Because you just don't know what the regulatory future looks like in this country, because of the volume and diversity of regulations coming at US EPA right now.

The EPA defends its position saying, carbon emissions from coal fire plants represent a huge threat to the health and welfare of the US citizens, because of the impact on climate change. They support their right to do this because they have regulated other forms of air pollution from power plants, and other sources for decades. Now, on the other hand, some states, cities, and scientists support the plan. And they say that since pollution and emissions don't respect state borders, that the EPA's plan will help ensure emissions are truly reduced across the US. In February of 2016, the US Supreme Court
issued a stay of the Clean Power Plan. A legal stay means that a judicial proceeding is temporarily stopped. They can either be temporary or indefinite.

This means that the Environmental Protection Agency is not allowed to enforce any of the requirements of the rule until all of the lawsuits against it have been resolved. The outcome of this controversy will have considerable impacts on all of us. Meeting the standards would mean more renewables, greater promotion of energy efficiency and a greater reliance on natural gas. Of course, you know that natural gas is not without its own controversy, namely fracking. There's no magic bullet and the sound bites that come out of the media and social media, just don't do this issue justice. It's one that bears a closer look by all of us since the impact will be so significant.

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Smart Grid - Future of Electricity

What is Smart Grid and what effect can we expect it to have on the future of electric utilities? We hear about it a lot. If you were at a party and asked 20 people, you probably would get 15 different
answers about what Smart Grid is. And the other five people would probably back away, and look for someone else to talk to. I wouldn't, but some people would. I may or may not know this from personal experience.

Basically, the smart grid is all about combining providing electricity with information technology or IT. And this can happen almost anywhere along the grid structure, from generation to our meters as customers. Why do this? Well, it's so the system can be monitored and controlled. And that means better efficiency, more reliability, and an easier time balancing demand with supply. There are many highly technical applications using powerful computing and information technology that helps manage operations and data.

It's extremely technical, but these systems basically do things like help reduce electric losses along the system. And as you can imagine, less loss means a more efficient system, and that generally means less expense for the utility and customers, so it's a total win win. Smart devices also can detect when there's an equipment fault. Because these faults can get isolated by the smart technology, power can be rerouted. This means greater reliability in general, and faster restoration if there is an outage. As you already know, our system is very old in some areas.

In fact, General Electric reported that the average age of a power transformer in the US is 40 years old. Smart technology makes it possible to get the most out of our aging equipment because it can monitor, so little things don't become big things. And this helps a lot when planning to replace equipment.

You know that for over 100 years, electric utilities and customers had mostly a one way relationship. Electricity came from the utility to us, the customers. And information generally flowed one way too. The utility provided us information. We provided information. Basically just to let them know when we were out, or maybe to sign up for a program. You also know that this relationship is changing. The concept that has gotten regulators attention, is how smart technology can be used for demand optimization. You remember in an earlier module, we talked about how energy efficiency programs and other programs that reduce peak usage work, well this is kicking it up a notch. Fundamental to smart grid is smart meters, these are meter that are installed on your house and measure how much electricity your home or maybe your business uses. They do this in intervals of an hour or even less.

If you compare this to an analog meter, those are read about once a month by a meter reader.  Which is a person that would probably win any fitness track or fitness challenge he or she entered. If your gate is locked or Precious the pit bull is out, the utility typically has to do an estimated bill. The information from the smart meter is sent back to the utility on an ongoing basis for monitoring. So not only do you get a more accurate bill, you also know that your liability is being monitored. Believe it or not, with old school meters, there's a reason why electric utilities used to tell you to call if you're out. Because they didn't always know.

There are actually two electric smart meter types, one way, or automated meter reading, AMR, which allows utilities to read meters for billing. And there's two way, or AMI, which stands for advanced metering infrastructure meters, and these allow utilities and customers to interact. So this allows smart consumption applications. You can see on this chart that there is a switch that occurred. And that's what AMI surpassed AMR and that occurred pretty rapidly.

When we think of AMI in our space we just thinking of the meters and there is an advantage to the utilities on automated meters and being able to remotely read and know what's going on on our systems from headquarters. Not having to have folks walking door to door checking meters, dealing with dog bites, and maybe unhappy people when you're trampling through their yard. There's just the advantage from the utilities perspective of that. From the customer's perspective on that, the ability for me to potentially hop on my phone, dial up or down my air conditioning. Dial up or down my toaster may be in the future. Who knows what that home of the future, that smart home is going to look like. But being able to do with my electric consumption that I do with any other of my apps on my phone. It's just such a cool thing to think about. 

The advanced technology like an automated meter reading, or now the basically, the AMI. So we have two-way communications to meters, is something that we didn't have five years ago, ten years ago. And now it means we're able to actually more fairly allocate the cost, and move them Into the right areas with rate design. Which causes problems because everybody knows what we were and not necessarily where we are heading or what those real costs are.

 I think the exciting thing about AMI is the potential for greater choice and control for us as customers. These include special pricing for peak time or time of use, green power options, voluntary control of high energy use things in our home like air conditioning. And home energy management and usage management of your appliances. That's how it looks at an individual level. But what if thousands of customers chose to do their laundry, wash dishes, or run a manufacturing
line at a non-peak time?  We already know that utilities build their capacity to meet the peak. Remember the example of a church on Easter Sunday? Or a mall parking lot, for the busiest day of the year? Well if you can reduce how much electricity's consumed during these peak periods, that lowers the need for costly standby power plans or purchasing power on the open market. This means less expense, which is passed onto us as customers. This greater agility proves really helpful when we're looking at putting some of the less predictable renewable energy power onto the grid. As you know the more predictability we can build into this system, the easier time we have to balance customer need for electricity with supply.

The US Energy Information Administration reported that there were about 58.5 million AMI meters in the US in 2014. 88% of those were on residential homes. Sounds like a no brainer, right? Not so fast. There are opponents to smart meters, and they have tried hard to put a halt on them. The response of regulars has been more about giving customers who don't want them the ability to opt out and keep their old analog meters. To present a balanced view why would people have an issue with these meters? 

Basically, it boils down to concern with health, privacy, and/or security. Kind of like those concerned about cell phones. Some people are concerned about the radiation coming from the radio frequencies that allow communications between the meter, utilities, and smart appliances, like a thermostat. Even though our cell phones are largely glued to our ears and smart meters obviously are not, this is something that people are concerned about. And smart meters don't transmit data all of the time, only brief pulses. I did some research from a reputable source, the American Cancer Society. On their website, they say, smart meters give off RF radiation, which is low energy radiation and doesn't have
enough energy to move charged particles. And so it's called non-ionizing radiation. Non-ionizing radiation has enough energy to move atoms in a molecule around or cause them to vibrate, which can lead to heat, but it can't damage DNA directly.

The American Cancer Society goes on to point out that the International Agency for Research on Cancer classifies RF radiation as a possible carcinogenic to humans. Based on a finding of a possible link in at least one study about cellphone use and a specific brain tumor type. We're exposed to multiple men and non-manmade RF radiation all the time. But if you want to learn more, I recommend you look at a reputable source like the American Cancer Society. And beware of sensationalized or any reports that are sponsored by an organization that could introduce bias. Beyond the health concerns, some other customers worry about our shift of yet another industry to reliance on computer technology. They're nervous that this would make our electric grid highly vulnerable to cyber attacks, with some really dire consequences.

 As you can imagine, a move to smart meters entails an exponential increase in data points. Think about it for a second, if your electric company used to read your meter once a month, that's 12 reads annually, but if the meter is reading every hour, that's 8,760 reads. I totally did that math on my head and that is if it's only once an hour, many of these meters are capable of reading meters in much smaller time increment. So for example, every 15 minutes, and if you think about the fact that utilities can have millions of customers, that's a lot of data. Customers worry about their information being breached, exposing some of their personal habits related to usage. And in this age where credit
cards get breached all the time, this really increases their sensitivity. Because of the concerns, states do allow customers to opt out, but so far, that's been relatively few who have decided not to have those smart meters. So what's the hold up for smart meter adoption? Well, remember the module on regulation? Rate-based funding for smart meters is one of those things that typically goes through public utility commission approval.

For some states that didn't do a particularly good job of educating communities and the consumer, this hasn't always been easy. But we're seeing more and more of these and we'll likely see more in the future. By the way, if you're interested in knowing if you have a smart meter, many of them actually say smart meter right on the device or you can always call your utility.

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Bright Electric Future

I know you've already seen that regulation, energy sources, customer choice and technology all interplay and ultimately impact you and me as customers in the previous articles. We know that everything that has happened in the 100-year history of this industry has brought us to where we are today. But what's ahead for the next 20? 10, or even just 5 years? No one can be totally sure, but the decisions made today will definitely impact the future of this industry. And why should we care? You shouldn't, unless, of course, you're among the billions who use electricity or benefit from something that is produced by electricity which, as you can guess, is like the all of us. In this final module, we're going to pull together what you've learned and talk about some of the most pressing issues going on in the industry today. Even industry insiders, sitting on the same side of the table, may not necessarily agree on what makes for the right approach. Throughout this module I'm going to reference a study conducted by utility dive, called the State of the Electric Utility Survey. The results of this survey are pretty telling since it was conducted with more than 500 electric utility executives. It covered topics ranging from what they worry about and what they see as good solutions.

The biggest challenges they face is the aging workforce, which is because baby-boomers are now reaching retirement age. They also worry about the existing utility regulatory model, given the market shifts. Aging infrastructure also tops the list, since it can impact reliability. It's not gloom and doom though. Executives remain positive about their utility's ability to add more value. They see energy management and efficiency services, community solar, and electric vehicle charging infrastructure as some of really high-potential areas. Green pricing programs and rooftop solar were also considered some really great opportunities. Not surprisingly, given the value-add utilities want to offer, executives are also pursuing large-scale renewables, demand-side management, distributed
generation, and natural gas power plants.

They also see energy storage being added to this list. Given where they said they want to add value, they do predict a shift in generation resources, with a much greater focus on large-scale renewables, distributed generation, and natural gas. They believe nuclear will remain flat and coal and oil will decline. Large-scale solar and distributed generation they believe will outpace wind and natural gas, but they also can see that integrating renewables and keeping cost down for consumers won't be all that easy.

In the next articles and modules, I'm really going to put your brains to work. You have enough background that, like industry experts, you too can have an informed opinion about what could and
what should happen in this industry. With that, in this module, let's jump with two-feet into the good stuff.

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Renewable, Hydro & Wind Energy For Electrical Generation

Hi and welcome back. We have talked about fossil fuels and nuclear energy and how they're used to handle that all important base load. Now, we're going to talk about renewable energy as primary fuel sources for electricity generation. Let's start with hydroelectric power. It's actually the most widely used renewable energy resource in the world. The first hydro project powered just one single lamp in the late 1800s. More came on board soon after. By the turn of the 20th century, use because much more preferred all around the world.

Right now, China, the US, and Brazil lead the way in hydro capacity. Hydro is considered a great
base load source, and it can also be a great peak load source. Every state in the US actually does have some form of hydro. There are some states that get a majority of their power from it. Washington state is one of them. Let's hear from a Washington utility that is known for their hydro generation.

I'm Pat McCarty. I'm the generation manager for Tacoma Power. Tacoma is a municipal electric utility that's owned by the citizens of Tacoma. We serve about 170,000 people in Tacoma and the greater Tacoma area. And back in 1912, they built the first hydroelectric plant that served the citizens of Tacoma on the Nisqually River. It was a 24 megawatt project. Shortly after that, they decided they needed more power to fuel the industry that was growing in Tacoma. And they ventured out to the slopes of the Olympic mountains and built the Cushman Hydroelectric Project. In 1926, when it first came online, it was a big deal. It was so big that Calvin Coolidge, back in the White House, pressed the button, symbolically sending the electrons from the Cushman Dam to Tacoma.

That's some great information. It might surprise you to know that hydro and coal fire plants produce
electricity pretty similarly.

Hydropower is all produced the same way. It harnesses the natural energy from falling and flowing water, that's what a hydroelectric project is. And it does that by capturing that water, sending it through a hydraulic turbine that spins that turns a generator to produce clean, green, renewable, and cost-effective power for our citizens.

There are actually three types of hydro plants. The most common use a dam and are called impoundment. Another is called diversion, and as the name suggests, this is where a portion of the river is channeled through a canal. There might or might not be a dam. The third kind is called pumped storage, and it works like a battery. It stores the electricity that is created by another power source, like solar, wind, or nuclear. Water is pumped uphill, and when energy demand is low, it stays there. When there's a high demand, it's released back downhill, and that's what turns the turbine. Hydro is one of the most efficient energy sources, and there are no emissions in using it,
and the cost is pretty low.  In fact, areas with a lot of hydro in the mix tend to have some of the lowest electric bills.

Renewable energy really depends on where you sit, geographically speaking. And here in Colorado, we're blessed with abundant renewable resources. Historically for us, it's been hydroelectricity. Municipal utilities are able to take advantage of federal hydropower from the power marketing agencies associated with the Bureau of Reclamation. In our case, it's the Western Area Power Administration. And WAPA, as we call them, for short. And WAPA delivers low cost hydro to public power customers. We're electric cooperatives and municipal-owned utilities. It is the lowest cost renewable resource in our portfolios, and we have been tremendously blessed to be able to have those resources here in the West and be able to have them delivered to our customers and help deliver historically a low cost renewable resources to our communities.

Down Side of Hydro Power Plants For Electrical Generation

Sounds great. So sign me up, right? Not so fast. By now, you know that I'm going to tell
you about some of the downsides of hydro. Of course, to have hydro, you need water. That's a no-brainer. And for some geographies, there might not be the right kind of water sources. And even in areas where there's a suitable source of water, drought conditions can change that. It cost a lot to build these plants. And building dams and other structures can change the natural terrain beyond the immediate location and then impact fish and other wildlife. Some folks say that most, if not all, of the good spots for building large hydro, are taken.

The trend now is to build smaller scale hydro facilities that power single communities. China, Brazil, the US, Canada, Russia, and India, are some of the biggest users, and together accounted for about 60% of the global installed capacity of hydro at the end of 2014. Here's some interesting trivia for you. They biggest hydro plant in the world is the Three Gorges Dam in China. It took over as the biggest in 2012, and it's about as high as a 60-storey building. It has a capacity of 22,500 megawatts. To give you perspective, that is handling 10% of China's electricity needs which, as you know, is one of the most heavily populated countries. Let's move on to a renewable energy source you've likely been hearing quite a bit about. Wind.

Renewable -Wind Energy For Electrical Generation

The way wind works are pretty simple. The energy from the wind turns the blades around a propeller, which spins a generator to form electricity. Sound familiar? The US is a world leader in wind generation. In 2015, wind produced enough energy to power 17.5 million typical US homes. China is second, and Germany is third. If we look more closely at the US, you can see that there's a pretty big difference in how much each of the states relies on wind. Of course, that's because wind quality and
accessibility differ by geography.

The Department of Energy predicts wind will grow to supply 20% of the US's electricity by 2030. That's up considerably from about 4% in 2014. And why not? Wind is free, right? Well, not really. The wind itself is free, but using it to generate electricity is definitely not. There's a lot of bad information on the web about how much wind costs.

In all fairness, maybe it's not so much that it's bad information, but context is really important here. The estimates for the true cost of wind vary a lot. The cost considered are capital, operations, and maintenance, but they don't tend to factor in the fact that the wind is not all that reliable. Sure, you know the wind will eventually blow, but it's intermittent. When it's calm out, there needs to be
backup power to keep the lights on.

Remember that baseload discussion we had? So what I'm saying is that coal and natural gas power plants are typically what provides that back up. And we need this for reliability. Transmission, which we'll learn about later, is also a pretty big issue. Usually, the wind is not located in population dense areas where it's used, and so new transmission lines need to be built. That's not cheap or easy.

The simple physics of an electric system demand that you can only hook up generation in certain areas. But specifically, if you're looking at the more intermittent resources or the renewable resources, such as solar and wind, they're highly dependent on where in the country you have the best wind blowing, and consistently, or where you have the best intensity of sunshine. So in other words, the closer you get to the equator, the better the intensity that you're going to have from the sun. And then you also have to look at land space. You can't very well put these large wind turbines in the middle of a metropolitan area. You're going to have to be a little bit further out and have the land space in order to be able to hook them up and let the wind blow in those jurisdictions. But a perfect example of
our company is wind. And we're the number one wind provider in the country for 12 years running. And that's because we've had the fortune of having a really nice wind resource down in our southern jurisdictions, so in Texas and New Mexico. We've been able to install wind turbines for a number of years. And some of those get a known as a capacity factor of over 50%, which means that you have really great wind resources down there.

Whereas here in Colorado, we also have a good wind resource but not quite as good as down in Texas. So you're looking at more capacity factors that are between 40 and 45%.

Certainly, a lot of renewables were brought online supported by things like feed-in tariffs and
other sorts of programs that actually help encourage their advancement and actually support financially. And those are often important for early-stage technologies because the manufacturer
needs to know that they're going to be delivering the certain number of panels or certain number of wind farms. Once they have that level, then they can achieve better economies of scale, and that's what then is going to drive the price down, and then the subsidies and the other types of incentives
can actually be phased out. So these types of early-stage incentives help get the technology into the market and achieve these economies of scale until it can reach them, basically, grid parody and compete
fully with other types of technologies.

Wind generation has been really amazing because, again, the prices have dropped considerably. It's between two to three cents a kilowatt hour to generate. So that's well below the standard rates for generation systems. And we've seen the towers get bigger and bigger. As they're bigger and taller,
they get more efficient. Also, they are able to access the winds that are more consistent at higher sizes. So we're seeing a tremendous increase in the size and the deployment of the turbines. One of the exciting things that they're looking at now is they're getting bigger, is that they'll be able to
access lower level wind speeds. So that would open up more parts of the country to wind development such as the Southeast US, which doesn't have the really high-speed wind. Just to mention, a really interesting thing in the manufacturing side related to wind is right now, wind turbines are constrained because of their size.

They're at the limit of where they can be transported down the highway, the big blades, and
the other parts of them, and the towers. So we're actually looking at on-site manufacturing of how do you actually manufacture the parts of wind turbines on site so they can be bigger and taller.

The turbines are getting more advanced and can power even more homes, communities, and businesses. Wind energy has also taken its share of hits from environmentalists. This includes fatalities of birds of prey and also noise pollution.

One of the interesting things there has been concern about, bird strikes and bat strikes on blades. And we're actually doing a lot of interesting research here at NREL to develop technologies to be able to shut the turbines down when certain types of birds are in place. Also, where you site them is very important. So working, again, with the Audubon Society and other types of community groups to understand where the migratory pathways are and not putting wind farms in those locations. So while that was an early concern, the risk of that has been greatly reduced through the different types
of advances in technologies.

I had the opportunity to talk with the United State's number one utility wind provider for 12 years in a row, as identified by the American Wind Association, and that's Xcel Energy. Let's see what we learned about what it means to be a leader in this space.

Talking about technological change over the past decade, and what we've been seeing in our industry,
one of the primary areas that we've concentrated on has been large-scale renewables. And we partnered with NREL, here in the State of Colorado, in order to be able to better forecast
when the wind was going to be blowing. Because of the algorithms we've been able to develop and design, instead of saying as two gigawatts of renewable wind energy on our system here in the State of Colorado, we're going to be able to surpass three gigawatts. And not only that, by optimizing the WinSystems so that we had other resources available to fill the gaps when it wasn't there, we've been able to save our customers tens of millions of dollars from these algorithms. And that goes straight to the customers, bottom line, and fuel cost savings.

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