electric spotlight on critical energy issues
spotlight on critical energy issues
EngineeringWorks The Next Generation
of Power Supply
Distributed Energy Storage:
A Powerful Tool
Real-World Done Right
with simulators
hedge your risks Synchronizing Your Phasors Stakeholder-Friendly Transmission ISSUE 1 / 2011
www.RMEL.org
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TO BRING YOUR IDEAS TO REALITY, LOOK TO THE RAM. ENERGY
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contents
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36
Features 10 Distributed Electricity Energy Storage: An Emerging Model by Doug Staker, Vice President, Business Development, Demand Energy Networks
18 Quantitative Easing as Alchemy: Why Electric and Gas Utilities Should Hedge Their Capital Construction Risk Today
42 WECC’s Synchrophasor Program is Boosting Grid Reliability by Deston S. Nokes, Independent Consultant, Western Electricity Coordinating Council
46 Technology Options: You Have Them by Samuel Scupham, Energy Consultant, Black & Veatch Corp.
by Mark Bridgers, Senior Consultant, Electric Utilities, Continuum Advisory Group
28 Winds of Change by Peter Castles, Public Involvement Manager, HDR, Inc. and Emily Siedschlag, Public Involvement Specialist, HDR, Inc.
36 A Decade of Power Plant Simulation at KCP&L’s La Cygne Station by Kenneth Luebbert, P.E., Principal Performance Engineer, Kansas City Power & Light
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elec tric energy | spring 2011
Departments 6 Message from the President 8 2011 Spring Electric Energy Conference 40 RMEL Membership Listings 49 2011 Calendar of Events 50 Index to Advertisers
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president’s message
RMEL—An Industry Resource
Networking and Education to Face Today’s Challenges and Opportunities by Larry Covillo President, Yampa Valley Electric Association, Inc. 2010-2011 President, RMEL
A s Pre sident of RMEL and Pre sident of Ya mpa valle y Electric Association, Inc., I’ve had the chance to speak with many utility industry leaders about what’s keeping them up at night. Even among the diverse utility types, we are faced with many of the same issues. These concerns were discussed at RMEL’s 2010 Fall Convention last September. The discussion included topics and questions around the public, public policy, politics and the media; environmental, security and reliability regulations; renewables and transmission; economy and finance; and future strategy – workforce and utility management. RMEL leadership has weaved forums, presentations and discussions about those vital issues identified into every facet of the association. Whether you’re asking how your utility is going to build all the transmission necessary for new renewables or where you’re going to find qualified employees for new projects – RMEL will help you find an answer. Larry Covillo In fact, the entire framework of RMEL has recently evolved to enable all of us to quickly find answers. 2010-2011 President, RMEL, RMEL Education Sections for Generation, TransmisPresident, Yampa Valley sion, Distribution, Safety and Management were created Electric Association, Inc. so people like you and I can identify our interests and RMEL can send relevant information to us. Answers and solutions are really what we’re all after, and that’s the focus of the optimistic tone and technical content of this issue of Electric Energy magazine. Regardless of what we face with politics, public and media misconception or massive regulation increases, if we stick to what we know – technology and engineering – we will drive the industry in a positive direction. Be proud of your industry, and get involved in RMEL. Write an article for this magazine, send your company’s news to editor@rmel.org, submit your ideas on the Education Hotline at www.RMEL.org and present at and/or attend an event. This is the time to get active. I look forward to meeting you at RMEL events in 2011!
www.RMEL.org Published Spring 2011 Published For: RMEL 6855 S. Havana St, Ste 430 Centennial, CO 80112 T: (303) 865-5544 F: (303) 865-5548 www.RMEL.org Electric Energy is the official magazine of RMEL. Published three times a year, the publication discusses critical issues in the electric energy industry. Subscribe to Electric Energy by contacting RMEL. Editorial content and feedback can also be directed to RMEL. Advertising in the magazine supports RMEL education programs and activities. For advertising opportunities, please contact Deborah Juris from WiesnerMedia, LLC at (303) 883-4159. Pu b l ish ed by:
6160 S. Syracuse Way, Ste 300 Greenwood Village, CO 80111 T: (303) 662-5200 F: (303) 397-7619 www.custompublishingco.com vice president – group publisher
Maureen Regan-Cannon (303) 662-5215 mregan@wiesnermedia.com publisher
Deborah Juris (303) 883-4159 debjuris@mac.com account executives
Martha Dickenson (303) 662-5280 mdickenson@wiesnermedia.com Susan Humphrey (303) 662-5207 shumphrey@wiesnermedia.com Susan Wist (303) 378-1626 swist@wiesnermedia.com copy editor
Carol Rolland clrolland@comcast.net art director/advertising production
Lindsay Hayes
chief executive officer
Dan Wiesner
chief financial officer
Jon Rich
John Wiesner
vice president – IT
vice president – production/operations vice president – group publisher
E. Patrick Wiesner credit manager
Patty Barbosa
accounting specialist
Amber Stroud
digital imaging/prepress manager office coordinator
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elec tric energy | spring 2011
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2011 spring conference
Spring Conference has 30 Sessions to Make the Most of Your Training Budget May 15-17 – Loveland, Colorado
Now is the time to put technology and engineering to work to tackle the biggest challenges of the utility industry. Join 300 members of RMEL’s trusted community to learn, network and discover solutions at RMEL’s Spring Management, Engineering and Operations Conference, May 15-17, 2011 in Loveland, CO.
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f you are managing people or projects, engineering, planning or operating systems in the electric utility industry, this conference is for you. The Spring Management, Engineering and Operations Conference has been a tradition since RMEL’s early beginnings. Known for providing outstanding continuing education and networking opportunities, this conference is a must attend event for engineering, operations and management personnel in the electric energy industry. With 30 presentations, this conference covers issues in generation, transmission, distribution, safety, customer service, human resources and other management topics. The timely topics and breakout structure of the conference allow attendees to customize their education experience to focus on presentations and resources that address their needs. Ample time is also provided to network with industry peers and visit with exhibitors. The educational program will begin on Monday with a general session focused on the challenges and opportunities for electric utilities that are outlined in the FCC’s National Broadband Plan. Tom Magee, Partner, Keller and Heckman LLP, will discuss Smart Grid development, demand side management of electricity consumption, RUS loans to electric co-ops and a host
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elec tric energy | spring 2011
of proposed regulations regarding pole attachments. Doug Buresh, Sr. VP, Planning and Operations, Indiana Municipal Power Agency, will tackle the issue of politics versus reality when it comes to electric generation during the second general session. He will address the technological challenges and financial implications of meeting our future electricity needs under a variety of legislative futures while focusing on some of the biggest questions utilities are asking right now. Another big issue for the electric energy industry – workforce challenges – will be in the spotlight during Tuesday morning’s general session. Dick Blais is the Director, Preparation for Tomorrow, Southern Regional Educational Board (SREB). SREB is an education program intended to develop the nation’s future workforce, which is leading a 12 state consortium to develop and implement in each state a high school program of four courses; one for each grade 9-12 in career areas that are important to the nation’s future workforce needs. Along with these general session presentations, the event features educational breakout sessions in three tracks: generation; transmission and distribution; and management. The slate of generation track presentations will guide attendees through topics like unintended consequences
of wind generation, recent gas turbine advancements and steam turbine retrofit potential. Pam Graika, General Manager, Regional Operations, Xcel Energy, is one of the speakers in this track and will share strategies Xcel is using to deal with the planning and retirement of a plant, repowering the grid, transitioning to natural gas, impacts on operations and facilities, environmental issues and the effects on workforce. Look forward to details on automated demand response, transmission and distribution line inspection and patrols and renewable firming with hydrogen in the transmission and distribution track. A presentation from JD Linscott, Sr. Engineer, T&D Design, Lincoln Electric System, and Theresa Baker, Public Involvement Specialist, HDR, Inc., will cover LES’ strategic approach to turn standard public involvement into authentic public engagement when the utility was faced with building transmission in a highly dense and developed urban area. The conclusion of this effort resulted in 368 public comments and 547 individual project participants, and the Central Lincoln Reliability Project was approved as a 63% underground and 37% overhead line with a unanimous vote from the LES Board of Directors. The third track of presentations, focused on management, covers the gamut of high-level challenges faced by managers throughout the utility industry, including preparing for plug-in vehicle load, social media risks and rewards, a 30,000 ft. view of new arc flash standards and distributed energy storage. Elizabeth Firkins, Lead Superintendant, T&D Operations, Unisource, and Terry Nay, Corporate Safety Directory, Unisource, will provide an overview of a successful process implementation and highlight some key strategies for behavior based safety (BBS) processes, which have proven to be a very successful tool in significantly reducing injury rates. This event offers something for every person in the utility
industry, whether you need to make the right contacts or find the right answers. Utilities of all types of ownership participate including IOU, G&T, municipal, cooperative, and others. Vendors of all types are valued participants in the conference and community dialogue to improve operations and enhance customer service.
Golf Outing to Benefit RMEL Foundation Scholarships Enjoy a golf outing at Highland Meadows Golf Course on May 15th. The format will be a four-person scramble and proceeds will benefit the RMEL Foundation scholarship program.
Guests and Spouses are Welcome Bring your guest to the 2011 Spring Management, Engineering and Operations Conference. If your guest registers for the full conference, they are registered for dinner and the Champions Receptions on Sunday and Monday. If they register for an individual day, they will be registered for dinner and the Champions Reception for that day only. Guest registration prices simply cover the cost of dinner. All attendees will receive a continuing education certificate. The certificate provides professional development hours based on participation. For more information and to register for the Spring Management, Engineering and Operations Conference, go to www.RMEL.org or call (303) 865-5544.
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Distributed Electricity Energy Storage:
An Emerging Model By Doug Staker, Vice President, Business Development, Demand Energy Networks
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elec tric energy | spring 2011
he electricity supply system is a good example of a just-in-time inventory model. Supply must react to a change in demand with only a marginal buffer to absorb variations. Like any inventory system, the supply chain must be built to handle peak demand, which leaves the system underutilized during lower usage periods. Generation, transmission and distribution must each be sized to handle the peak seasonal requirements. The ability to increase the capacity of any of the three segments of the supply chain is challenging, and in some cases is restricted by public sentiment or law. Failure for supply to match demand causes system stability issues that result in voltage variation or even blackouts if the imbalance reaches extremes. Of the electric, gas and water utilities, only the electric systems operate without storage as a resource in the daily operation model. Gas and water utilities have the advantage of storing their commodity during low usage periods to meet the peak demand of the day or season. Electricity storage systems have been deployed and operated for some time but at a small scale of the energy supply system. An emerging focus on electricity storage solutions is driven mainly from the issues associated with renewable intermittency and system stability. Electricity storage has the ability to transform a just-in-time inventory system into a more managed inventory model with options to meet the dynamics of the daily energy cycle. The electric energy market is in a time of dynamic change. Load growth will increase as the economy rebounds. The ability to add new generation resources is a challenge from both capital and regulatory perspectives. Building new transmission systems is challenged by environmental reaction, regulatory uncertainty and the public’s general sentiment of “not in my backyard.” Renewable energy goals are testing the system’s flexibility to allow for intermittent resources to become part of the supply chain. Distributed solar generation on both commercial and residential buildings is gaining momentum and is drawing the attention of distribution system operators on how best to integrate these intermittent resources while maintaining local stability. Wind energy production that tends to occur overnight while the load diminishes is driving wholesale market pricing negative to get the renewable energy credits produced to meet trading demand. All of these issues are converging on utility operations and making it a real challenge to move forward. Energy storage has two key areas of focus that require two different modes of operation. A market for ancillary services has emerged where storage systems react
on 15-minute cycles to either store or release energy to help balance system stability. In the second model, energy is stored during off-peak periods and released to match demand during peak periods. While both are important emerging solutions, this article is focused on peak shaving and the value proposition around it—in particular, the benefits of distributed energy storage. A next generation of demand response, DR 2.0, is coming to the market that involves managing both load and generation to better optimize the capacity of the supply chain (generation, transmission and distribution). Distributed energy storage offers a new tool in the mix to help offset the challenges of building the supply chain to meet the peak while allowing renewable energy to become a scheduled resource that system operators can optimize and use to improve the overall value of grid infrastructure. The ability to move energy through the supply chain during off-peak periods and then releasing that energy during high demand will improve the utilization factor of the system without needing to grow capacity. Stored energy released locally can create a noninvasive, passive solution to a demand response event where from the supply side it looks like the event occurred but from users’ perspective, they have not reduced load but supplied part of their load with energy that was transported overnight and released during the peak. Participation rates could be 100 percent since the end consumer is not interrupted. Customer participation has traditionally been the challenge in most DR programs.
Electricity Storage Today
Proven storage solutions are in use today. Pumped hydroenergy storage systems were developed in the 1890s in Italy and Switzerland. More than 90 GW of pumped hydro are installed today worldwide and new systems are being developed. The key challenge in developing new pumped hydro storage systems is to find the right site that can supply the land necessary for both reservoirs as well as close proximity to the transmission system for delivery. Compressed air is a similar emerging solution that uses geologic features (salt domes or similar caverns) where air is stored and released to assist gas turbine production. Again, this solution is bound by the geographical parameters required for operation and the associated siting, permitting and public support challenges. Kinetic energy storage such as flywheels is being developed to support the ancillary services model for energy storage. These systems are in use today to support w w w. r mel .o rg
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Distributed Electricity Energy Storage
data centers in the form of uninterruptible power supply systems as they convert to standby generation during a grid outage. They are now being applied to the ancillary services market for load balancing. Battery-based energy storage systems have been proven and deployed across a wide variety of chemistries and technologies. Sodium sulfur, lead acid, nickel metal hydride and lithium ion solutions have been deployed in both ancillary services and peak shaving solutions. Flow batteries, which use two chemical reactants mixed across a fuel cell type of reactive chamber, have also been deployed in various grid systems to support system stability issues. Research and development in energy storage is on the rise. New chemistries and solutions are finding their way to markets that need a mixture of solutions to meet the operational challenges presented with growing loads.
Electricity Storage Models
Most current electricity storage is large-scale and centralized near the generation source to support base load and ancillary services. A new model that distributes the stored energy and matches it more closely to local load requirements is emerging. Distributing storage at the load centers allows the entire delivery chain to be optimized. The concept of caching content is well-established in video and Internet network system designs. Content like on-demand video is streamed to local set-top boxes during off-peak periods. If on-demand content was required to be delivered in real time through the network system, the distribution system would experience congestion or require that it be overbuilt to manage the peak traffic flow. Internet providers cache content and popular
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web pages in data centers that are distributed globally. If Google required the system to draw content from a single corporate data center, the response time would be impacted and the effectiveness of the Internet impaired. These systems have developed the use of storage in a way to balance the system operation and optimize the utilization factor of every component in the delivery system. So how can distributed energy storage help optimize the supply chain? Starting at the generation system, there is a difference in the efficiency of base load generators and generation dedicated to peak or variable loading. Heat rate ranges for different types of generation can vary from 6000 to 8000 BTUs per kWh for the most efficient base load generators versus 10,000 to 12,000 BTUs per kWh for variable output peak generators. Granted, heat rate is not the only measure for efficiency and the dollar per BTU differential for fuel types plays into the total cost, but power plants that can operate at high-capacity factors run more efficiently than plants that must adjust to variable output to meet peak demands. If distributed energy storage could create more base load during off-peak periods and create local capacity to shave the peak demand, the overall generation efficiency would improve as well as the blended capacity factor for a regional fleet of generation. Better utilization of the existing fleet can avoid or reduce the additional flexible capacity needed to meet load growth. One of the constraints that occur in the electric supply system is in transmission. Generation is often located near the energy source with access to transmission and water for cooling. Many transmission corridors have experienced load growth that has not been met with expanded capability. The ability for regional transmission organizations and Independent System Operators
to build new transmission is challenging at best. At costs between $1 million to $4 million per mile, it may be challenging to get regulatory approval but is not nearly as difficult as establishing right-of-way access and public approval. Building transmission is easy as long as it is “in someone else’s backyard.” The ability to create Dispatchable Load™ with distributed storage and move off-peak energy through the transmission system can relieve peak congestion and improve the utilization factor of existing infrastructure. The integration of wind power has similar challenges and can be optimized with distributed storage. In Japan, energy storage has been collocated with generation to support the intermittent nature of renewable energy. However, if transmission is a constraining factor, moving wind resources through the system during the peak may be moot. In some regions, wind tends to produce at night when demand is low and base generation is meeting the demand. In the Pacific Northwest during the spring, the Columbia Basin Hydro Power System has a requirement that maintains minimum stream flows to assist in salmon
and steelhead fish migration. This requirement is further constricted by dissolved gas levels that can be detrimental to the juvenile fish as they migrate to the Pacific Ocean. To keep the gas level in compliance, water cannot be released through the spillway and is passed through the turbines. The ability for the hydro system to be able to turn down its generation levels may be limited, and access to the grid becomes competitive. The Renewable Energy Certificate market allows wind producers to earn credits only when power is put onto the grid. During off-peak periods, wind generators
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Distributed Electricity Energy Storage
may pay other generation resources to shut down to create a production credit. In the spring of 2010, the cost of getting other resources to go offline went as high as 10 KWH. Wind producers paid to put energy onto the grid to earn the REC. Wind production in the region is planned to expand from its current level of 3000 MW and the ability of the hydro system to firm the added capacity will diminish. Distributed energy storage can effectively time-shift load by creating load when wind production is in excess and correlating wind production with peak demand. The last link in the energy supply system is the distribution system. As the utility market went through various levels of deregulation, the resolution about who would
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Distributed Generation Renewable Energy Biomass Utilization Supervisory Control and Data Acquisition
Employee Owned
own and operate the distribution system was unclear. As utilities waited for clarification on the rules of a “wires only” ownership model, some system enhancements and maintenance updates fell behind the load growth and many distribution assets are undersized for the load they carry today. During the past 20 years, while load has continued to grow, infrastructure investment nationally in the United States has been reduced. As a result, the infrastructure that was designed in the past is not necessarily designed to meet the load of today. Substation transformers may be overloaded in peak seasons; conductors may be undersized for the feeder circuits they support, increasing line losses; and distribution transformers may be undersized for the connected load they serve. Placing storage at the load centers can reduce peak loading and optimize stressed feeder circuits to a level within operational guidelines without replacing the existing distribution equipment. One of the key issues driving the interest in energy storage is the deployment of distributed photovoltaic solar generation. While distributed solar can reduce the load on a feeder or substation, a problem occurs when a cloud comes by and shades a neighborhood. Suddenly, distribution needs to make up for the loss of generation. As incentives continue to increase the amount of solar connected on a distribution feeder, system stability starts to become problematic. Distributed storage collocated at distribution transformers or even as part of the PV solar generation system can alleviate the intermittent challenges. One model of connecting PV directly to a battery system with the capability of time-shifting the production to coincide with peak demand is being studied for solar as possible demand-side management systems. In the Northeast, an urban investorowned utility is evaluating the use of
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storage connected directly with solar to alleviate connected peak load during summer air conditioning season. The IOU is looking to eliminate connected peak load, and the intermittent nature of solar without storage will not qualify for the DSM program since it would have to make up the load as clouds reduced the solar output. Distributed energy storage offers a new tool in the management of the electricity supply chain—but at what cost? It may be better to first understand its value and how the value proposition applies to various segments of the supply chain. One of the best research reports on the value of energy storage was produced by Sandia Labs. Co-authors Jim Eyer and Garth Corey have spent more than 10 years looking at how storage can be used to optimize the electricity supply chain. They have looked at 17
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direct benefits and nine indirect benefits to applying storage in solving power, capacity and energy challenges in the supply chain. The value varies between $500 and $7500 per KW for a system that has a 10-year operational life. This report is one of the most thorough compilations about energy storage and should be read by all involved in the electricity supply business. It is available online at http://prod. sandia.gov/techlib/access-control. cgi/2010/100815.pdf. The electricity supply chain will continue to evolve and will require all types of resources to be deployed. Distributed energy storage is becoming a recognized component that can unlock tremendous value of the underused existing integrated system assets. The ability to be strategic about where storage is located and solve specific system and load issues allows a fleet of these systems to be highly optimized and increases the aggregate value of the solution. Research and development will continue to drive innovations, and the cost of electricity energy storage will continue to decline and reach economic levels that will allow these systems to become commonplace in the daily operation of the next generation electricity supply system. Doug Staker has spent the past 25 years in the electric power industry. His career started in the hydroelectric sector and he spent 20 years with Itron, a world leader in Smart Grid technology. He is currently the vice president of business development at Demand Energy Networks, a company focused on developing distributed energy storage systems. Contact Staker at doug@demand-energy.com.
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Quantitative Easing as Alchemy:
Why Electric and Gas Utilities Should Hedge Their Capital Construction Risk Today By Mark Bridgers, Senior Consultant, Electric Utilities, Continuum Advisory Group
Executive Summary Fearing continued economic stagnation and high unemployment, the Federal Reserve recently announced a policy of “quantitative easing” as a panacea for these ills. There is broad diversity of opinion about whether using $600 billion to purchase bonds will work, even among the Federal Reserve System’s Board of Governors. “ [Quantitative easing] won’t push inflation to ‘super ordinary’ levels.” -Ben Bernanke, Federal Reserve System Board of Governors Chairman, Nov. 3, 2010
“ The Federal Reserve is not a repair shop for broken fiscal, trade or regulatory policies. Given what ails us, additional monetary policy measures are, at best, poor substitutes for more powerful pro-growth policies.” -Kevin Warsh, Federal Reserve System Board of Governors, Nov. 8, 2010
Many electric and gas utility leaders wonder how this policy will affect their ability to construct capital assets environments. What is certain is that inflation in the United States will increase, the dollar will depreciate in value and dramatic commodity price increases will take place. Unprepared utilities will be punished by these environmental changes in 2012 and beyond.
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Federal Reserve System The Federal Reserve controls the interbank borrowing or federal funds rate and pushed this rate down to essentially 0 percent. This rate is the cost for reserve system member banks to borrow funds and in theory lend these amounts to individuals and businesses. Exhibit 1.1 displays a 40-year period covering seven recessions and comparing the federal funds rate to one measure of inflation (the consumer price index) and the U.S. unemployment rate. The federal funds rate is much lower than it has ever been during this 40-year period, and both inflation and unemployment are at their historical extremes.
Exhibit 1.1
40-Year Comparison of Recessionary Periods to Federal Funds, Inflation (CPI) and Unemployment Rates 20.0% CPI FedFundRate Unemployment
15.0%
10.0%
5.0%
0.0% U.S. leaves gold standard
Paul Volcker takes office
Alan Greenspan takes office
Ben Bernake takes office
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-5.0%
Source: Department of Labor, Federal Reserve, compiled by Mark Bridgers
A low federal funds rate traditionally boosts economic growth but in this case, it has not sparked a higher growth rate or reduced unemployment. This rate indirectly affects interest rates that utilities or large industrial firms pay for financing. It is, however, related. When the federal funds rate goes down, the interest rates these firms will pay for various forms of credit can fall. The Federal Reserve effectively steps on the brake or accelerator for the economy with this tool.
Long-Term Credit Markets Adjustments to the federal funds rate tend to have low impact on the cost of longer-term forms of credit like Treasury and corporate bonds. The interest rate or cost for these credit instruments is more directly tied to longer-term economic risks faced by both the borrower and lender. Exhibit 1.2 presents the coupon rates for 1-year, 10-year and 30-year Treasury bonds over the past 40 years. Both 10-year and 30-year bonds are at the low end of their historical range while 1-year Treasury bills are at unprecedented low rates.
18% 16% 14% 12%
1-Yr Treasury 10-Yr Treasury 30-Yr Treasury
10% 8% 6% 4% 2% 0%
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Exhibit 1.2
1-Year, 10-Year and 30-Year Bond Coupon Rates
Source: Federal Reserve, compiled by Mark Bridgers
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Quantitative Easing as Alchemy?
these efforts will get the economy growing at a higher rate and reduce the unemployment rate. What is taking place is similar to a chemistry experiment. The Federal Reserve is going to pour a catalyst (the $600 billion) into a liquid (the economy) and see what happens. We already know that this catalyst will have a chemical reaction; we just don’t know if the $600 billion is enough catalyst to cause an observable or visual reaction—higher economic growth rates and more jobs. While the $600 billion is applied, there will be vigilant observation of the economy to see what happens. If little is observed over some time period, a decision about additional expenditures and pouring more catalyst into the economy will be made. The problem with this approach is no one can really know how much catalyst is necessary to have a visual reaction nor how long to wait to observe this reaction. Therefore, it is more likely we will get the mix wrong as there are many more wrong answers than there are right ones. If the A good catalyst needs to absorb the reactant molecules strongly Federal Reserve is wrong on the too much cataenough for them to react, but not so strongly that the product lyst side, we will experience high inflation and molecules stick more or less permanently to the surface. if we are very wrong, potentially hyperinflation. There are nearly 20 recent examples of hyperinBaCl2 (aq) + Na2SO4 (aq) 2 NaCl (aq) + BaSO4(s) flation over the past 50 years around the globe described at Wikipedia:Hyperinflation.1 Given that there is little more that the Federal Reserve can do with interbank borrowing rates, it has moved to a policy of quantitative easing. The $600 billion anticipated to implement this policy is created either by crediting the accounts of banks and brokerages from which it buys securities or printing currency through the Treasury. The net effect of either approach is the same: placing more currency into circulation. This is manufactured demand for bonds and an increase in the money supply. The first round of $75 billion was undertaken in November of 2010, a second round of the same amount occurred in December of 2010 and subsequent monthly expenditures are expected through June 2011. The result will be a more direct lowering of the long-term rates for bonds as higher rates are not necessary any longer to attract the dollar investment. The hope is that
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elec tric energy | spring 2011
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What Will It Mean to a Utility and Its Capital Construction Program? The bond markets are already anticipating higher inflation rates over the long term. Recent rises in oil and other commodity prices are precursors to a more competitive and volatile environment. Devaluation of the U.S. dollar has already started and is impacting some commodity prices. Uncertainties primarily revolve around the speed of economic recovery and growth and employment rates in the United States. Utilities of all types will face three certainties: increasing inflation in the United States, devaluation of the dollar outside of the United States and increasing construction commodity prices. All three will punish unprepared utilities operating in what is likely to be a slow-growth U.S. economy.
One example of inflationary expectations is found in a recent auction of inflation-adjusted securities sold at an anticipated negative return. This negative return is an overpayment for the face value of the security, like buying a $10 bill for $11. The buyers of these securities anticipate that the inflation adjustment mechanism of these bonds will be used in the future and result in higher interest payments. Essentially, investors expect to earn the negative return back with these higher interest payments over time. If inflation at higher rates does not come to pass, investors will simply have paid too much for these bonds, again like buying a $10 bill for $11. “The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in sparking inflation.�2
Inflationary Pressure Increasing
U.S. Dollar Devaluation
The likelihood of the United States experiencing hyperinflation, defined by the International Accounting Standards Board as greater than 25 percent annually, is low. The likelihood the United States will experience inflation at a rate higher than our recent history is very high. Roughly speaking, the United States has experienced annual inflation of less than 5 percent for essentially the last 30 years (Exhibit 1.1). In the late 1970s and early 1980s, the United States experienced much higher inflation than this level, and for several periods it approached or exceeded 10 percent. From a current economic standpoint, all of the factors that are likely to cause inflation currently exist and if they are not unwound in the next 12 to 36 months, the United States will enter a period of higher inflation. In point of fact, the quantitative easing policy is intended to create inflationary pressure to stave off the threat of economic stagnation defined as a very low growth rate of 1 percent or less. The policymakers at the Federal Reserve currently fear stagnation to a greater degree than they see future inflation as problematic.
Transactions or purchases denominated in dollars for goods or services created outside of the United States will result in the makers of these goods or services demanding more dollars for their efforts as the value of the dollar falls in relative terms to their home currency. Exhibit 1.3 displays the value of the U.S. dollar as measured in euros. Since the implementation of the quantitative easing policy on Nov. 3, 2010, the U.S. currency has lost value in comparison to the euro. The British pound sterling has followed a similar trajectory. Closer to home, the Brazilian real and Canadian dollar are also appreciating against the U.S. dollar, eroding the purchasing power of the U.S. currency. Overall, devaluation of the dollar makes U.S. exports more cost-competitive and attractive as well as making imports to the United States more expensive. Many construction commodities, particularly oil, petrochemical products and copper, are imported or internationally sourced through transactions denominated in dollars.
1.44 1.42 1.40
1 U.S. DOLLAR TO EURO
Exhibit 1.3
Value of the U.S. Dollar vs. Euro
1.38 1.36 1.34 1.32 1.30 1.28 1.26 10/1/10 10/3/10 10/5/10 10/7/10 10/9/10 10/11/10 10/13/10 10/15/10 10/17/10 10/19/10 10/21/10 10/23/10 10/25/10 10/27/10 10/29/10 10/31/10 11/2/10 11/4/10 11/6/10 11/8/10 11/10/10 11/12/10 11/14/10 11/16/10 11/18/10 11/20/10 11/22/10 11/24/10 11/26/10 11/28/10 11/30/10 12/2/10 12/4/10 12/6/10 12/8/10 12/10/10 12/12/10 12/14/10 12/16/10 12/18/10 12/20/10 12/22/10 12/24/10 12/26/10 12/28/10 12/30/10
1.24
Source: Federal Reserve, compiled by Mark Bridgers
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elec tric energy | spring 2011
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Commodity Price Increases The quantitative easing policy will have an immediate effect on the cost of construction commodities. The price of oil, which has risen to nearly $100 per barrel since November 2010 in part due to the change and anticipated change in the value of the dollar, is one example. The Economist on Jan. 15, 2011, pondered, “Given that the global recovery is at a very early stage, do high prices indicate that the world faces significant supply constraints … for years to come … prolonged inflation … tighten[ing] monetary policy … speculative activity in the futures market?”3 Changes in commodity, material and equipment costs will obviously impact construction budgets. In the vast majority of cases, utilities putting in place capital assets over the previous two years have observed savings on construction spending related to lower commodity, materials and equipment costs rather than lower labor or construction labor costs. In Exhibit 1.4, the drop in steel and nonferrous metal (such as copper) pricing since 2008 is obvious. Not shown in the chart is the high point of steel pricing in mid-2008 and the low point that occurred in early 2010 resulting in excess of a 40 percent reduction. “Higher pricing may cause a surge in headline inflation but [its] main effect will be to act as a tax on consumers [of these commodities].”4 Utilities, as one of the biggest consumers of construction commodities, have benefited over the previous two years but will see these gains eroded through this “tax” over the coming 24 to 36 months through rising commodity prices. Nonferrous metals like copper are already experiencing increases in pricing that are expected to accelerate.
INDEX BASE OF 100.0 IN 1982
Exhibit 1.4
Commodity Pricing Index All Construction Materials Steel Products Nonferrous (Copper, etc.)
+76% Nonferrous
270.0 230.0 190.0 150.0
+82% Steel
110.0 70.0
-3% Steel
Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
30.0
Source: U.S. Department of Labor, Bureau of Labor & Statistics, compiled by Mark Bridgers
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elec tric energy | spring 2011
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Conclusions The old quip “a stitch in time saves nine” offers insight into the window of opportunity facing U.S. utility companies to plan for and mitigate three risks: U.S. inflation Devaluation of the U.S. dollar Commodity price increases With these certainties are a host of relative uncertainties associated with the policy of quantitative easing. Utilities will be forced to navigate these challenges and search for real opportunities to control cost escalation.
Relative Certainties
Relative Uncertainties
• Increasing U.S. inflation starting in 2012
• Will a combination of U.S. deficits and debt unleash a disruptive impact on the economy or financial markets?
• Devaluation of the U.S. dollar, reducing the buying power of U.S.-centric firms
• Can commercial properties secure refinancing in 2011-2014 and avoid a second foreclosure crisis?
• Volatile and rising construction commodity prices for 2011 and the first half of 2012
• Will 2012 yield job growth that drives down unemployment?
• Lower U.S. financing cost during 2011 for qualified utilities
• Can industrial owners successfully mitigate significant commodity price increases via better internal processes and material substitution?
• Increasing financing cost in 2012 and 2013 in response to inflation
• How will regulation and energy-efficiency requirements affect design, construction and life-cycle cost performance of utility assets?
• Very slow job growth in 2011, resulting in unemployment unlikely to fall below 8%
• At what point will higher financing costs impact facility size, geographic location and go/no-go decisions strangling utility demand for capital asset construction?
• Increasing competition among U.S. firms for resources of all types from high-growth economies of Brazil, China, India and the Middle East While this writer places little faith that the Chinese governmental authorities have the best interests of the United States at heart, their perspectives on the quality of U.S. government debt are relevant as they are currently the largest debt holder. The Chinese ratings agency Dagong scorned quantitative easing as “a practice resembling drinking poison to quench thirst. … In essence the depreciation of the U.S. dollar adopted by the U.S. government indicates that its solvency is on the brink of collapse.5” Federal Reserve policy, industry regulation, financial and banking reform, and most importantly, a return to robust economic growth in the United States will all dictate whether the nation is consuming “poison” or nourishment. Prudent utility leaders will take action today and ensure they make a “stitch in time.”
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elec tric energy | spring 2011
Mark Bridgers is a principal with Continuum Advisory Group, specializing in driving transformation of the capital construction process. He can be reached at (919) 345-0403 or mbridgers@ContinuumAG.com. 1
yperInflation, Wikipedia, http://en.wikipedia.org/wiki/Hyperinflation, H downloaded Jan. 2, 2011.
2
E ddings, Cordell, and Kruger, Daniel, “Treasury Draws Negative Yield for First Time During TIPS Sale,” Bloomberg, Oct. 25, 2010.
3
uttonwood, “Material Concerns: Commodity Prices are Surging at a B Very Early Stage of the Cycle,” The Economist, Jan. 15, 2011, p. 82.
4
Ibid.
5
u, Sinan, and Du, Mingyan, Surveillance Report for Sovereign Credit L Rating the United States of America, November 2010, p. 8.
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27
Winds of
Change Developers and electric utilities
building new wind generation and transmission are learning how a more sustained and coordinated outreach effort can help smooth the way for project delivery. By Peter Castles, Public Involvement Manager, HDR, inc. and Emily Siedschlag, Public Involvement Specialist, HDR, inc.
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elec tric energy | spring 2011
hen it comes to developing new, large-scale energy infrastructure projects, utilities and developers are facing a climate of increased public scrutiny, suspicion and even outright hostility. This is especially true for utility-scale wind generation projects and transmission facilities that are necessary to carry new sources of renewable energy to often-distant population centers. Part of what fuels public emotion is the vast scale of these projects—with wind turbines towering above previously unfettered rural landscapes and new transmission wires stretching across the horizon. And with nearly half of the states now having adopted renewable portfolio standards, more and more projects are getting pushed through the development pipeline, bringing inevitable impacts and conflicts with communities that feel little local control in the matter. These changes can make for some strong theater during public meetings and hearings, often resulting in lopsided, negative press. Public fervor and frustration are also fed by the Internet, where web-surfing citizens can cherry-pick any number of “facts” or arguments that reinforce their existing doubts and fears. When it comes to issues of “wind and wires,” a cursory search online reveals a treasure trove of misinformation, myths and outright falsehoods. Sure, the real story is out there somewhere, too, but it certainly isn’t easy to find among the clutter of criticism, anecdotes and diatribes. Of course, there are many other factors contributing to today’s challenging project development environment. Regardless of the specific causes, it is how utilities and developers respond to these challenges that determines the outcome of proposed projects. That is where we are beginning to see some real—and very necessary—change.
Difference-Making at Different Stages More than ever before, wind and transmission developers—both public and private—are adopting proactive, collaborative and responsive outreach approaches to help ensure project success and prevent risky and costly development delays (or worse, cancellations). Gone are the days of doing only what is required by the regulatory approval process. Those taking a more holistic, strategic and continuous approach to stakeholder engagement are finding it easier to foster and maintain project understanding, acceptance and support among affected communities. In addition to understanding what motivates public resistance, developers of wind and wires projects are learning how to use proven and emerging best practices for outreach throughout all stages of the planning and development process. This begins with predicting potential project impacts and opposition during the earliest stages of feasibility study. Once a formal project is proposed, development teams then begin planning a broader outreach program to reach communities and stakeholders. Finally, with development under way,
teams start acting to implement specific engagement measures during siting/routing, regulatory review and construction. We will discuss some ways to approach each of these phases as well as look at key difference-makers and lessons from wind and transmission projects. Some of these insights are unique to wind and wires projects, while others have more general application.
Prediction = Prevention Before there is an official project to speak of, development teams remain reluctant to focus on outreach strategy. This is understandable—sometimes it’s just a matter of organizational policy; other times it comes down to finalizing the economics and feasibility. Whatever the reason, opportunities are often lost at this critical early juncture, when teams should be defining how potential community issues and obstacles may affect the outcome of a project. Once a proposed project starts to take shape after initial siting and definition of the project area, teams should start forecasting the possible impacts to landowners and communities, gauging where those impacts could cause potential opposition, and planning key messages and responses to mitigate concerns. As early efforts are made to identify key landholders and stakeholders, this is also a good time to set up a master stakeholder database, preferably one that is sufficiently robust to allow project teams, via a secure web interface, to remotely input and access contact information, meeting notes, action items, red flag issues and other details. If internal staff resources are lacking or overburdened, it is not too early to get an outreach specialist on board to help teams chart the way forward. Getting expert help involved sooner rather than later can be a difference-maker in terms of preventing negative consequences from developing. Teams that fail to mobilize outreach resources until problems are threatening the project may find it hard to rectify the situation, with the chances for successful project delivery diminishing.
Early Engagement Sets the Tone While it doesn’t make sense to conduct a broad (and costly) public outreach effort before there is a defined project, meeting informally with a few key stakeholders is often a good place to start a productive dialogue. These conversations will happen eventually anyway, so why risk waiting until the rumor mill is churning and potential opposition is forming? These early talks will help reveal what it is going to take to make the project clearly understood, build community acceptance, and get the project approved and built. These early interactions also set the tone for the rest of project development. Even if there aren’t a lot of details to share with stakeholders at this stage, it may be worth taking the opportunity to simply get acquainted and listen. The earlier teams engage stakeholders, the sooner they will w w w. r mel .o rg
29
The towering presence of wind turbines on rural landscapes often prompts resistance from nearby landowners and communities who fear that visual impacts and other concerns may affect their property values and quality of life.
be able to identify and address key concerns that might otherwise cause problems down the line (or even raise red flags about the viability of a particular site, parcel or route). Teams should also take care not to exclude those who, at first glance, may be considered second-tier stakeholders, such as landholders just outside project boundaries. Just because they are not as directly impacted (or benefited, in the case of wind farms) doesn’t mean they can be safely ignored. For example, the people who own small parcels within a wind farm footprint often don’t have enough land to host turbines, which means developers might not contact them until they have talked to the larger landowners. But if the small landholders start hearing about the project through the grapevine (and who is getting paid) and not from the developer, chances are they won’t be waving the flag for the project but, rather, waving their fists at the public meetings and hearings. Early miscues like this can create highly motivated opponents who then fight the project for the duration—even after it gets built (if it gets built). Despite these kinds of clear risks, it may be difficult for some agencies or developers to understand why they would want to expend more effort and funds to engage stakeholders early on when it is clearly outside the requirements of the regulatory process. The unfortunate reality is that the regulatory review process is an inadequate arena for building true stakeholder involvement, collaboration and support. Project developers today must look not only at what the process legally mandates but also at what projects logically require for successful delivery. In the end, waiting to engage stakeholders until required by regulatory milestones is simply not worth the gamble, especially when millions in development costs will be at risk. There are no do-overs. Once stakeholders or communities start to turn against a project, it is extremely difficult to recover.
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elec tric energy | spring 2011
When we are brought into projects midstream, we have found that options for effective outreach are much more limited. If little has been done to distribute accurate project information and provide engagement opportunities to the broader public, community members are more susceptible to opponents’ negative messages and misinformation. With a lot of emotion and distrust at play, choosing the type of communications and the appropriate meeting format is critical to future success. Even late in the game, efforts to bring balance back to the public debate can still be effective through such tools as key messaging, media briefings, presentations to key groups and mobilizing project supporters to write letters and attend hearings. But when teams wait too long to ask for help, no amount of outreach can reverse the already-entrenched sentiment of an organized opposition. The bottom line is that by taking the initiative early, utilities and developers can build the understanding, trust and alliances that will help projects survive the inevitable speed bumps in the marathon process of development and regulatory review.
Planning for Broader Outreach As stakeholder identification and early dialogue continue during initial project development, a foundation for broader outreach will begin to emerge. As part of these early exchanges, development teams should look to cull insights that will help them craft the right approach for informing and engaging the communities at large. This input can provide strategic insights about what level of collaboration is possible or expected, which communications tools are likely to be most effective and
A Few Media Tips Project developers should tout project benefits and counter misleading or misinformed anti-project views via local media: Meet proactively with local reporters and editors, either informally or at editorial board briefings. Don’t always wait for them to come to you. Request the opportunity to pen a guest editorial. Offer to sit on a panel discussion hosted by an area newspaper. Encourage participating landowners and supporters to write letters to the editor. Im mediately follow up on unbalanced or erroneous coverage, and set the record straight. Tactics like these require sustained effort but can help turn media coverage in a more objective direction almost immediately.
those goals. Project teams that go through the motions of what issues may be most important to the community. By implementing the standard outreach toolbox often don’t understanding the questions people are asking about the bother to ask, “How is this tool going to help us get there?” project, teams can start to gather the facts and craft the The key is to take the time to create a plan that sets both messages that will provide the right answers. goals and tactics; shows how tools will achieve results; Community issues and preferences regarding project and provides targets or mechanisms for measuring desired communications can be collected through a simple stakeresults, such as community acceptance, positive/balanced holder survey card or questionnaire that collects input on media, support at hearings and elected officials’ support. key issues and concerns; preferred meeting formats, locations and times; noticing methods; multicultural outreach needs; and other items. All of this feedback will help teams develop a responsive strategic communications and outreach plan, one that typically includes a combination of meetings, materials, messaging, media and other proven methods to educate, inform, engage and even help manage expectations. These plans can be simple or complex, depending on the reach of the project and the characteristics of the affected communities. But they are all built around the common sense notion that providing useful knowledge to the public will help promote a clear and positive understanding of the project. While there are countless ways to create outreach plans, the most effective plans are those that utilize a diverse set of tools and tactics applied consistently and constantly. Plans that get results have a realistic framework, sufficient funding and flexibility that allow teams to adjust strategy and tactics to O pen house meetings staffed by technical experts and third-party resource specialchanging priorities. ists are instrumental in helping communities understand the characteristics, benAn effective outreach program doesn’t efits, and potential impacts of wind and transmission projects. have to be all things to all people, but it does need to cast a wider net these days to carry credibility in the community. To succeed, the plan must also be informed by a confident Again, this means that utilities and developers should grasp of situation and context. So, as a matter of best not rely solely on the regulatory-driven public process as practice, the strategies that utilities and developers create, their primary outreach venue. It simply provides too little the tools they use and the messages they impart must reflect opportunity for communities to understand the project and an understanding of the community; respond to stakeholder participate in its development. interests, needs and preferences; and help realize the specific outcomes set as goals when preparing the plan. Outreach for wind energy and transmission projects often varies in approach because of the obvious differences in project The outreach and communications tools that projects scope and reach. While the turbines of a wind farm are typically utilize these days are increasingly varied and sophisticated. clustered in one area, affecting at most one or two rural From newsletters to web sites, open houses to hearings, fact communities, long-haul transmission projects typically pass by sheets to civic presentations, advisory groups to editorial or through numerous communities and traverse several counties board briefings, social media to podcasts, hotlines to ethnic (or even states). The logistical (and financial) obstacles to outreach—the list keeps growing. conducting methodical grass-roots outreach in every community But tools are most effective when they are deployed to means that transmission development teams must rely more on achieve specific goals. Good outreach planning clearly broader outreach tools, such as regional public meetings and and simply connects the overall goals of the project to the podcasts, project web sites, email blasts and media noticing. specific outreach strategies and tactics that will help achieve
Goals Before Tools
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Message Management One outreach tool that should be part of any outreach plan is key messaging. More and more, strategic messages, talking points and the effective use of facts and credible third-party resources are proving to be key differencemakers in the development and defense of energy projects. Messaging helps ensure that project teams are speaking consistently and with a unified voice, whether in media interviews, informal discussions or at public hearings. While some of these messages must address valid community concerns and debunk myths, the most important messages are those that clearly lay out the many important benefits of the project (such as system reliability, energy security, local economic benefits and environmental benefits). Simply put, a strong case must be made that demonstrates how these benefits outweigh the potential Transparency means impacts. Peer-reviewed communicating with science, studies and evidence affected landowners should also be referenced in talking points with media, and communities elected officials, supporters before project areas or and the general public.
Tips for Transparency
routes are identified, whenever possible.
T eams should refrain from showing lines on a map at public meetings until these affected landowners have been informed and engaged. Teams should be open to making changes if through outreach they learn something that would justifiably affect the decisions they make. R emember, once people determine you have not listened to them, they assume you never will.
32
Putting Plans into Action and Working the Middle Ground Good outreach planning is worthless without smart execution, but putting plans into action is not just a simple matter of deploying tools. Communications strategies are also a key component. For example, development teams can get bogged down in expending a lot of time and energy trying to win over those strongly opposed to a project. While the intentions behind these efforts are enviable, the results are usually disappointing, with most opponents refusing to budge. Once it becomes clear that a project opponent is unlikely to change position, regardless of how much
elec tric energy | spring 2011
L ong-haul transmission projects typically affect numerous communities. Understanding community triggers and planning scenarios can prevent siting a transmission line route near sensitive features and constraints such as schools, new housing developments, or parks and recreation areas.
teams address the opponent’s concerns or make concessions, it is time to shift focus to the all-important “middle ground.” In other words, teams should look for reasoned voices in the community who can discuss the project from an objective standpoint. The dialogue with critics should continue, of course, but not at the expense of these folks in the middle who are still on the fence and seeking information—information that can help them understand why the project is necessary and how it will provide benefits. As a common sense outreach strategy, working the middle is a simple and proven method for building public acceptance and support. One of the best ways to reach people before they have made up their minds on a project is to host local workshops—usually right after project announcement— that feature not only project materials and staff, but also third-party resources and issue experts who lend outside credibility regarding issues such as health and safety, environmental impacts, property values and economic benefits. Often these third-party resources can be local or regional academics, scientists, right-of-way professionals and economists.
Consistency Breeds Success As mentioned earlier, message consistency helps the public and stakeholders know what they are dealing with. But equally important is who they are dealing with. Ideally, the main point of contact for a project should consistently be the same person, whether a project manager or communications specialist. (On larger projects, it is sometimes necessary to have two or more contacts.) When people come to open house meetings,
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that wind energy, as a send emails or make phone still-emerging industry, calls, seeing or hearing and transmission, with its from the same person they have complex planning and regulatory spoken with in the past helps build a process, elicit little clear underrelationship of trust and familiarity. standing among the general public. Consistency is also important for the Taking the time to understand comThat is why utilities and developers regulatory process as a steady outreach munity triggers, current community must always recognize the key approach helps create a stronger role outreach plays in getting new record. During the transmission layout and future community planprojects built. Through all phases of routing process, for example, docuning scenarios can prevent plandevelopment, they must continue to mentation demonstrating consistent ning a transmission line route near use and grow best practices that are outreach and the input obtained along proven difference-makers in helping the way helps show how and why a sensitive features and constraints win project acceptance and support. utility or developer is proposing a such as schools, new housing decertain route. The ability to show who velopments, or heavily frequented Peter Castles is a senior Public participated, when they participated, Involvement Project Manager with how they provided input and how parks and recreation areas. 16 years of experience in conducting their input was used within the routing communications, outreach, and process is critical in moving the project public/media relations programs forward through permitting. for local, state, federal, and commercial clients. He can be Throughout a consistent, well-planned outreach reached at Peter.Castles@hdrinc.com. approach, utilities and developers will gain greater understanding of their communities. The key is the Emily Siedschlag is a Public Involvement Specialist with ability to be flexible and responsive to changing realities a background in environmental science and a previous as a project evolves. focus on National Environmental Policy Act (NEPA) permitting, she transitioned to public outreach on several large transmission line projects in the Midwest. She can be Now for the tough question: When is outreach “done”? reached at emily.siedschlag@hdrinc.com. Some think outreach is over when a project gets the approvals it needs to be built. But smart development teams understand that outreach should continue, at some level, through construction and into operation. After all, approvals to build and operate facilities are never unconditional. Agencies can always delay construction and Creating a transparent siting or routing process from the suspend operations, if given a good reason (or legal ruling). beginning is crucial. Without it, comments such as these are But communities that feel they are still being informed and engaged after ground is broken are more likely to accept likely to be heard when publicly unveiling project footprints the project and not search for ways to shut it down. or routing alternatives: The simple awareness that construction and postconstruction communications are important is yet another “ What are these lines on the map drawn right indication of the shift toward a more proactive, responthrough (or around) my property? This looks like a sive and collaborative outreach model for utilities and done deal already and you haven’t even bothered developers alike. Granted, it has been a gradual shift, to come talk to me!” but one that seems irreversible. Challenges remain, of course. Today’s public is often “ It seems you’ve known where these lines/turbines more sensitive about development in their communities—and eminently more capable of derailing projects. are going the entire time!” For wind and wires projects, in particular, successful “W hy bother asking us for input now if you already project development is still made difficult by the fact
Are We Done Yet?
Siting and Routing Transparency
have these routes/sites all figured out?” 34
elec tric energy | spring 2011
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A Decade of Power Plant Simulation at KCP&L’s La Cygne Station By Kenneth Luebbert, P.E., Principal Performance Engineer, Kansas City Power & Light
Introduction In the l ate 1990s, K a nsa s Cit y Pow er & Light undertook a m a jor control s conversion at both of its La Cygne units to convert from the traditional benchboard controls to a computer-based distributed control system. Plant management understood that this conversion represented both a significant technical change and a very concerning psychological change for an operations and technical staff that was just starting to be widely exposed to computers in the workplace. As such, the controls team determined that highfidelity plant simulators were necessary for the following critical functions of the controls conversion: Control permissives checkout to ensure control logic correctly converted Control tuning of critical loops to ensure proper unit control Complete startup of unit(s) to ensure all controls function correctly Complete shutdown of unit(s) to ensure all controls function correctly Extensive tuning of irregular events such as unit runbacks on loss of major equipment
La Cygne Station – Joint Ownership: KCP&L, 50 Percent; Westar Energy, 50 Percent In-Service Date: Unit 1, 1973; Unit 2, 1977 Capacity: Unit 1, 800 MW; Unit 2, 710 MW Unit Type: Unit 1, Westinghouse Steam Turbine/B&W Boiler; Unit 2, GE Steam Turbine/B&W Boiler Fuel: Powder River Basin Coal 36
elec tric energy | spring 2011
In addition to the controls tuning, the high-fidelity simulators provided the following benefits to the plant staffing: Platform for operators to familiarize themselves with computer screen-based human machine interfaces as opposed to the traditional benchboard interface Platform for extensive operator training prior to unit conversion to DCS; operators can repeatedly perform operations that they may rarely have the opportunity to perform on the actual unit P latform for technicians to familiarize themselves with the new DCS-based control processors In short, the high-fidelity simulators were viewed as critical to the success of the controls conversion project.
High-Fidelity Simulators
The power plant simulators at La Cygne Station are stimulated high-fidelity simulators, meaning they use the same control hardware with the same control consoles and screens and the same multifunction processors as the actual unit. Therefore, for a control operator, the simulator is nearly identical to the actual unit. The simulation logic resides on additional servers that are connected to the control system via an application programming interface. The control logic resides on multifunction processors that are identical to the processors used on the actual units. By sharing nearly identical control hardware with the actual units, the simulators provided an ideal situation for control hardware interconnectivity checkout. In addition, the simulators provided a realistic environment for technicians to perform critical functions such as control logic downloads, multifunction processor changeouts and live control logic tuning.
Ongoing Usage and Upkeep One of the main concerns that all utilities have when purchasing unit simulators is that they will not be maintained and used over the life of the unit(s). This has not been the case for the La Cygne simulators, which have been in continual use and have provided extensive value to the plant for the last decade. Their current uses include: Training of new control operators and plant equipment operators Refresher training for existing operators Platform for testing new control algorithms and unit changes Platform for engineers to test and validate potential capital upgrade projects Platform for unit operation training of personnel that may not normally get unit operation training (such as engineers and maintenance personnel) La Cygne maintains the relevancy of the simulator by providing continual upkeep. On a yearly interval, all of the control and unit modifications are loaded into the plant simulators, which are then tuned to ensure that they are still
in lock step with the unit. Furthermore, every four to five years, the simulators are upgraded to the latest version of the simulation software. In addition, the controls software on the simulators is maintained at the same revision as the controls software on the actual units.
Future The La Cygne power plant simulators will play a critical role in the upcoming environmental plant upgrade. Both La Cygne units will be retrofitted with a an SCR, scrubber and baghouse to facilitate greatly reduced air emissions. In addition, both units will have a complete DCS replacement and upgrade. The simulators will be augmented with the SCR, scrubber and baghouse additions before the actual unit upgrades. In addition, the simulators will be converted to the same state-of-the-art control system that is chosen for the actual units approximately one year prior to the actual unit outages. This will allow for the simulators to once again provide a platform for testing and validating controls before the unit outage(s). Furthermore, as the simulator logic has been continually tuned to match to the actual unit transient response characteristics over the last 10 years, the simulator will provide a critical platform for tuning the state-of-the-art control system that is selected for the boiler and steam turbine portion of the plant. From a training perspective, the simulators will allow for plant operators to train on the new units with the additional air quality control equipment and upgraded controls for approximately one year before the actual unit(s) transitioning. This should result in shorter outages and smoother postoutage operation. In addition, this should facilitate the familiarity of operations and technicians with the new HMIs and control logic.
Conclusions La Cygne’s unit simulators have provided a state-of-theart operator training platform for allowing plant operators, engineers, technicians and other staff to perform the same control actions and see the same results as the actual plant for the last decade. In addition, they have stood the test of time and are as valuable today as they were when they were installed. Furthermore, KCP&L is extending this value by providing a major update and augmentation of these simulators as part of the plant air quality capital upgrade project. This will ensure that the La Cygne simulators are an invaluable tool for the plant for the next decade as well. Kenny Luebbert is a principal performance engineer with Kansas City Power & Light. Prior to this, he was lead instrumentation and controls engineer and lead mechanical engineer on the Iatan 2 Construction Project, one of the largest coal unit construction projects in the United States. Luebbert can be reached at Kenneth.Luebbert@kcpl.com. w w w. r mel .o rg
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member listings
1 ABB, Inc. 2 ABCO Industrial Sales, Inc. 3 Access Energy Cooperative 4 ADA Environmental Solutions 5 Alexander Publications 6 Alstom Power 7 Altec Industries, Inc. 8 AMEC 9 American Coal Council 10 Arizona Electric Power Cooperative, Inc. 11 Arkansas River Power Authority 12 Asplundh Tree Expert Co. 13 Associated Electric Cooperative, Inc. 14 Atchison-Holt Electric Coop 15 ATCO Noise Management 16 Ayres Associates 17 Babcock & Wilcox Company 18 Babcock Power, Inc. 19 Barry Electric Cooperative 20 Barton County Electric Cooperative 21 Basin Electric Power Cooperative 22 Bechtel Power Corporation 23 Black & Veatch Corp. 24 Black Hills Corporation 25 Black Hills Electric Cooperative 26 Black River Electric Cooperative 27 Boilermakers Local #101 28 Boone Electric Cooperative 29 Border States Electric 30 Brand Energy & Infrastructure Services 31 Brooks Manufacturing Company 32 Burns & McDonnell 33 Butler Public Power District 34 C.I.Agent Solutions 35 Callaway Electric Cooperative 36 Carbon Power & Light, Inc. 37 Casey Industrial, Inc. 38 CBS Arc Safe 39 Central Electric Power Cooperative 40 Central Missouri Electric Cooperative 41 Central New Mexico Electric Cooperative, Inc. 42 Central Rural Electric Cooperative 43 CH2M Hill 44 Chariton Valley Electric Cooperative 45 Chimney Rock Public Power District 46 City of Alliance Electric Department 47 City of Aztec Electric Department 48 City of Boulder 49 City of Cody 50 City of Farmington 51 City of Fountain 52 City of Gillette 53 City of Imperial 54 City of Yuma 55 Co-Mo Electric Cooperative 56 CoBank
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57 Colorado Energy Management, LLC 58 Colorado Powerline, Inc. 59 Colorado Rural Electric Association 60 Colorado Springs Utilities 61 Colorado State University 62 Commonwealth Associates, Inc. 63 Consert Inc. 64 Consolidated Electric Cooperative 65 Continental Divide Electric Cooperative 66 Cookson Hills Electric Cooperative 67 Corporate Risk Solutions, Inc. 68 County of Los Alamos Dept. of Public Utilities 69 CPS Energy 70 Crawford Electric Cooperative Inc. 71 Cuivre River Electric Coop Inc. 72 Davies Consulting, Inc. 73 Deloitte 74 Delta Montrose Electric Assn. 75 DIS-TRAN Packaged Substations, LLC 76 Dowdy Recruiting LLC 77 E & T Equipment, LLC 78 E3 Consulting 79 East Central Oklahoma Electric Coop 80 El Paso Electric Company 81 El Paso Natural Gas Company 82 Electric Power Research Institute 83 Electrical Consultants, Inc. 84 Emerson Process Management 85 The Empire District Electric Company 86 Empire Electric Association, Inc. 87 Energy & Resource Consulting Group 88 Energy Reps 89 Engineering, Procurement & Construction, LLC 90 ENOSERV, LLC 91 Equal Electric, Inc. 92 ESC engineering 93 Estes Park Light & Power Dept. 94 Evonik Energy Services LLC 95 Exponential Engineering Company 96 Farmers Electric Coop Inc. (MO) 97 Foothills Energy Services Inc. 98 Fort Collins Utilities 99 Foster Wheeler 100 Fuel Tech, Inc. 101 Gascosage Electric Cooperative 102 GE Energy 103 Glenwood Springs Electric System 104 Golder Associates, Inc. 105 Grand Island Utilities 106 Grand Valley Rural Power Lines, Inc. 107 Great Southwestern Construction, Inc. 108 Grundy Electric Cooperative 109 Gunnison County Electric Association, Inc. 110 Halcrow
111 Hamilton Associates, Inc. 112 Hamon Research - Cottrell 113 Harris Group, Inc. 114 Hartigan Power Equipment Company 115 Hawkeye Helicopter LLC 116 HDR, Inc. 117 Heartland Consumers Power District 118 Heartland Solutions, Inc. 119 High Energy, Inc. (HEI) 120 High Plains Power, Inc. 121 Highline Electric Assn. 122 Hitachi Power Systems America, Ltd 123 Holy Cross Energy 124 Homer Electric Association, Inc. 125 Honeywell Process Solutions 126 Howard Electric Cooperative 127 Howell-Oregon Electric Cooperative 128 HSB Solomon Associates, LLC 129 Hughes Brothers, Inc. 130 IBEW, Local Union 111 131 Independence Power & Light 132 Indian Electric Cooperative, Inc. 133 Intercounty Electric Coop Association 134 Intermountain Rural Electric Assn. 135 ION Consulting 136 Irwin Industries, Inc. 137 J.L. Hermon & Associates, Inc. 138 Jemez Mountains Electric Cooperative, Inc. 139 KAMO Power 140 Kansas City Board of Public Utilities 141 KD Johnson, Inc. 142 Kiamichi Electric Cooperative 143 Kiewit 144 Kit Carson Electric Cooperative 145 Kleinfelder 146 Klondyke Construction LLC 147 KVA Supply Co. 148 La Junta Municipal Utilities 149 La Plata Electric Association, Inc. 150 Laclede Electric Cooperative 151 Lake Region Electric Coop Inc. 152 Lamar Utilities Board 153 Laminated Wood Systems, Inc. 154 Lane-Scott Electric Cooperative, Inc. 155 Lauren Engineers & Constructors 156 Lewis Associates, Inc. 157 Lewis County Rural Electric Cooperative 158 Lincoln Electric System 159 Longmont Power and Communications 160 Loup River Public Power District 161 Loveland Water & Power 162 Luminate, LLC 163 M & A Electric Power Cooperative 164 Macon Electric Cooperative 165 Marsulex Environmental Technologies 166 Merrick & Company
Resourceful
POWER GENERATION POWER DELIVERY RENEWABLE ENERGY
The power industry is undergoing fundamental restructuring. Are you prepared to navigate the changes? HDR can help you understand regulatory planning and risk uncertainties, generation constraints, transmission bottlenecks and technology changes. With planning, natural resources, land rights, engineering and construction management professionals under one roof we’ll give you unprecedented access to integrated teams—experts delivering seamless execution, from conception to construction. For more information, contact energy@hdrinc.com. Sound decisions made through understanding the business, your risk, and technology. That’s energy understood.SM
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member listings cont’d
167 Missouri River Energy Services 168 Missouri Rural Electric Cooperative 169 Morgan County Rural Electric Assn. 170 Mountain Parks Electric, Inc. 171 Mountain States Utility Sales 172 Mountain View Electric Assn. 173 Mycoff, Fry & Prouse LLC 174 Navigant Consulting 175 Navopache Electric Cooperative, Inc. 176 Nebraska Public Power District 177 NEI Electric Power Engineering, Inc. 178 New-Mac Electric Cooperative 179 NMPP Energy 180 Nooter/Eriksen, Inc. 181 Norris Public Power District 182 North Central Missouri Electric Cooperative 183 North Platte Light & Power 184 Northeast Community College 185 Northeast Missouri Electric Power Cooperative 186 Northeast Oklahoma Electric Coop Inc. 187 Northwest Rural Public Power District 188 NV Energy 189 NW Electric Power Cooperative 190 Occupational Safety Councils of America 191 Omaha Public Power District 192 Omnicon Technical Sales 193 Osage Valley Electric Cooperative 194 Osmose Utilities Services, Inc. 195 Otero County Electric Cooperative 196 Ozark Border Electric Cooperative 197 Ozark Electric Cooperative 198 Ozarks Electric Cooperative Corp 199 PacifiCorp 200 Panhandle Rural Electric Membership Assn. 201 PAR Electrical Contractors, Inc. 202 PCS Mobile 203 Peak Power Engineering, Inc. 204 Pemiscot-Dunklin Electric Cooperative 205 Peterson Co. 206 Pike Electric, Inc. 207 Pioneer Electric Cooperative, Inc. 208 Pipefitters Local Union #208 209 Platte River Power Authority 210 Platte-Clay Electric Cooperative 211 PNM Resources 212 Poudre Valley Rural Electric Assn. 213 Power & Industrial Services Corp 214 POWER Engineers, Inc. 215 Power Equipment Specialists, Inc. 216 Power Pole Inspections 217 Power Product Services 218 PowerQuip 219 Provo City Power
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220 Quanta Services 221 R.W. Beck, An SAIC Company 222 Ralls County Electric Cooperative 223 Raton Public Service 224 REC Associates 225 Reliability Management Group (RMG) 226 Reliable Power Consultants, Inc. 227 Rocky Mountain Generation Cooperative, Inc. 228 S&C Electric Company 229 Sabre Tubular Structures 230 Sac Osage Electric Cooperative 231 Safety One Inc. 232 San Luis Valley Rural Electric Cooperative 233 San Miguel Power Assn. 234 Sangre De Cristo Electric Assn. 235 Sargent & Lundy 236 Scientech 237 Se-Ma-No Electric Cooperative 238 Sega, Inc. 239 SEMO Electric Cooperative 240 SENER Engineering and Systems, Inc. 241 The Shaw Group 242 Sho-Me Power Electric Cooperative 243 Siemens Energy Inc. 244 Sierra Electric Cooperative, Inc. 245 Sierra Southwest Cooperative Services, Inc. 246 SNC-Lavalin Constructors Inc. 247 The Socorro Electric Cooperative, Inc. 248 South Central PPD 249 Southeast Colorado Power Assn. 250 Southeast Community College 251 Southern Iowa Electric Cooperative 252 Southern Pioneer Electric Company 253 Southwest Electric Cooperative 254 Southwest Generation 255 Southwest Transmission Cooperative, Inc. 256 Southwire Company 257 SPIDAWeb LLC 258 Springfield Municipal Light & Power 259 SRP 260 Stanley Consultants, Inc. 261 Stuart C. Irby Company 262 Sturgeon Electric Co., Inc. 263 Sulphur Springs Valley Electric Cooperative 264 Sunflower Electric Power Corporation 265 T & R Electric Supply Co., Inc. 266 Technically Speaking, Inc. 267 Thomas & Betts Steel Structures Division 268 Three Rivers Electric Cooperative 269 TIC - The Industrial Company 270 Total-Western, Inc.
271 Towill, Inc. 272 Trachte, Inc. 273 Transformer Technologies 274 Trees Inc 275 Tri-County Electric Cooperative 276 Tri-State Generation & Transmission Assn. 277 Trimble 278 Trinidad Municipal Light & Power 279 UC Synergetic 280 Ulteig Engineers, Inc. 281 UniSource 282 United Electric Cooperative 283 United Power, Inc. 284 University of Colorado 285 University of Idaho Utility Executive Course College of Business and Economics 286 URS Corporation 287 Utility Telecom Consulting Group, Inc. 288 Valmont Newmark, Valmont Industries, Inc. 289 Verdigris Valley Electric Coop Inc. 290 Victaulic 291 Wärtsilä North America, Inc. 292 Waukesha Electric Systems 293 Webster Electric Cooperative 294 West Central Electric Cooperative (MO) 295 West Plains Engineering, Inc. 296 Westar Energy 297 Western Area Power Administration 298 Western Cultural Resource Management, Inc. (WCRM, Inc.) 299 Western Line Constructors Chapter, Inc. NECA 300 Western Nebraska Community College 301 Western United Electric Supply 302 Westwood Professional Services 303 Wheat Belt Public Power District 304 Wheatland Electric Cooperative 305 Wheatland Rural Electric Assn. 306 White River Electric Assn., Inc. 307 White River Valley Electric Cooperative 308 William W. Rutherford & Associates 309 WorleyParsons Group, Inc. 310 Wyoming Rural Electric Association 311 Wyrulec Company 312 Xcel Energy 313 Y-W Electric Association, Inc. 314 Yampa Valley Electric Association, Inc. 315 Zachry Holdings, Inc.
Tradition and Innovation—The Best of Both
The UEC Summit is an industry-driven executive education program designed specifically for utility leaders to provide comprehensive analysis of the industry’s top challenges and opportunities. The intensive three-day format combines some of the utility industry’s best leaders with a worldclass faculty, competency-based curriculum, and abundant opportunities for network building. The UEC Summit runs concurrently with the third week of the Utility Executive Course. (The 58th annual Utility Executive Course is June 6-23, 2011, on the University of Idaho campus in Moscow, Idaho.) Summit and UEC participants will join faculty, Advisory Committee, and staff on Thursday evening for a final banquet and dinner cruise on beautiful Lake Coeur d’Alene.
Admission
The UEC Summit is designed for experienced managers and executives. Utility industry leaders are invited to apply online at www.uidaho.edu/uec/ summit.
Details
Dates: Location: Phone: E-mail: Website:
June 20-23, 2011 The Coeur d’Alene Resort, Coeur d’Alene, Idaho 208.885.6265 uiuec@uidaho.edu www.uiuec.org
JUNE 20 - 23, 2011 Coeur d’Alene, Idaho w w w. r mel .o rg
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WECC’s Synchrophasor Program
is Boosting Grid Reliability B y D e s t o n S . N o k e s , I n d e p e n d e n t C o n s u lta n t, W e s t e r n E l e c t r ici t y C o o r di n a t i n g C o u n ci l
O
n Jan. 26, 2008, Bonneville Power Administration’s Big Eddy substation lost transformation near the northern terminus of the 3100 MW DC Intertie. Western control center operators subsequently observed oscillation, and after they reduced power on the DC Intertie by 500 MW, the oscillations appeared to have ceased. What the control centers couldn’t detect is that the oscillations only had been reduced by 50 percent, which is below an observable level by dispatchers using traditional energy management systems. However, in the California Independent System Operator’s control room as well as at Southern California Edison, the system oscillations could be detected, thanks to the use of synchrophasor data. A synchrophasor is a grid measurement taken by a piece of hardware that provides real-time information about the performance of electrical transmission systems. When the DC Intertie flow was reduced to 0 MW, the oscillations stopped. A project is well under way to expand the use of synchrophasors to improve the reliability of the bulk electric power grid that spans the West. Led by the Western Electricity Coordinating Council, the
Western Interconnection Synchrophasor Program is installing 250 to 300 new or upgraded phasor measurement units. WISP is tying the PMUs together with a secure communications network and is deploying the software tools needed to manage an increasingly complex power grid. “This is the largest electric transmission synchrophasor project in the country, and it provides a jumpstart the West needs in advancing this technology,” said Mark Maher, chief executive officer of WECC. WECC is one of eight regional entities in North What is a America, encompassing a synchrophasor? geographic area equivalent Synchrophasors are precise to more than half the United grid measurements now States. It is responsible for available from monitors called promoting electric system phasor measurement units. reliability and providing PMU measurements are taken a forum for coordinating at high speed, typically 30 to the operating and planning activities of its member orga120 observations per second nizations. WECC members, compared to one every 2 to 4 representing all segments of seconds using conventional the electric industry, provide technology. Each measureelectricity in 14 Western ment is time-stamped accordstates, two Canadian ing to a common time referprovinces and portions of ence. Time-stamping allows one Mexican state. synchrophasors from different utilities to be time-aligned (or synchronized). Combined, they provide a precise and comprehensive view of the entire interconnection. Synchrophasors enable a better indication of grid stress and can be used to trigger corrective actions to maintain reliability. ( Source: North American SynchroPhasor Initiative, www.NASPI.org)
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Synchrophasor technology also can provide the ability to see and manage the intermittent nature of renewable resources, and to deploy the ancillary services needed to solidify the changing nature of the West’s generation fleet. In addition, developing real-time controls to automatically take corrective actions will significantly increase the reliability of the interconnection and should release latent transmission capacity at very low cost. “The promise of synchrophasor technology is huge—an immense opportunity,” said Vickie VanZandt, WISP’s program manager. “This project is helping us implement a better, more flexible and more resilient grid.” Slated for completion in 2013, WISP started in 2009 when WECC received $53.9 million in funding from the Department of Energy. The funding, which was awarded under the American Recovery and Reinvestment Act’s Smart Grid Investment Grant initiative, matches dollars already committed by nine WISP partners in the West to extend and deploy synchrophasor technologies within their electrical systems. The total funding for WISP is $107.8 million. The wide-scale, collaborative effort includes eight cost-share partners in addition to WECC: Bonneville Power Administration, California ISO/California Energy Commission, Idaho Power Company, NV Energy, PacifiCorp, Pacific Gas & Electric, Southern California Edison and SRP. Nine additional invited entities have agreed to participate: Alberta Electric System Operator, Arizona Public Service, BC Hydro, Los Angeles Department of Water and Power, NorthWestern Energy, Public Service of New Mexico, San Diego Gas & Electric, Tri-State Generation and Transmission Assn., and Western Area Power Administration. The Western Interconnection has an existing network of 137 PMUs installed over the last three decades based on the individual decisions of utilities, system operators and balancing authorities. The value has been to time-synchronize power system disturbance data, which can then be analyzed to improve generator, transmission and load modeling. It also can be used to understand abnormal power system behavior in the stability-limited Western Interconnection. WISP is deploying 250 to 300 PMUs and is building the telecommunications network necessary to support a large-scale production synchrophasor system. The project also calls for the implementation of new synchrophasor applications for West-wide situational awareness, power system analysis and model validation. The synchrophasor technology then will be more available to integrate renewable resources, improve operators’ situational awareness of the status and vulnerabilities of the system in real time, and develop and implement real-time controls. Providing these situational awareness tools to system operators enables them to see power system vulnerabilities much better, and to minimize the risk of vulnerabilities evolving into a major disturbance or blackout.
The availability of synchrophasor data “is like going from an X-ray to an MRI of the grid,” said Terry Boston, chief executive officer of PJM. Specifically, WISP’s benefits include:
Large-Scale Outage Avoidance: Improving wide-area situational awareness and widearea controls can reduce significantly the frequency of large-scale, long-duration outages originating in the bulk power grid. Each outage that does not occur represents substantial savings to customers in terms of avoiding lost production and amenities. For large cities, a major outage typically has customer costs valued in the hundreds of millions of dollars or more.
Increased Transmission Utilization: Currently, transmission facilities are not used to their full capacity in the Western Interconnection because grid operators lack sufficiently granular, time-synchronized measurements of the flow of electricity throughout the transmission system; and automatic controls do not currently benefit from these wide-area measurements. When the program is implemented, available transmission capacity will be based, in part, on these precise, real-time measurements rather than on slower, coarser measurements or simulation methods such as transmission path nomograms. This will increase the effective capacity of selected congested lines and increase transmission asset utilization, thus lowering energy costs to consumers.
Increased Utilization of Intermittent Renewable Generation: An exciting component of WISP is improving the utilization of wind and other renewable generation. There is growing concern that transmission systems will not be able to absorb all the generation from wind, solar and other renewable generation, leading to a “spilling” of renewable generation to maintain reliability that would make renewable portfolio standards and greenhouse gas policy fulfillment more difficult and costly. Synchrophasor technology will improve the visibility of transmission, generation and load conditions. Therefore wind resources will be better used, increasing their capacity factors. Energy and Environmental Economics, Inc., a consulting firm retained by WECC, estimates the value of increased wind use conservatively at $323 million over 40 years. BPA is investing $22.5 million to deploy PMUs on its system—many at wind sites. “This technology will be very important for reliable and cost-effective integration of wind power in the Pacific Northwest,” said Dmitry Kosterev, principal planning engineer at the Bonneville Power Administration. w w w. r mel .o rg
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WISP At-A-Glance Recipient: Western Electricity Coordinating Council States: AZ, CA, CO, ID, MT, NM, NV, OR, SD, TX and WA BPA recently included a PMU requirement in its Generator Interconnection Standards. Several new wind power plants are constructed and energized with PMUs installed as a part of a monitoring package. According to Kosterev, BPA has been successfully using PMU data for power plant model validation since 2001. The PMU data benefits include real-time monitoring of power plant performance, verification of compliance with WECC model validation criteria and timely detection of control issues and failures.
Reduced Capacity Firming Costs for Intermittent Generation: Intermittent renewable resources typically have low, firm capacity values and as the penetration of these resources increases, the system must be augmented by firm capacity resources to maintain grid reliability. Since visibility of the intermittent resources is currently low, carrying a conservative amount of reserves is the current practice. The program will increase visibility of these resources, enabling a reduction in operating reserves.
ritical Infrastructure Protection and C Cyber Security: The new, private network architecture is not only scalable, it can accommodate the anticipated enhanced levels of cyber security and North American Electric Reliability Corporation Critical Infrastructure Protection controls. WECC believes this project represents the only proposed plans for reliable and secure wide-area control to enhance reliability and efficiency in the nation. BPA intends to deploy response-based stability controls by 2015 using synchrophasor data that will increase the stability limit of the California-Oregon Intertie, a major transmission path in the Western Interconnection.
Benefit
Minimum Value
Large-scale outage avoidance
$1,220,540,494
Increased transmission utilization on a major transmission path
$34,748,816
Increased utilization of intermittent renewable generation Reduced capacity costs for intermittent generation
$323,755,442
NERC Region: Western Electricity Coordinating Council Total Budget: $107,780,000 Federal Share: $53,890,000 Key Partners: Bonneville Power Administration, California ISO/ California Energy Commission, Idaho Power Company, NV Energy, PacifiCorp, Pacific Gas & Electric, Southern California Edison and Salt River Project Project Type: Electric transmission systems
Equipment 250-300 PMUs 50 PDCs T ransmission systems communication equipment
advanced applications Angle and frequency monitoring V oltage and voltage stability monitoring Post-mortem analysis O scillation energy and mode meter monitoring R eactive reserves monitoring and device control M odel baselining, validation and improvement P ath loading and congestion management
targeted benefits Deferred investment in transmission capacity expansions Reduced ancillary service cost
$307,735,069
Reduced wide-scale blackouts Increased electric service reliability
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Improved use of intermittent renewable generation
WISP’s Economic Benefit Energy and Environmental Economics, Inc. quantified the program benefits in the Western Interconnection. Its forecasts indicate the program has the potential to provide numerous economic benefits by improving reliability, operating efficiency, asset utilization, system planning and environmental impact. [Minimum forecast economic benefits associated with the program (present value more than 40 years using Year 2008 dollars). Since fall 2009, a project team led by WECC has been engaged in planning and implementing the integrated synchrophasor network. Last year, the technical framework was developed for the wide area network PMU/phasor data concentrator integration, system infrastructure and software applications. Two WECC data center facilities are being expanded: one in Vancouver, WA, and the second in Loveland, CO. Currently under way are the procurement and installation of PMUs, PDCs, network infrastructure and server hardware. In addition, the wide area network service provider and the application software selection will be completed by spring 2011. In December, the team will begin testing phasor data communications, system integration and software application functionality. WISP’s full implementation phase will take place beginning in the summer of 2012, with training, business readiness and system cutover planning. The implementation phase is scheduled to end with the completion of the system cutover by March 2013. “Synchrophasors are going to enable operators and reliability coordinators to view and operate the system as never before,” Maher explained. “They’ll get a real-time view of the system, which is a significant advance in our ability to fulfill our mission of assuring the reliability of the Western Interconnection.”
The Right Combination of Resources & Energy Global resources. Delivered locally.
business solutions for utilities and the energy industry for more than 100 years.
Greg Kishiyama 303.928.4236 Hazen Burford 916.817.3920
www.worleyparsons.com
Deston S. Nokes, independent consultant for the Western Electricity Coordinating Council, has been a communications consultant and energy writer for PacifiCorp, BPA, North American Windpower magazine and others. He can be reached at deston@destonnokes.com.
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Technology Options:
You Have
Them
By Samuel Scupham, Energy Consultant, Black & Veatch Corp.
M
any factors are seemingly pushing the industry to natural gas-fueled generation. These include abundant domestic shale gas reserves; pairing of simple-cycle and combined-cycle technologies for renewable energy backup generation; and regulatory changes. While natural gas-fueled generation is reliable, cost-effective and environmentally acceptable, it is important as an industry to maintain a balanced portfolio. Utility owners have options for meeting their regulatory, economic and business requirements.
The Push to Natural Gas The Environmental Protection Agency is proposing a suite of air, water and waste regulations that will significantly impact power generation, particularly coal-fired generation assets. Black & Veatch’s analysis of the potential impact concludes that approximately 16 percent of the existing coal-fired generation fleet (more than 52,000 megawatts of generation) will be retired rather than face the cost of compliance with EPA’s pending air quality regulations. In addition, it is difficult to predict what, if any, federal standards for greenhouse gas emissions or renewable portfolio standards will be addressed by the new Congress. The EPA has already issued regulations addressing permitting and will soon propose minimum limits for greenhouse gas emissions. It
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elec tric energy | spring 2011
remains to be seen whether Congress will impede their implementation or whether these rules will stand up to judicial review. Uncertainty about carbon emission limits, strong environmental opposition and hesitation from lending institutions to finance have brought the development of new coal-fired generation to a virtual standstill. At the same time, the U.S. economy is showing signs of resurgence that will eventually return load growth, leaving utilities to grapple with meeting short- and long-term needs in the face of potential base load retirements. These factors, coupled with the fact that proven domestic shale natural gas reserves have rapidly expanded since 2005 (with promises of sustainable and cheap natural gas for the next 15 to 20 years), seemingly are pushing the industry to the next great natural gas boom. After all, such clean and reliable forms of energy should face minimal resistance from commissions, permitting agencies and other stakeholder groups as long as gas prices remain low and the cost of electricity doesn’t increase too much.
Keep the Portfolio Balanced While the promise of cheap natural gas seems to be the answer, particularly in the wake of pending coal generation retirements, fuel diversity still remains one of the most prominent components of a utility’s long-term plan.
Standard, the concept of a “clean energy” standard was introThere is no question that a portion of new load should be duced in Congress in late 2010. It set a minimum percentage met with natural gas-fueled technologies, particularly when of energy that utilities would be required to obtain from clean coupled with continued renewable deployment. However, energy sources, which in addition to traditional renewable additional fuel and technology implementations are needed to (solar, wind, geothermal, biomass, qualified hydroelectric) also manage load growth, keep the nation’s energy mix diversified included nuclear, advanced coal (65 percent capture), waste-toand reduce emissions – all while ensuring electric prices do energy and coal-mined methane. Further, it gave credit to early not climb too rapidly or too much for consumers. retirement of fossil-fueled units. The bill proposed a minimum of Achieving a sustainable and balanced energy mix 15 percent beginning in 2015, and, if enacted, would increase 5 requires cooperation among all key stakeholders as well percent every five years until reaching 50 percent in 2050. as investment in emerging technologies. For several years Technological developments are also providing the now, industry leaders have collaborated with government industry with much-needed advancements, particularly agencies, research organizations and emerging companies to as they relate to renewable development and reliability of develop components to the nation’s clean energy solutions. supply when using intermittent resources. utility-scale carbon capture and sequestration: smart grid: Numerous utilities have or are implementing There are numerous studies and demonstration projects under Smart Grid pilot programs and full Smart Grid deployments way for developing carbon capture and sequestration capabilinationwide. As technology and program implementations ties. These projects cover all aspects of carbon management, progress, utilities will be able to better plan and control including various capture methods, geologic sequestration, both supply-side and demand-side resources. This enables a sequestration monitoring and the development of legal framemore optimized use of centralized and distributed generation works for liability. The layperson can be overwhelmed and supply, which will improve energy efficiency and conservadiscouraged by the thought that the fruit of these efforts is still tion. Smart Grid initiatives also engage customers on a approximately 10 years away. However, one important initiative real-time basis so that load can be managed more intelligently to watch is round three of the Clean Coal Power Initiative. considering power supply requirements and end-use needs. The National Energy Technology Laboratory identified small modular reactors: The development of small six utility-scale demonstrations of pre- and postcombustion modular reactors will provide utilities, co-operatives and capture and sequestration, which are scheduled to start between municipal-owned utilities with a possibility of a clean and 2014 and 2016. Similarly, FutureGen is bringing Department of Energy funding to an alliance of coal producers and users to develop an oxy-fuel retrofit of a 200-MW unit at Capture Capture Rate, Start Meredosia Power Station in Illinois. Performer Location Technology Tonnes/yr Date Meanwhile, Tenaska Energy is pushing forward with a full-scale, amine-based PRECOMBUSTION CAPTURE capture system for its proposed new Summit Texas pulverized coal plant in Texas. The Clean Energy Odessa, TX Selexol 3,000,000 2014 takeaway from these examples is that the period of talking about whether full-scale Southern Company Kemper County, MS Selexol 2,000,000 2014 carbon dioxide capture is a dream or reality is passing. The fruition of these Hydrogen Energy California Kern County,CA Rectisol 2,000,000 2016 and other projects will provide answers and eliminate this uncertainty. POST-COMBUSTION CAPTURE Nuclear: The Nuclear Regulatory Commission’s combined construction Basin Electric* Beulah, ND Amine 500,000-1,000,000 2014 and operator license application process NRG Energy Thompsons, TX Amine 500,000 2015 is currently evaluating several potential new, large-scale nuclear generation facilAmericanElectric Chilled ities. In addition federal loan guarantees Power New Haven, WV Ammonia 1,500,000 2015 may help move these first few projects forward. These projects will provide the OXY-COMBUSTION CAPTURE industry with much-needed certainty FutureGen 2.0** Meredosia, IL Oxy-Combustion 1,000,000 2015 regarding the licensing and new-build process in terms of cost and schedule for *On 12/17/10, Basin Electric announced an indefinite hold on completing the project. long-term development. **This project is not a part of the CCPI program, but has a similar scope & objectives. clean energy standard: As an Source: U.S. Department of Energy National Energy Technology Laboratory evolution to a strictly Renewable Portfolio w w w. r mel .o rg
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dependable energy resource. Multiple American technologies are expected to be offered in the 10- to 311-MW range within a 10- to 15-year horizon. energy storage: Technologies are being ambitiously pursued for the firming of intermittent renewable resources. Utility-scale pumped storage hydro and compressed air energy storage are commercially available technologies that can modulate the intermittent generation from solar and wind resources as well as improve transmission capacity utilization resulting from the high penetration rates of wind and solar. Deployment of energy storage can allow reduced sizing of new transmission to carry the intermittent generation, with excess electrical energy being stored during times of high generation within a transmission region. Given the cost and environmental impacts on new transmission, this offers benefits to oversizing transmission facilities to accommodate the intermittent generation. In addition to load firming with large-scale energy storage technologies, flywheels and batteries are being applied for frequency regulation.
Conclusion There is no doubt that the U.S. power industry is at a crossroads once again with no one clear path for the industry to follow. Environmental regulations, increasing integration of renewables and a seemingly abundant domestic supply of
natural gas are all factors that are pushing the industry to rely more and more on natural gas. Yet even though gas reserves are indeed abundant, there are still numerous questions regarding our ability to develop and capitalize on the resource. Should these reserves be delayed in development or not developed altogether, utilities and their customers could repeat the pains of the early 2000s, thus compromising the next round of gas-fired plant capacity additions. Moving forward, utility owners’ best bet is, in many ways, to do as they have always done: Focus on developing and maintaining a diverse fuel mix; partner with companies like Black & Veatch to get a full understanding of what technologies offer the best solutions for the utilities’ unique needs and to implement projects and programs; and invest in multiple technologies and fuels that balance economic and environmental needs. In a time where the only certainty is uncertainty, it is imperative to understand the options. And the good news is that technology options are available now, with more coming in the future. Sam Scupham is the Service Area Leader for the Technology Assessment Group of Power Generation Services within Black & Veatch Energy providing technical and planning support for energy companies, investors, governmental agencies, and industrials. He can be reached at ScuphamSK@bv.com.
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elec tric energy | spring 2011
rmel 2011 calendar
2011 Calendar of Events January 20, 2011
March 11, 2011
June 16, 2011
Introduction to the Electric Utility Workshop Denver, CO
RMEL Foundation Scholarship Application Deadline
Plant Management Conference Council Bluffs, IA
February 3, 2011 Basics of System Operations Workshop Denver, CO
February 10-11, 2011 Smart Grid Conference Intelligent Technologies Park City, UT
March 15, 2011 Workforce Roundtable Denver, CO
March 29, 2011 NERC Audit Lessons Learned Roundtable Denver, CO
April 6-8, 2011
Safety Roundtable Longmont, CO
Distribution Overhead and Underground Design and Staking Workshop Denver, CO
March 3, 2011
April 14-15, 2011
Power Supply Planning and Projects Conference Denver, CO
How to Perform an Arc Flash Calculation Study, Including DC Arc Flash Workshop Denver, CO
February 25, 2011
March 4, 2011 Generation Vital Issues Roundtable Denver, CO
March 8, 2011 Transmission Planning and Operations Conference Denver, CO
April 19-20, 2011 Health, Safety and Security Conference Denver, CO
April 20, 2011
June 17, 2011 Plant Management Roundtable Council Bluffs, IA
July 12, 2011 RMEL Golf Tournament Westminster, CO
August 26, 2011 Safety Roundtable Fort Collins, CO
September 11-13, 2011 Fall Executive Leadership and Management Convention Santa Ana Pueblo, NM
September 29, 2011 2012 Spring Management, Engineering and Operations Conference Planning Session Denver, CO
October 11, 2011
Safety Roundtable Denver, CO
National Electric Safety Code with 2012 Updates Workshop Denver, CO
March 9, 2011
May 15-17, 2011
October 18, 2011
Transmission Vital Issues Roundtable Denver, CO
Spring Management, Engineering and Operations Conference Loveland, CO
Renewable Planning and Operations Conference Denver, CO
March 10, 2011 Distribution Overhead and Underground Operations and Maintenance Conference Denver, CO
March 11, 2011 Distribution Vital Issues Roundtable Denver, CO
June 1, 2011 Awards Nomination Deadline
November 18, 2011 Safety Roundtable Westminster, CO
continuing education certificates Continuing education certificates awarding Professional Development Hours are provided to attendees at all RMEL education events. Check the event brochure for details on the number of hours offered at each event.
w w w. r mel .o rg
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advertiser index
Alstom Power
www.alstom.com
(970) 215-1805
AMEC
5
www.amec.com
(770) 810-9698
Ames Construction
3
www.amesconstruction.com
(952) 435-7106
Bechtel Power Corporation
23
www.bechtel.com
(415) 768-1234
Black & Veatch Corp.
13
www.bv.com
(913) 458-2000
Border States Electric
25
www.borderstateselectric.com
(701) 293-5834
www.ch2m.com
(303) 771-0900
CH2M Hill
Inside Back Cover
Colorado Powerline, Inc.
33
(303) 660-3784
DIS-TRAN Packaged Substations, LLC
27
(318) 448-0274
www.distran.com
Empire Electric Association, Inc.
50
www.eea.coop
(970) 565-4444
Exponential Engineering Company
25
www.exponentialengineering.com
(970) 207-9648
Great Southwestern Construction, Inc.
14
www.gswc.us
(303) 688-5816
HDR, Inc.
39
www.hdrinc.com
(402) 399-1000
Harris Group, Inc.
35
www.harrisgroup.com
(303) 291-0355
Hitachi Power Systems America, Ltd.
7
www.hitachipowersystems.us
(908) 605-2800
Kiewit
Back Cover
Kleinfelder
35
www.kiewit.com
(913) 928-7000
www.kleinfelder.com
(480) 763-1200
Laminated Wood Systems, Inc.
45
www.lwsinc.com
(402) 643-4708
Merrick & Company
14
www.merrick.com
(303) 751-0741
Nebraska Public Power District
27
www.nppd.com
(402) 564-8561
Pike Electric, Inc.
33
www.pike.com
(336) 789-2171
Pioneer Electric Cooperative, Inc.
50
www.pioneerelectric.coop
(620) 356-4111
POWER Engineers
50
16
www.powereng.com
(208) 788-3456
Power Product Services
Inside Front Cover 41
www.powerproductservices.com
(720) 859-4625
Sabre Tubular Structures
48
www.SabreTubularStructures.com
(817) 852-1700
Sega, Inc.
20
www.segainc.com
(913) 681-2881
Stanley Consultants, Inc.
33
www.stanleygroup.com
(303) 799-6806
Sturgeon Electric Co. Inc.
48
www.myrgroup.com
(303) 286-8000
T & R Electric Supply Co., Inc.
9
www.tr.com
(800) 843-7994
TIC – The Industrial Company
17
www.ticinc.com
(970) 879-2561
Trees Inc.
27
www.treesinc.com
(866) 865-9617
Ulteig Engineers, Inc.
25
www.ulteig.com
(701) 237-3211
University of Idaho Summit
41
www.uiueg.org
(208) 885-6265
Westwood/ETG
35
www.westwoodps.com
(952) 937-5150
WorleyParsons Group, Inc.
45
www.worleyparsons.com
(303) 928-4226
Young & Franklin
15
www.yf.com
(315) 457-3110
Zachry Holdings, Inc.
21
www.zhi.com
(210) 588-5000
elec tric energy | spring 2011
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