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Power Transmission Technology:The Second Revolution
Superconductor-Based Technologiesand Regulatory Reform Strategies
To Boost Grid Capacity, Improve Reliabilityand “Break the Gridlock”
Massachusetts Restructuring RoundtableBoston, MA
November 16, 2001
John B. HoweVice President, Electric Industry Affairs
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We are a world leader in developing and manufacturing products using superconducting wires and power electronic switches for the power infrastructure
American Superconductor Corporation
Nasdaq: AMSCNasdaq: AMSC
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Overview Today’s Power Grid is Severely Stressed
The Grid Never Violates the Laws of Physics
New Grid Technologies: Description and Benefits High-Capacity HTS T&D Power Cable Distributed SMES for Voltage Stability
Network Effects of a Stronger Power Grid: Component Benefits -- System-level Benefits
Regulatory and Legislative Reforms That Can Speed the Adoption of New Grid Technologies
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……Has Brought Us to “Power Gridlock” -- Has Brought Us to “Power Gridlock” -- And A Demand for New Power TechnologiesAnd A Demand for New Power Technologies
A Convergence of Many Factors...
Demand Growth
“Siliconization”
Siting Obstacles
Erratic Pace of Deregulation
Eroding Reliability
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The “Power Struggle:” Summer 2001
In Georgetown: Lost Business Merchants Bemoan Costs as Power Outage Continues
June 15, 2001
The Detroit NewsMajor Detroit power line failsIt happens nearly one year after the city's worst outage
June 13, 2001
Another Boston-Area Power OutageAugust 24, 2001
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New Generating Capacity
19301930 19401940 19501950 19601960 19701970 19801980 19901990 20002000
4040
3535
3030
2525
2020
1515
1010
55
00
66
55
44
33
22
11
00
Transmission Investments Estimate
New
gene
ratin
g ca
paci
ty (‘
000
meg
awat
ts) Transm
ission investment (1992 US$ billion)
Source: CERASource: CERA
Grid Investment Lagging in U.S.
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The amount of power that can be transmitted through a particular grid is limited by a number of factors, chiefly:
Thermal Limits Line/cable conductors reach physical capacity Overload leads to excessive sag, degraded
insulation, burnout and outright failure Stability Limits
Lines reach limit of safe operation by standards of “Prudent Operating Practice”
Overload puts system at risk of fast collapse during a contingency (line outage, plant trip)
Power Grids Have Limited Capacity
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The Changing Role of the Power Grid
Pre-1990s: Vertically-Integrated Monopoly
Mid-1990s: Rise of DG -- “Is the Grid Obsolete?”
2000s: The Grid Isn’t Going Away Soon -- But It Needs a Major Upgrade Now!!
The Grid’s New Role: Platform for Competition
……The Lesson from Other Regulated Industries:The Lesson from Other Regulated Industries:The Key to Robust CompetitionThe Key to Robust Competition
Lies in a Robust Physical NetworkLies in a Robust Physical Network
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Superconductor Technology Benefits
Raise Energy Efficiency
Increase Capacity
Improve Reliability and Power Quality
Reduce Environmental Impacts
Put Scarce Real Estate to Higher Value Uses
……ComponentComponent Benefits of Superconductivity are Benefits of Superconductivity are Leveraged into even Larger Leveraged into even Larger System-LevelSystem-Level Benefits Benefits
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The Basis for the Revolution The Basis for the Revolution
HTS Wire: 140x Increase in Wire Capacity
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HTS Wire Price/Performance Trend
0
200
400
600
800
1000
1200
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Pric
e/Pe
rfor
man
ce R
atio
, $/k
A-m
*
* Price of One Meter of Wire Carrying 1,000 Amperes
Performance and Yields are Rising -- Costs are Falling
ActualTarget
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First Commercial HTS Wire Plant --Devens Commerce Park, Massachusetts
8/00 Broke Ground
8/01 First Employees
1/02 Fully Equipped
8/02 High-Yield Production
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HTS Power Cable Alliance
Exclusive commercial agreement
Alliance since 1990
$30 million in funding to AMSC
First HTS cable in 1996 - Beta-phase about to start
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High Capacity HTS Power Cables
More power carried in same right of way at much lower voltages and system costs.
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(1, 2)(1, 2)Nine Existing Nine Existing Copper Cables Copper Cables Are RemovedAre Removed
(3, 4)(3, 4)Three HTS CablesThree HTS CablesAre Installed -- SixAre Installed -- SixConduits Free forConduits Free forExpansion/Other UsesExpansion/Other Uses
HTS Cable: The 3-to-1 Advantage
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2
3
Urban Re-Electrification: “Virtual Bus”
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Urban Re-Electrification: “Urban Ring”
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HTS Re-electrification: Reclaiming Corridors
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HTS DC Transmission: Uses and Benefits Integrate Markets: Tap the Large Interregional Price Disparities
Exposed by Deregulation
Special Delivery: Serve Congested Urban Load Pockets with “Virtual Power Plant”
Operation: Avoid Parallel Path / Loop Flows
Environment: Avoid AC Line Siting, EMF Issues
2020 Vision: Separate Grid into AC “Islands” Connected by Controllable DC “Bridges”
Improved Stability and Reliability Make the System Function as the Economists Want it to!
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Power Transmission Lines Never Operate at Full Capacity (“or “Bandwidth”)
Our Least Expensive “New” Grid Capacity: The Capacity that Already Exists but Can’t be Used
At What Fraction of Maximum Bandwidth are Your Utility’s Power Lines Operating?
U.S. Average = 35% !
Distributed SMES:Attacks the Power Bandwidth Problem
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Old Solution- String More Lines!
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A New Solution - SMES
Power electronics and superconductors
Most effective
Lowest cost
Quickest solution
No environmental permits
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Proprietary Storage Technology...
Coil of LTS wire stores enough energy to deliver 3 megawatts of power in one second.
SMES Basics
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Delivers megawatts of real power instantaneously and simultaneously with megaVARS of reactive power.
…Plus Proprietary Power Electronics Technology
SMES Products
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PQ SMES: Precise Power Quality Protection
LINE VOLTAGE (IN) LOAD VOLTAGE (OUT)
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Time in Seconds
D-SMES: Wide Area Grid Stabilization
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
Rel
ativ
e Vo
ltage
0 0.5 1 1.5 2
Base Run - 115kV
D-SMES
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D-SMES vs. Conventional Overhead Lines Effective alternative where existing lines are stability-limited
(vs. thermally limited)
Eliminates siting & political obstacles
Quick installation (2 days)
Mobility -- avoids stranded asset risk
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WPS Northern Loop (No. Wisconsin)D-SMESD-SMES
100 miles
First permanent use of superconductors in a live grid
6 units deployed in July 2000
3 MVAR reactive power capacity (2.3x short term overload capability)
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Ava
ilab l
eA
vaila
b le
Load
Ser
ving
Cap
abili
ty, M
WLo
ad S
ervi
ng C
apab
ility
, MW
0
50
100
150
200
250
300
350
Six D-SMES: 15% Safe Increase in Power BandwidthSix D-SMES: 15% Safe Increase in Power Bandwidth
ThermalLimit
CurrentOperation
Dynamic Voltage
Limit
Operating in the Operating in the RED ZONE RED ZONE
6 D-SMESAdded
WPS Northern Loop
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Entergy Gulf States (East Texas)
D-SMESD-SMES Two units in 2001, two
more in 2002
8 MVAR reactive power capability (2.3x overload)
D-SMES built into Entergy’s strategic planning process
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1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
Ava
ilab l
e Lo
a d S
ervi
ng C
apab
ility
, MW
Ava
ilab l
e Lo
a d S
ervi
ng C
apab
ility
, MW
Four D-SMES: 20% Safe Increase in Power BandwidthFour D-SMES: 20% Safe Increase in Power Bandwidth
Operating in the Operating in the RED ZONE RED ZONE
Dynamic Voltage
Limit
ThermalLimit
CurrentOperation
FourD-SMES Added
Entergy Gulf States
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D-SMES: Uses and Benefits Utility: Increase Load Serving Capability Over Existing Lines
-- Maintain Reliability Objective
Trader / Marketer: Increase Import / Export / Transfer Capacity -- For a Slice of the Benefit
System Planner / IPP: Facilitate Interconnection of New Merchant Generators -- and “Fill in Holes” Caused by Retirement of Older Generators
Environmental / Emissions Trading: Reduce Need for Dirty Reliability-Must-Run (“RMR”) Units -- Generate / Claim / Trade Valuable Credits
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A Stronger Grid Gives Rise toSystem-Level Benefits
Enable Closer Adherence to Economic Dispatch (Fuel Efficiency and Air Quality Benefits)
Better Integration of Remote Resources including Coal/Nuclear and Renewables (Solar/ Wind)
Integrated “National Grid” Can Save $10Bs in Generation Investment to maintain Reserve Margin
Reduced Congestion Is Essential to Ensure the Success of New Retail Competitive Frameworks
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The Problem
For Utilities that Operate Under Traditional Cost-of-Service Regulation,
Investing in Transmission Assets to Reduce Congestion is Unprofitable…
or Worse.
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Some Level of Transmission Constraints is Economically Efficient
DollarsInvested
Number of Hours Constrained
Cost ofRelievingConstraint
Benefits ofRelievingConstraint
EconomicallyDesirableLevel ofConstraint
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What Determines “Optimal” Constraint?The Form of Regulation Matters!!
DollarsInvested
Number of Hours Constrained
Vertically-Integrated,Local Regulated Utility
Unbundled DISCO underCost of Service
Unbundled DISCO underMulti-Year Price Cap
VI Utility with Non-RegulatedMarketing/Generating Affiliate
Large RTO InternalizingAll Congestion Costs
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Competition in Commodities Spurred byCompetition in Commodities Spurred by Competition in the Building of Network FacilitiesCompetition in the Building of Network Facilities
Telecom, 1970s: “No One Will Replicate the Existing Communications Network” (1980s-90s: Fiber Optic, Wireless Networks)
Natural Gas, Early 1980s: “A Sunset Industry” (1990s: New Pipelines, Compression, IT)
Airlines: Landing Gates Key to Mitigating Incumbent Market Power (the O’Hare Problem)
Network Investment:The Key to Robust Competition
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Incentives to Strengthen the Grid: Regulatory and Legislative Actions Move RTO Focus From “Congestion Management” to
“Congestion Relief!”
Performance-Based Regulation (a la UK)
Mandatory Reliability Standards
Coordinate Development of Road, Railway and Utility Infrastructures
In the Long Run, the Most Stable End Point Will Be True Network-Based Competition.
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Stimulating New Grid Investment:“Exempt Transmission Facilities” Applies to New Facilities -- Not Existing AC Network
Must Meet Low Environmental Impact Standard
Technologies with Controllable Current (Avoid Impact on Underlying AC Network Flows)
ETFs Have No Recourse to Eminent Domain
Show Absence of Market Power (Size, Ownership)
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Exemption from Rate Regulation under FPA
Eligibility for Streamlined/Federalized Siting Process Modeled on Interstate Natural Gas Pipelines
Exemption from Open Access Requirements under FERC Order 888 / 2000
Proposed Benefits of ETF Status
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“Break the Gridlock!”
Thank You!Questions?