power industry needs to look at long-term

Editor’s note: This is part two of a two-part series about the power industry’s future. The first part, on predictions and trends, was published in the May/June issue of EL&P. This article was originally delivered as a keynote speech at the DistribuTECH Conference in January 2005.

As we discussed in part one of this article (May/June EL&P), you are architects of the future. And, you are the ones on whose shoulders creating a new grid for that future will rest.

Making investments in a new, intelligent grid of the future would be challenging enough in normal times. But, it will be made even more so by other changes that will transform the traditional core business of the T&D utility companies over the coming decades. Let me suggest a few potential breakthrough innovations that could turn your world upside down. For parallels today, think of what cell phones and the Internet are doing to traditional phone companies.

These kinds of radical developments don’t have to be bad. They can be great opportunities if you get into a position to take advantage of them and build appropriate business models. In an infrastructure business, though, where there’s a huge capital investment to be amortized over decades, one needs to be very careful to design and build in flexibility to accommodate new technologies.

Let me mention five technology areas in which we could see breakthroughs that could be fully incorporated into the infrastructure by the middle of the century.

plug and play distributed energy resources

When will we get to the point where a business can just plug a fuel cell into its energy management system and get automatic recognition and acceptance from the utility, along with automated net metering and billing? Or, when can I go down to Home Depot and buy a couple of solar arrays that I can bring home, install on my roof, plug into my home metering portal, and get automatic power exchange and billing on a net metering basis?

We can develop the technical protocols and systems to accomplish this today. In fact, some groups are working on it now. The question is, when will we have the willpower to do it institutionally? We’ve seen the marketing attraction of green power, and we’ve witnessed the political support for renewable energy, especially at the state level. With global climate change as the big environmental issue of the century, this public interest is only going to grow.

Offering “plug and play” flexibility to customers is a business opportunity. The question is, whose business will it be? Will distribution utilities continue to resist it, to avoid losing kilowatt hour sales, or will they find win/win opportunities and extend into this as part of their customer businesses?

Whenever this comes, it will significantly change the nature of the grid. The grid will truly become a network in which power flows in all directions, including to, from, and among customers. Instead of managing power flows among thousands of power plants today, we’ll be managing a network of several million power sources.

the smart house

We’ve been talking smart houses for 20 years. We even built prototypes 20 years ago. The difference is that now the technologies are coming together to make it more readily achievable with a viable business model. This is like the Internet-where the basic infrastructure had to be put in place, and then users and services developed that were never imagined.

Now, there are real, commercial pilot projects on broadband communication over power lines, smart consumer portal devices, smart appliances, and systems for using the power lines inside buildings for both power and communications. In my view, the question is not “if” this will happen, but “when.” Distribution utilities may want to move quickly into this online space, to “own” the customer connection. The wires going to every home and business may be one of the most valuable assets utilities have.

superconductivity that works in a wide range of applications and over long distances

Superconductivity’s progress has been agonizingly slow so far, but it is beginning to show real results, especially in specialized applications. One of those, for example, is in large motors, where superconductivity can reduce motor size and weight to one-fifth the usual levels and increase efficiency up to 97 percent. Superconductive equipment is also beginning to be used in transmission grid operations, to detect and instantly correct short term power fluctuations to improve overall power quality. Over the long term, superconductivity should be a significant contributor to both power quality in our grid operations and to energy efficiency in our economy.

cars plugged into the grid

We can already see the beginnings of electric drive returning to the auto sector in the form of today’s hybrid cars. This is a trend that makes sense, and one I believe will become standard in a decade. Ten years from now, I predict that a quarter of all the new cars sold will be hybrids, and, in 20 years, I think it will be half or more of them. When Toyota and Honda introduced the first Prius and Insight cars, the other manufacturers resisted the whole idea. Now, gradually everyone is getting into the act.

This is the cycle we’ve seen for many other technological innovations in the auto industry, such as solid-state ignition, antilock brakes and front-wheel drive. These types of new technology are more complicated and more expensive, but they bring consumer benefits and value. They start out in selected models and eventually spread to the rest of the fleet.

Now the auto industry has learned and solved the lesson we’ve all learned here in the energy field: Customers do not want to sacrifice anything for efficiency. And, they don’t have to. The new Honda Accord Hybrid is a great example of the right kind of energy efficient product. It has 240 horsepower, 15 more than a standard Accord, and accelerates faster, getting from 0 to 60 mph in under seven seconds, half a second faster than the standard Accord.

The additional change that I foresee is adding a plug to the hybrid car as an option. That, along with some additional battery capacity and some other electronics, will allow customers to top up their charges at night, so they can do a significant share of their driving on electricity. But the truly radical impact is that once there’s a plug on the car, the electricity can flow both ways. Customers can use the car as a power source, and can plug it in at home to supplement their grid power. And their home energy systems will be smart enough to know when to switch over and use some of that power if grid prices are too high, or even to sell some power back into the grid.

That doesn’t sound like a very big deal, until you run the numbers. Every five months, the amount of horsepower we put on the roads in new cars in the U.S. is equal to the total installed base of the nation’s electricity grid. Every five months. It doesn’t take very long to amount to a very large impact if you start to add plugs to just a few percent of the new cars.

biotechnology breakthrough to produce hydrogen

This can be the breakthrough that will lead to fuel cells everywhere, as a supplemental power supply. I am not one who believes that the “hydrogen economy” is coming soon. However, I do believe that fuel cells will be very attractive to businesses and consumers in providing assured reliability and quality at homes, offices and factories. And, it will be paid for in part by selling power back into the grid at peak load times when prices are high.

I believe we’ll overcome the technical challenges of fuel cells and bring their costs down and reliability up. The biggest obstacle, though, is how to produce the hydrogen. Producing it either by electrolysis of water or by reforming natural gas requires too much energy and is too costly, except for special market niches, such as extended life power supplies for cell phones and portable computers.

I expect the biotechnology revolution is going to provide our answer. I foresee a biological process of producing hydrogen that will be economical and that will not produce carbon-which is crucial for solving the global climate change problem. Once that is available, I expect we’ll work out the hydrogen storage and transport issues so that fuel cells will be practical in our businesses and even in our homes.

I expect my kids will have a fuel cell in their garage, next to the water heater, that will provide maybe 15 percent to 20 percent of their electricity-enough to guarantee that they’ll never have a complete power failure, to assure them a continuous supply of high-quality electricity, and it will be paid for in part by selling some power into the grid at peak load times. It may even be owned and serviced by the local utility or an energy service firm.

This is just a start. You can go on to identify many more technology breakthroughs that would have important implications for your organizations. I have not said anything about energy storage, for example. Or the impact of changing demographics in the future, including our patterns of work, commuting, recreation, and so on. Nor have I said anything about the impact of international developments, which have made us part of an ever closer global community.

Through all of this, recognize that technological change is not a spectator sport. We’ll all be affected by it. The choice for us is whether we’re on the bus or off of it. Are we willing to embrace the changes and develop strategies and business models to take advantage of them for growth and strength in the new industries of the future?

T.J. Glauthier recently moved on from his job as president and CEO of the Electricity Innovation Institute (E2I), an affiliate of the Electric Power Research Institute (EPRI). He can be reached at tjglauthier@aol.com.

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power industry needs to look at long-term

T.J. Glauthier, contributing writer

You are architects of the future. You-the representatives of the transmission and distribution utilities, the vendors, service providers and others-are charting the course for the future in the actions you take every day.

I’m sure all of you have good, clear visions of the next few years, but what do you see in the longer term? The equipment you’re putting in place is going to be in service for the next 20, 40, even 50 years or more. But, will your companies still be here in 20, 30, 50 years? By the middle of this century, we’ll all know which ones of you will be the survivors-which of you will be the Googles and Verizons of tomorrow, and which will, unfortunately, be the Edsels and Enrons.

lessons from history

To put things in perspective, let’s look back 50 years and see just how much technology and infrastructure has actually changed in that time.

In 1950:

“- a telephone was rotary, and all long distance calls went through operators.

“- a computer took up a whole room and did not have as much memory as your cellphone does today.

“- we did not yet have a national superhighway system.

“- we did not have any commercial nuclear power plants. (The first one went on-line in 1958.)

“- the stock market closed that year at 235, compared to over 10,000 now. And a busy day on the New York Stock Exchange saw 200,000 shares trade hands. Last year, the average daily volume was 1.4 billion shares traded per day.

“- there were no commercial jetliners, Xerox machines, satellites or even self-service elevators.

What will our country be like in another 50 years? The equipment and systems you’re putting in place today comprise the infrastructure upon which that future will be built. But, we’re terrible at forecasting the future. We continually make the same mistake: We behave as if innovation and progress were linear. We extrapolate current trends and miss the radical, transforming innovations that pop up. We need to focus on watching for the turns in the road ahead, and finding a way to see around the corner-or be adaptable enough to accommodate the turn when it does come.

In Project Independence in 1976, following the energy crisis, the federal government with the help of industry experts projected the country’s overall energy needs in the year 2000. They predicted it would double from 75 quads (quadrillion Btus) in 1973 up to 150 quads in 2000. They got the growth estimate wrong by 200 percent! In 2000, it was actually only 99 quads-one third of the increase they expected. And, by 2003, it dropped back to 97 quads. Why were they so wrong? They missed something outside the linear projection: They missed the tremendous improvement in energy efficiency that we made over that period, especially in our industry and transportation sectors.

The new Department of Energy 2005 Annual Energy Outlook is out now in draft form, and it has similar challenges of projecting out current trends. It’s only projecting out 20 years, and they’re trying to be sensitive to the changes going on. But, they end up extrapolating many current trends, and, in the end, are projecting total energy demand for the country of 133 quads in 2025-and we still haven’t hit 100 quads yet. They’re projecting almost twice the annual rate of increase we actually saw in the past 30 years. And, they are projecting that total carbon emissions from energy use in the U.S. will increase by 40 percent over that period. If we get serious about global climate change and begin to make significant changes, that projection and its underlying details could be way off.

As you are planning and investing in T&D system expansions and upgrades, how you view the future has crucial implications for all of us. I urge you to be cautious about future growth projections. When you are making or using projections, look carefully at the underlying details and assumptions, and consider developing alternative scenarios.

modernizing the grid

One thing we are sure of as we move into this new century is that we need to modernize the grid, and I’ll use that term to denote both the transmission and distribution parts of the electricity delivery system.

To continue to provide the reliability, security and service that customers have come to expect, we need to totally modernize the technology of the grid in a way that has not been done for over 50 years. The T&D system we have today has served us incredibly well. It is keeping the lights on and computers humming at a very high level of quality and reliability almost all of the time. However, the fundamental design of the system is 100 years old, and most of the basic technology is 1950s design. The current grid is under a lot of stress, and it needs to be modernized to serve our more demanding needs for the coming decades.

In particular, we need to fully computerize the grid. Every other sector of the nation’s economy has been computerized, except for this one. And, this is the most critical part of our entire infrastructure. If the electricity grid fails or is taken out in a terrorist attack, everything else stops too. We saw a clear example of that 17 months ago in the blackout in the East and Midwest.

What we need is a digitally run, fully computerized power grid. One that is on-line and intelligent, self-diagnosing and self-healing. The system needs several key components:

“- first, sensors throughout the grid. Everywhere. On transmission towers and local distribution lines, at every substation and major transformer, sending real time information about power flows that will enable us to optimize the functioning of the grid in normal circumstances, and when there is a problem developing on the system, to identify what is happening in real time.

“- second, we need microprocessors throughout the system. We need distributed computing to receive the monitoring information from those sensors in real time, fast enough to understand what is happening on the grid as it is occurring.

“- third, the modernized grid must have fast modeling and simulation capability to evaluate possible optimizing or corrective action in real time. These software systems must be faster than real time-in some cases, that means minutes or hours, but in some instances it has to be done in seconds or less.

“- finally, we need new, advanced power electronics. In particular, we need families of new digital, solid-state power controls that can respond instantly so power flows can be redirected and controlled in real time. These will include solid-state circuit breakers, fault current limiters, and power flow controllers that will both allow us to optimize the normal operation of the grid, and to take corrective action instantly when we have to. These will enable us to achieve dynamic islanding in emergencies and make the grid self-healing.

In this new intelligent grid, communications will be integrated with the power system. Everything in the system will be online and communicating in real time. The sensors, wide area monitors, portal devices, and other communications equipment on display and discussed today are just the beginning.

One tool that will aid in this process, and is available online for free, is a new IntelliGrid architecture that can be used by utilities, vendors, manufacturers and others to increase compatibility of equipment. It’s available to anyone through EPRI’s website.

Finally, a word about the cost of modernizing the grid. In absolute terms it will be expensive, up to $100 billion over the next 10 to 20 years. However, the benefits will far outweigh those costs. Several studies, most recently one by the Lawrence Berkeley National Laboratory, have concluded that the cost of power outages and disruptions are over $50 billion every year. We can make significant progress in this modernization if we start by focusing the $12 billion the industry is already spending every year on T&D upgrades and replacements. Let’s begin there, by making those installations and equipment compatible with an on-line, smart grid for the future.

This is part one of a two-part series about the power industry’s future. The second part, on breakthough innovations, will be published in the July/August issue of EL&P.

This article was originally delivered as a keynote speech at the Distribu-TECH Conference in January 2005.

Glauthier recently moved on from his job as president and CEO of the Electricity Innovation Institute (E2I), an affiliate of the Electric Power Research Institute (EPRI). He can be reached at tjglauthier@aol.com.