The National Energy SuperGrid

1
The National Energy SuperGrid Value
Implementation

• Chaim Braun
• Presentation at the
• National Energy SuperGrid Conference
• Palo Alto, CA
• November 6-8, 2002

2
The National Energy SuperGrid

• VALUE

3
The National Energy SuperGrid Value Summary

• The Energy SuperGrid, by providing enhanced
  inter-regional transmission interconnections,
  will
• Improve reliability of national transmission
  system
• Improve reliability of electricity supply
  (limited increase in reserve margins)
• Allow diurnal shifting of wholesale generation
  blocks
• Optimize regional power plants generating mixes
• Support transition to nuclear and renewable
  energy technologies

4
The National Energy SuperGrid Value Summary
(Cont.)

• Provide Regional Energy Storage capability
  (Backup reserve margin)
• Reduce electric price volatilities
• Reduce consequences of fossil fuels burning
• Support production of nuclear electrolytic
  hydrogen
• Support future transition to Hydrogen economy
• Provide long-distance tunnel- based
  transportation corridors

5
The National Energy SuperGrid Transition to New
Industry Structure

• Transition to new RTOs regime irreversible
• Transition resulting in loss of local vertical
  market power, reduced control of future of
  utility organization
• Evolving National SuperGrid supports increased
  regional interconnectivity and horizontal
  re-aggregation
• Emerging new power, wires, organizations could
  use the SuperGrid to regain control of their
  destiny through horizontal integration

6
Regional Transmission Organizations in Operation
or Under Discussion (FERC 2002)
7
The National Energy SuperGrid Relieving
Intermediate-Term Transmission Bottlenecks

• Near-term transmission fixes implemented by 2010
• National SuperGrid can provide new demonstration
  projects in the 2020s time frame
• A potential Eastern Interconnection SuperGrid
  demonstration opportunity - enhancing
  transmission link between PJM Interconnection and
  NYISO
• A potential Western Interconnection SuperGrid
  demonstration opportunity - further expanding
  Path 15 in California beyond the third 500 KV AC
  overhead line
• Energy SuperGrid will allow back-to-back AC-DC-AC
  interlinking of neighboring RTOs (TVA-ECAR,
  SERC(Southern) FRCC)

8
The National Energy SuperGrid Relieving
Intermediate-Term Transmission Bottlenecks in the
Eastern Interconnection
9
Regional System Interconnections NYISO
10
Main Transmission Tie-Lines Between PJM
Interconnection and NYISO
11
Power Transfer (MW) Histogram on the Branchburg
(PJM) Ramapo (NYISO) Line
12
Power Transfer Levels (MW) Going East on the
Branchburg (PJM) Ramapo (NYISO) Line
13
Power Transfer (MW) Frequency Distribution on the
Branchburg (PJM) Ramapo (NYISO) Line
14
Power Transfer (MW) Histogram on the Three PJM
East New York City Tie Lines
15
Power Transfer (MW) Frequency Distribution on the
Three PJM East New York City Tie Lines
16
Regional System Interconnections U.S.
Southeast
17
The National Energy SuperGrid Relieving
Intermediate-Term Transmission Bottlenecks in the
Western Interconnection
18
The National Energy SuperGrid Economics

• Financing the National SuperGrid should be based
  on selling U.S. Government (USG) bonds
• Funding method similar to financing the Federal
  Highway System
• SuperGrid will be incrementally constructed
  (spatially temporally)
• A 500 KV overhead AC line costs 1.2 Million
  /Mile, and requires 175 Feet of corridor width.
  (NTGS) Transcontinental overhead AC line would
  cost upwards of 4 Billion Dollars
• Superconducting transmission lines could cost a
  factor of 5-10 above cost of overhead lines
• Full implementation of National SuperGrid require
  several decades
• Annual Budgetary impacts manageable

19
The National Energy SuperGrid Benefits

• The National Energy SuperGrid benefits, over
  time, will exceed implementation costs. Benefits
  could include
• Increase energy independence
• Reduce environmental consequences of fuels
  extraction, refining, and transportation
• Reduce fossil pollutant emissions from automotive
  vehicles
• Reduce fossil power plants pollutants emissions,
  control costs, societal damages
• Provide national security value by
• Compensating for regional electric supply
  disruptions
• providing alternative secure transportation
  routes, using system of underground tunnels

20
The National Energy SuperGrid - Reduced Demand
for Long Distance Fossil Fuels Transport Networks

• The National Electric SuperGrid could
  additionally
• Reduce need for Northern expansion of natural gas
  pipeline network, from South Central region
• Avoid need for large natural gas pipelines
  construction from Canadian Rockies to U.S.
  Midwest
• Reduce need for oil, and natural gas imports from
  Mexico
• Avoid transporting coal by unit trains from
  Powder River Basin, Mn, to Midwestern power
  plants
• Resolve the argument between electric utilities,
  railroad companies, over coal by wire vs. coal
  by rail in favor of the electric utilities
• Lower coal hauling rates by railroads for
  non-electric applications

21
The National Energy SuperGrid Savings to
National Economy

• The accumulated savings related to implementation
  of the Energy SuperGrid, will accrue from
• Rationalizing generation transmission systems
• Reducing economic consequences of electricity
  supply disruptions
• Increasing electrification of the national energy
  economy
• Reducing price volatilities, increasing energy
  prices stability
• Increasing national energy independence
  (political economic)
• Reducing price pressures on fossil fuels
  (Non-electric sector)
• Providing lower costs electricity to all consumer
  classes
• Reducing the need for expanding alternative
  energy infrastructure networks
• Reducing costs of pollutant emissions from,
  legacy fossil plants
• Providing commodity electrolytic hydrogen
  (Chemical, transportation sectors)
• Such savings are not easily quantified, but will
  accrue over time, exceeding the higher initial
  costs of constructing the National Energy
  SuperGrid

22
The National Energy SuperGrid Risk of No Action

• Avoiding commitment to the National Energy
  SuperGrid could result in
• Perpetuating limited interconnectivity of
  national electricity system and reduced
  reliability of supply
• Less than optimal regional generation mixes,
  higher economic costs
• Continued higher electric price volatilities
• Lack of regional electric energy storage
• Reduced penetration of nuclear renewable power
  plants
• Continued dependence on imported fossil fuels
  (political, economic, security uncertainties)
• Continued large scale pollutants emissions from
  fossil power plants
• Delayed transition to the hydrogen economy

23
The National Energy SuperGrid

• IMPLEMENTATION ISSUES

24
The National Energy SuperGrid Relation to
Current Studies

• The Energy SuperGrid concept represents an
  evolutionary extension of missions identified in
• - The National Transmission Grid Study (NTGS)
• - The Transmission Grid Solutions study of the
  DOEs Electricity Advisory Board
• - Vice President Cheneys National Energy Policy
  Report (NEPR)
• - The Draft Hydrogen Economy Roadmap Study
• National Energy SuperGrid will be a
  Federally-supported overlay to new RTO electric
  grids
• Current studies propose transmission grid
  solutions for the next two decades.
  Implementation of the National SuperGrid concept
  will extend over several decades, building on
  progress achieved in implementing recommendation
  of current studies

25
The National Energy SuperGrid Implementation by
Extension of Current Grids

• Implementation of the Energy SuperGrid concept
  requires large scale engineering development.
  Does not depend on new scientific breakthroughs
• Large scale oil and natural gas pipeline already
  exists. Limited hydrogen pipeline system now in
  operation in U.S. and in Europe
• Full scale implementation of the National Energy
  SuperGrid will extend over several decades.
• Annual impacts on the national budget will be
  manageable
• Energy SuperGrid will be the electric analog of
  Federal Highway System
• Energy SuperGrid has twice longer components
  lifetime than current fossil power plants and
  overhead transmission lines.
• Energy SuperGrid concept could provide organizing
  principle for large scale energy RD program

26
U.S. Pipeline Technology That Hydrogen Can Build
On
Oil Pipelines
27
The National Energy SuperGrid Funding Options

• The National Energy SuperGrid could be based on
  regional, for profit, regulated, independent
  transmission companies (ITCs)
• ITCs will plan, finance, construct operate
  SuperGrid transmission assets
• Transmission assets could be funded from sale of
  tax-exempt Federal and State bonds
• ITC Ratemaking will be based of performance based
  regulatory (PBR) approach
• A price structure for SuperGrid transmission
  services could include
• - Fixed Access Charge on loads guaranteeing firm
  capacity reservation
• - Congestion Charge on generators injecting MW
  into the SuperGrid
• - Energy Transfer Charge on each MWh delivered
• All access and energy charges be price-capped and
  adjusted for regulatory lags through PBR review

28
The National Energy SuperGrid Funding Options
(Cont.)

• An early example of a for-profit ITC is the
  American Transmission Company (ATC), established
  on January 1, 2001, owning transmission
  facilities in Wisconsin, Michigan Illinois,
  with book value in excess of 500 Million Dollars.
  ATCs transmission lines construction budget
  till 2004 is 100 Million /Year.
• For-profit ITCs could subcontract construction of
  new lines in their systems to merchant
  transmission companies, such as the proposed
  Neptune Project that will connect Atlantic Canada
  to New England, New York PJM, through 4,800 MW
  high voltage direct current (HVDC) line.
• Another proposed for-profit merchant transmission
  project is the TransAmerica Grid, planning to
  link mine-mouth coal-fired plants in Wyoming
  through long distance DC lines to load centers in
  the Chicago and Los Angeles areas
• For-profit Merchant transmission projects could
  by compensated by granting them rights to issue
  Firm Transmission Rights (FTRs) (Capacity
  reservations) on their line segments. FTR charges
  should remain within the price ceilings
  established by the PBR rate-setting process

29
The National Energy SuperGrid New Plants
Interconnection to the Grid

• Construction of new nuclear and renewable power
  plants connected to the National Energy
  SuperGrid, could be initiated by large
  utility/power developers/vendors consortia,
  granted preferential terms Power Purchase
  Agreements (PPAs), issued by large end-user
  organizations, such as the USG, State
  Governments, regional utilities, or direct
  customers (Bilateral contracts)
• The National superconducting SuperGrid will allow
  direct power purchase contracting among further
  removed plant owners and end-users, than would be
  the case with the current AC transmission
  networks, due to the SuperGrid ability to
  transfer large power blocks over longer distances
  with minimum losses
• Preferential Term PPAs could provide electricity
  sales prices incrementally higher than prevailing
  regional market clearing prices (MCPs), for a set
  period of years early in the plants operating
  life. The early in life incremental revenues
  above regional MCPs would be returned, with
  interest, later in plants life, once generating
  costs decline below prevailing market prices,
  profitability improves, and the plant generates
  adequate cash flows

30
The National Energy SuperGrid Regional Energy
Transfers

• The National Energy SuperGrid will allow
  large-scale inter-regional bulk power transfers,
  corresponding to diurnal demand variations (East
  to West transfers), and seasonal demand
  variations (North-South transfers). Examples
  could include
• East to West inter-regional bulk power transfers
  following diurnal peak demand variation among
  time zones
• South to North interconnection between the TVA
  and So.ECAR North to South interconnection from
  the TVA and Southern Company into FRCC
• North-South seasonal transfer in the Midwest.
  East North Central region - winter peaking
  (Chicago, IL). East South Central region - summer
  peaking (Dallas, TX)
• North-South seasonal power transfers along
  Pacific Coast. Pacific Northwest has excess hydro
  generation during winter and spring seasons.
  Southwest and California have excess capacity
  during late summer and fall seasons