Monthly Archives: August 2013

Providing 99.87% Reliability* Is Going to Cost a Lot More – Are There Related SG 2.0 Business Opportunities?

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Dom Geraghty


Historically, utilities have provided about “3 x 9s” reliability. The cost of this reliability is currently bundled into the price of electricity. This includes the cost of maintaining reserves, contingency plans, and automated generation control to cover the stochastic behavior of forced outages and electricity demand.

This cost is going up. Why?

Bulk Power Supply Uncertainty Is Affecting Reliability

The implementation of the RPS mandates is increasing the proportion of intermittent power production plants and by default decreasing the inertia, i.e., the damping ability, of the power system. As a result, a substantial amount of extra generation reserves and ancillary services are required to cover the increased uncertainty of supply while maintaining “3 x 9s” reliability levels. Recognizing this, most ISO markets trade various reserve and ancillary service products.

Trans-15-almost-purple-New-Image-150x150The transmission system is becoming more congested and there is widespread resistance against building new transmission lines. As a result, to maintain target levels of reliability and system security, more contingencies and remedial action plans and systems are needed to cover the increased uncertainty of delivery capability. Recognizing this, the ERCOT wholesale market trades month-ahead “congestion revenue right” products.

Real-World Examples of Related Supply-Side Reliability Events

A recent article by Dr. Paul-Frederik Bach, an expert in power system operations, discusses the impact of renewables penetration on the German power Grid. “The number of interventions has increased dramatically from 2010-2011 to 2011-2012…….

Bottlenecks are often detected in local grids. It makes no difference to the owner of a wind turbine if local or national grids are congested…………..In an attempt to establish an impression of the extent of interventions in Germany, EON Netz will be used as an example………..

During the first quarter of 2012, EON Netz has issued 257 interventions. The average length was 5.7 hours. Up to 10 interventions have been issued for the same hour. A total of 504 hours had one or more interventions. Thus, there have been interventions active for 23.1 percent of the hours during the first quarter of 2012..........

The total amount of curtailed energy from wind and CHP is probably modest, but the observations seem to indicate that German grids are frequently loaded to the capacity limits. Strained grids have a higher risk of cascading outages caused by single events.”

Another informative and very detailed analysis of a widespread outage in Europe in 2006 -- one which overloaded power lines and transformers in Poland by 120% and 140%, respectively -- can be found here. It includes a very interesting map of the European interconnected system showing voltage phase angle differences between substations varying from +60° to -50° across the region.

Demand-Side Uncertainty Is Also Affecting Reliability

Limited band-width, short-term frequency and voltage control is provided by traditional power plants.

However, the power industry does not have closed loop control between demand and supply. Continue reading

How Do You Spend $400 Billion? Part V: A Business Opportunity – Identifying the “Top 20%” High-Value Nodes in the Power System

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Dominic Geraghty


In Part IV of this dialog series, we presented a Least Cost Strategy for deploying SG 2.0. The present dialog discusses how we identify and screen the most valuable projects within the Least Cost Strategy and how we address the risks and uncertainties inherent in the deployment of these projects.

In all situations, it is the business case that provides the basis for the go/no-go investment decision of an SG 2.0 application in a particular location. As we’ve said previously, a complete business case will include market, regulation, power system impact, other technical considerations, and an assessment of the risks/uncertainties. It will also include an assessment of qualitative factors.

The primary prioritization metric for projects is the benefit-to-cost ratio of the business case, subject to meeting hard constraints such as service reliability and environmental compliance.

Identifying High-Potential SG 2.0 Opportunities

Developing a business case is a very resource-intensive task. We don’t want to do it for every potential SG 2.0 application. Is there an efficient way to develop a first-cut list of the “Top 20%” (most valuable) applications? Yes, power system operators can speed-up the process.

10. DSC_1334-150x150These power system operators, i.e., vertically-integrated utilities, utilities, distribution companies, ISOs, and RTOs, will be the main users of SG 2.0 applications. They are the power system experts. They should be able to develop an initial list of high-potential opportunities for SG 2.0 applications based on their knowledge of stressed system nodes and likely optimal locations.

Project and power system simulation models can then be used to confirm (or not) the value of the applications for these locations. This is a business opportunity for software developers and SG 2.0 vendors.

As part of this identification process, the benefits that an SG 2.0 application may bring to the broader power system needs to be considered (see the discussion on power system simulation models below).

Developing Business Cases

Having screened for the most valuable SG 2.0 application opportunities first, detailed business cases are developed for these opportunities. Some re-ranking in the initial list based on the results of the business cases will result. Certain trade-offs will still be inherent in the process, based in part on the level of risk that decision-makers are willing to tolerate, e.g., their valuation of short-term versus long-term savings, their views on an acceptable level of risk.

It is entirely likely that the business cases will exhibit our desired characteristic discussed in Part IV, i.e., conforming to the 80%/20% rule that projects that 20% of the projects will provide 80% of the benefits of SG 2.0 applications. This is a critical element in achieving our “least cost” goal to create a significant reduction in cost relative to a less selective, less discriminating, deployment approach. Continue reading