A Chat with NREL Director Dan Arvizu

Editor’s note: This is part four of a four-part UAE news series. Senior editor Kathleen Davis talks with NREL director Dr. Dan Arvizu about connecting renewables to the grid. In this fourth part of the series, Dr. Arvizu talks money and specifics about some of NREL’s programs.

KD: One of the largest issues with getting any renewable on the grid–from marine power to wind power–is available transmission lines. Much has been said about who should pay for access to renewable generators. In your opinion, how should those costs be allocated?

DA: I do not believe there is a single answer to the “who pays” question. High-voltage transmission is a regional or multistate activity, and the best answers will probably come from regional bodies. This includes the RTOs that have proposed and will propose various methods for compensating the owners/installers of lines. As a principle, it seems most agree that the beneficiaries, or those who receive the benefits of the renewable energy, should pay for transmission. The challenge will be to establish rules that satisfy all the perceptions of benefits and liabilities. I recognize that a lot of work needs to be done to address this issue.

KD: You spoke at the Washington International Renewable Energy Conference in March and called for a global assessment of the life-cycle costs and emissions of renewable energy technologies compared with conventional energy. Would those assessments include transmission construction and access costs for remote renewables? Even with those transmission costs added into an assessment, do you believe renewables will fare well in the comparison?

DA: A fair and rigorous life-cycle assessment would include transmission construction and access costs for all technology scenarios. This means conventional technologies must also be judged with transmission construction and access costs. Because our transmission network is fully subscribed, even the conventional energy scenario with new conventional resources will require substantial transmission additions. With transmission included for all scenarios, I do believe renewables will fare well.

KD: At that conference, you were part of an NREL panel discussing accelerating renewables innovation and deployment. What grid connection issues did you and your fellow panelists examine? Any new and exciting ideas tossed about when discussing how to transmit and distribute renewable power?

DA: On the distribution side, the ability to intentionally island parts of the distribution system and form microgrids can improve customer reliability. NREL is also examining the effects of higher levels of renewable penetration, especially for customer-sited solar electricity systems, at the distribution level.

KD: I’ve read a little bit on your WinDS model, the Wind Deployment System. It’s an interesting idea–to model capacity and transmission requirements and their variants to predict supply curves. How is that system progressing? Any new discoveries or advancements? Additionally, can you tell us who is using WinDS and just how they are utilizing it?

DA: The WinDS model was used as part of the recently released report on 20 percent wind by 2030 and to estimate wind output and costs and related transmission needs and costs for achieving this penetration. The study was conducted by a consortium of public and private entities that included the Department of Energy and the National Renewable Energy Laboratory. Other groups such as the Western Governors Association have taken the processes learned from WinDS and are working on more detailed modeling efforts to examine renewable energy zones (REZs) in the West and the cost for transmission to deliver output across state boundaries.

KD: Wind energy is the fastest growing renewable, and, therefore, as an industry, we seem most focused on how to connect it to our power grid. Do renewables like solar, biomass, etc., have separate grid connection issues that we should also be addressing–but that get lost behind the growing wind market?

DA: Central-station solar thermal plants are similar to wind. First, they have a variable output that depends on the solar resource. Second, they are often located in dry environments, which can be far from load centers. Many states and regional bodies considering REZs are including solar, wind and perhaps geothermal in their resource identification efforts. Biomass, geothermal and hydro and water power plants, on the other hand, are typically more traditional in nature, and their grid issues have generally been solved for many years.

Photovoltaic (PV) energy, while technically capable of transmission voltage interconnection, will be more closely related to the utility distribution network in the near future. NREL has participated in efforts to develop interconnection standards for distributed resources, and these are being implemented at most utilities. NREL also recently worked with the Department of Energy on the Renewable Systems Integration (RSI) study. This series of reports examines the interconnection of large amounts of renewables at the distribution level. The study addresses the technical and analytical challenges that must be addressed to enable high penetrations of distributed renewable energy technologies. Integration-related issues at the distribution level are likely to emerge first for PV technology, so the RSI study focused on this area. A key goal of the study was to identify the research and development needed to build the foundation for a high-penetration renewable energy future while enhancing the operation of the electricity grid.

KD: If you could ask just one favor of RTOs and ISOs in this country to smooth a renewables connection to the power grid, what would you ask of them? How do you think they would respond?

DA: The RTOs and ISOs that I am aware of have strong stakeholder-driven processes for change. I would urge them to keep these processes and keep abreast of how others are handling key connection issues. For example, Bonneville Power Administration (BPA) is proposing an “open season” to replace an overloaded queue. Would such a process work for an RTO?

KD: Is there anything else that I haven’t discussed that you’d like to tell our readers? Programs? New discoveries? Concept technology?

DA: I suggest readers interested in wind and grid-related topics refer to the recently released 20 percent wind by 2030 report. It can be found at http://www.20percentwind.org/.

More utility information can be obtained from the Utility Wind Integration Group. This is a utility forum that is focused on accelerating the integration of wind into utility power systems. Information can be found at http://www.uwig.org/.

On the distribution system level, I suggest the new Renewable Systems Interconnection studies available at http://www1.eere.energy.gov/solar/solar_america/rsi.html. At NREL, we are particularly excited about our up-and-coming new facility, the Energy Systems Integration Facility (ESIF). Once built, the ESIF will enable the simulation, engineering and testing of renewable electricity in energy systems into the existing electrical grid. This is one area where many energy experts feel major barriers to renewable energy generation and use exist.

On a more general note, the NREL Web site, http://www.nrel.gov, has a wealth of information on the full spectrum of what is going on with renewables. It has information for most audiences and includes the newest and most exciting information.

Parts one through three of this news series are featured in the September, October and November issues.

Study Reveals Trends in U.S. Substations

The Newton-Evans Research Co.’s mid-year study on substation automation revealed a number of points:

  • Substation-related integration and automation programs will cost North American electric power utilities some $350 million this year.
  • Eighty-one percent of survey respondents have automation programs underway as of mid-2008.
  • DNP remains the most common protocol in North America.
  • U.S. plans to adopt IEC 61850 aren’t catching fire.
  • Utilities are concerned about cost with some automation plans.

In earlier studies, participants were much more concerned about barriers to automation. But, that notation has become significantly less important with each two-year study. The crucial bits of automation are already in place, according to these utilities, and the secondary points may not “earn” automation if it comes down to money.

Chuck Newton, president of Newton-Evans Research Co., said, “The attitude seems to be that most of the substations in their service territory that are deemed critical to operations are in fact sufficiently integrated and automated, and the costs to retrofit additional, less critical, more remote substations may not be worth the relatively high cost.”

One interesting point of the two-year study might be the lag of IEC 61850 implementation when it’s such a rage in Europe. In North America, however, Newton-Evans’ study traces very little progress.

“Many utilities around the world are not yet caught up with 61850 fever,” Newton said. “There is a lot to this bold new architecture-protocol. However, like so many complex technology issues, you have to look at different operating and management philosophies concerning automation, communications and the procurement mind-set of utility managers.”

Newton supposed that bundled procurement might be a big part of this gap between European acceptance and U.S. foot-dragging. It could be a difference between getting the whole package (goods, services in a turnkey contract) as European awards tend to run and getting contacts piecemeal. In the North American market, there is more picking and choosing. So, they need a “plug and play” option, which DNP often provides, leading to that protocol’s dominance on this side of the Atlantic.

“We believe that in utilities where turnkey substation contracts are awarded, the winning suppliers are likely to migrate users to IEC 61850,” Newton added. “However, because North America and other regions will continue to purchase new equipment as needed for existing substations, there is no sense of urgency to migrate to IEC 61850 here.”

NERC Looks at Long-term Reliability

by Kathleen Davis, senior editor

In late October, the North American Electric Reliability Corporation (NERC) released its 300-plus-page report titled “Long-term Reliability Assessment.”

Focusing on the period between this year and 2017, the report examines information and observations submitted by each of the eight regional entities earlier this year, which was updated regularly over the rest of the report’s drafting process.

In its “2007 Long-term Reliability Assessment,” NERC identified five key findings that they placed on the critical list–in need of immediate and drastic action. Those findings were revisited this year (see table).

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NERC notes in the report, “While some progress has been made, action is still needed on all of the issues identified in last year’s report to ensure a reliable bulk electric system for the future.”

The key findings for 2008’s assessment include:

  • Capacity margins improved, though resources are still required;
  • Wind capacity is projected to significantly increase;
  • More transmission is needed to maintain bulk system reliability and integrate new generation;
  • Demand response is increasingly used to meet resource adequacy requirements; and,
  • Bulk power system adequacy trends emphasize maintenance, tools and training.

Capacity Margins

The report notes that capacity margins bounced when compared to previous figures, mostly do to demand response and supply-side help in the last year. However, more needs to be done to maintain reliability in western Canada and the Desert Southwest areas in the coming years.

A few areas in the study (New England, California, the Rocky Mountain sub-region, Texas and the Midwest) have shown improvement in projected capacity margins because of categorization changes, forward capacity markets or new resources. So, progress has been made, but capacity margins are still a top issue in the long term.

Wind Capacity

The report states that “wind resources are growing in importance in many areas of North America as new facilities come online. With growing dependence on wind generation, it is vital to ensure that these variable resources are reliably integrated into the bulk power system.”

NERC projects 145,000 MW of potential new wind resources over the next 10 years. Many are listed as “proposed”–meaning cancellation is possible since developers still haven’t made a solid decision yet. However, “this projection still represents a dramatic increase in wind energy resources when compared to data received last year,” the report concludes.

Transmission Needs

“Though total miles of transmission additions have increased when compared to last year’s assessment, much more transmission will be required to reliably integrate projected location-constrained resources such as wind, nuclear, clean coal and others into the bulk power system,” the report states.

In this area, NERC projects that transmission miles will increase by 9.5 percent (15,700 circuit miles) in the United States and 7.4 percent (3,400 circuit miles) in Canada over the next decade.

Demand Response

One of the biggest changes NERC has noticed with this report is the increase in demand response. The corporation plans to monitor the sustainability of demand response and its impacts over the long term. It does predict a large increase in the use of demand response programs over the next few years to offset growing demand. The report called the growth figures “significant and encouraging.”

Tools and Training

NERC’s first look at reliability data over the last six years has pushed them toward one conclusion: “The drive towards suitable maintenance, operating tools and training must continue.

“It is vital that these metrics be further refined and the trends analyzed so that root causes can be addressed,” the report notes.

The full 300-page report titled “2008 Long-term Reliability Assessment (2008-2017)” can be obtained by contacting NERC: www.nerc.com.

T&D Market Index Provides Snapshot of Critical Spend Categories


Denali Intelligence, a market research firm for sourcing professionals, released its latest (Q3) T&D Market Index. The Denali Intelligence T&D Market Index is based on detailed analysis of 11 critical spend categories that represent core purchases for most T&D organizations, including:

  • Line material
  • Meters
  • Steel structures
  • Street lighting
  • Switchgear
  • Transformers
  • Wire and cable
  • Wood products
  • Construction services (underground and overhead)
  • Engineering services
  • Vegetation management
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Since most of these categories have seen signi௬cant volatility over the past two to three years, Denali Intelligence’s T&D Market Index is based on a weighted composite developed from an analysis of more than 30 utility T&D spend pro௬les. Denali analyzes the key cost drivers (commodities such as steel and copper, labor and other cost factors) to develop the historical and forecasted price trends associated with this index.

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The index provides T&D organizations a snapshot of what has happened to their budget for purchased materials and services over the past 12 months (to explain budget variances) and gives projections for the coming year.

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Reflecting the broad economic slowdown, the Denali Intelligence T&D Market Index increased 2 percent in the third quarter of 2008, but remains up almost 10 percent on the year. Leading the downward pull are underlying commodities, including a 22 percent decrease in crude oil and sweeping decreases across all base metals. Diesel fuel prices fell 14 percent in Q3 but remain up 20 percent for the year. Metals and energy prices have retreated on eroding demand, both domestic and international. A slow U.S. economy and production cuts in China have nearly erased 2008’s first half gains in metal markets. The overall unemployment rate remained at 6.1 percent in September, up markedly from 4.5 percent a year ago. Since September 2007, the unemployment rate has increased by 1.4 percent, which equates to an additional 2.2 million unemployed workers in the United States. As the financial crisis rapidly unfolded in early October, fear of a long and harsh recession sped demand and price drops. This new market reality has increased corporate focus around cost restraint, and the September 2008 ISM Purchasing Managers Index (PMI) hit its lowest level since October 2001.

Market Forecast

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  • Recessionary forces are expected to continue and intensify, with economic forecasts for the U.S. economy to begin recovery in mid- to late 2010.
  • The IMF cut its 2009 global economic growth forecasts to 3 percent from 3.9 percent, the lowest level since 2002. According to the IMF, growth of 3 percent or below is an indication of global recession.
  • The U.S. unemployment rate is forecasted to increase to 7 percent or 8 percent in late 2008 and early 2009.
  • Reflective of recessionary forces and slowing T&D project loads, the Denali Intelligence T&D Market Index is forecasted to increase by 8 percent to 10 percent in 2008 and ease to a 3 percent to 4 percent increase in 2009.

Denali Intelligence (www.denaliintelligence.com) provides subscription-based, category-specific market intelligence designed for utilities sourcing professionals. While the free, abbreviated version of the T&D Market Index offers valuable topline insight regarding 12-month T&D price trends and forecasts, Denali Intelligence subscribers receive detailed trends and forecasts for each of the 11 critical spend categories, as well as analysis of supply market risks and trends speci௬c to the T&D organization.

Contact them for more information on the full version of Denali Intelligence’s T&D Market Index, or other reports at 888.824.8866 or info@denaliintelligence.com.

Cooper Industries Unveils Industrial Technology Center

Cooper Industries recently completed a first-of-a-kind Industrial Technology Center located near its headquarters in Houston, Texas. The 35,000-square-foot facility features an auditorium and training rooms designed to help demonstrate the entire Cooper line of industrial products and solutions.

The full-scale replica of an industrial facility includes the substation pictured here.
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Among the center’s most notable features is a full-scale replica of the key components of an industrial facility, displaying more than 230 of Cooper’s products as they appear in a plant. The center’s main purpose is to host, train and educate end-users, distributors, engineering and procurement professionals, as well as internal employees. Cooper expects several thousand people to utilize the facility each year.

Professionals who design and build industrial facilities can see Cooper’s entire industrial offering under one roof, from the newest lighting technologies and electrical fuses to transformers and energy automation solutions to mass notification systems. All of Cooper Industries’ eight division are represented at the facility.

How Will the Ongoing Financial Crisis Impact the Evolution of the Smart Grid?

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“We believe “Ëœsmart grids’ are part of the solution for an energy efficient future. In the current financial climate, it is vital that those considering pilot projects, or new energy solutions, work closely with regulators to ensure investments are made to benefit customers and with adequate return for investors. We continue planning for a “Ëœgreener’ energy future, replacing our networks with newer, smart technology and leading on energy efficiency for our customers. The future energy world is changing and as more renewable and distributed generation connects onto our networks, smart grids will play a central role in efficient energy management.”

Steve Holliday, chief executive, National Grid


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