Regional Grids in the U.S.

Regional Grids in the U.S. USAID/NARUC East Africa Regional Regulatory Partnership 1 st Partnership Exchange October 21, 2014 Dar Es Salaam

The Electricity Grid 10/23/2014 Source: National Renewable Energy Laboratory 2

Growth of U.S. Generating Capacity 10/23/2014 3 Source: National Renewable Energy Laboratory

Sources of U.S. Electricity Generation 10/23/2014 4

Future Electricity Generation 10/23/2014 5 Source: National Renewable Energy Laboratory

THE U.S. TRANSMISSION SYSTEM 10/23/2014 6

National Transmission System and Interconnects http://www.npr.org/2009/04/24/110997398/visualizing-the-u-s-electric-grid 10/23/2014 7

Advantages and Disadvantages to Interconnected Systems Advantages: Improved reliability: numerous generators help to maintain system frequency and avoid voltage collapse Inertia in the grid improves system stability Reduces the overall cost of providing reserves Opportunities to exchange information and cooperate during emergencies Encouraged new entry in the beginning of the process, which led to robust competition. Disadvantages: Possibility that an initial disturbance may lead to a large-scale blackout because of a cascading failure Requires: proper coordination and dialogue between regions to avoid such events from occurring. 10/23/2014 8

ISO/RTO Map Massachusetts Washington, D.C. Arkansas 10/23/2014 9 Source: PJM Interconnection.

Regional Market (ISO/RTO) Advantages 1. Reliability: keeping the lights on, balancing generation and demand. 2. Efficiency: ISOs/RTOs efficiently manage electric grids in a nondiscriminatory way, using markets to provide consumers with the best value from transmission and generation resources. 3. Transparency and open markets: well-structured, organized markets value transparent pricing, which assures customers that prices reflect actual supply and demand conditions. 4. Fostering innovation: enabling deployment of advanced grid technologies. The Top Four Advantages of Organized Wholesale Energy Markets from the ISO/RTO Council. 10/23/2014 10

Drawbacks of the market Capacity that is underutilized. CAPACITY UTILIZATION GRAPH System planning is hampered in the non-vertically integrated states because the states cannot direct where the resources should be built. 10/23/2014 11

LESSONS LEARNED FROM THE INTERCONNECTED SYSTEM AND WHOLESALE MARKETS 10/23/2014 12

Lessons Learned A market can have a combination of vertically integrated resources and non-vertically integrated resources. Key features are open access and non-discriminatory pricing. Market development can be done in stages. 10/23/2014 13

NERC Lessons Learned for Bulk System Operations Load Shedding Local load shedding procedures While load-shedding plans are effective for reducing large amounts of load over a large area, system operators should also have local load-shedding procedures that give them the flexibility to solve small local area voltage or line-loading problems. Training and guidance on load shedding Utilities should provide training and guidance to system operators on load-shedding plans. 10/23/2014 See: http://www.nerc.com/pa/rrm/ea/pages/lessons-learned.aspx 14

NERC Lessons Learned for Bulk System Operations Capacity Awareness Regional system operators must have awareness (at all times) of: generation (current and future hourly forecasts) power purchases sales transmission capacity available for importing power. They must have the tools that provide this awareness Despite multiple entities operating parts of the system, all operators must have: Procedures and tools in place to communicate under time pressure situations A mutual understanding of the critical information that must be communicated to other entities The necessary training to ensure communications between system entities. Training should include scenario simulations, under time pressure, which involve all system entities working together to solve a system problem. 10/23/2014 See: http://www.nerc.com/pa/rrm/ea/pages/lessons-learned.aspx 15

NERC Lessons Learned for Bulk System Operations Fuel Interdependency, Fuel Diversity Transmission operators and distribution planners should review fuel availability to determine what protection measures are needed in case of system contingencies or stress. Fuel production and delivery facilities should be evaluated for their dependence on electricity to provide fuel to ensure such facilities are protected from system stress conditions and load shedding. Generation dependent on fuels should insure it has sufficient storage capability readily accessible to meet generation demands and it should have access to alternative fuels if a critical facility. System operators and generators should review generation capacity and load balancing plans to ensure the plans: Efficiently maximize generation with available firm gas supply and minimize non-firm gas supply generation with alternatives in place if gas becomes unavailable. Address the usage of alternative fuels where available. Reduce loads (interruptible load, demand side management, etc.) when possible to allow continuing service to all firm loads with no interruptions. 10/23/2014 See: http://www.nerc.com/pa/rrm/ea/pages/lessons-learned.aspx 16

NERC Lessons Learned for Bulk System Operations Timing requirements in operational plans In the development of operating plans or procedures, organizations must consider if such actions are accomplishable within required time frames. All stakeholders or parties that have actions in the procedures should be involved in the review and approval of these procedures. 10/23/2014 See: http://www.nerc.com/pa/rrm/ea/pages/lessons-learned.aspx 17

CHALLENGES TO THE FUTURE ELECTRICITY SYSTEM 10/23/2014 18

Transmission System Challenges Transmission system in the nation was built with additional capacity to support load growth but not wholesale transactions Old infrastructure New interconnections Clean energy resources: variable renewable generation Given the age and increased use, the nation s existing transmission system is being stretched and needs updating 10/23/2014 19

Transmission Planning Planning process is complex, requires time, and multiple system impact studies feasibility study (long-term) mid-term study that looks at specific area needs site specific studies that identify needed system improvements Working groups and committees may be necessary to continually assess processes and challenges and recommend solutions 10/23/2014 20

Who Pays? Building transmission is expensive (345 kv line costs over $2 Million/mile) Utilities often find transmission investment for economic development projects competes with other investments such as distribution, generation, and projects to maintain reliability Generators wanting to interconnect to a system that already needs some upgrades, ask who should pay for what upgrades? 10/23/2014 21

REGIONAL PLANNING 10/23/2014 22

Regional Transmission Expansion Plans (RTEP) Each ISO/RTO conducts long-term regional planning to identify changes and additions that are needed to ensure reliability and operation (PJM example) PJM RTEP process uses a 15 year planning horizon Systematic and objective evaluation of proposed transmission and generation investments to ensure reliability compliance, but also evaluate public policy factors: Renewable energy requirements Demand response and energy efficiency At-risk generation Includes a mechanism PJM can use to mandate investment where reliability is needed Multiple stakeholder involvement (State commissions, utilities, power producers), with final approval by PJM board Identifies needs and benefits of transmission and generation projects. States evaluate siting requirements. Transmission owners are obligated to build transmission that PJM determines is critical to maintaining reliability standards 10/23/2014 23 Source: PJM Interconnection.

PJM RTEP 10/23/2014 24 Source: PJM Interconnection.

PJM Regional Transmission Expansion Plan (RTEP) 10/23/2014 25 Source: PJM Interconnection.

Interregional Planning 10/23/2014 26 Source: PJM Interconnection.

FERC Order 1000 The order specifies how public utility transmission providers plan for new transmission projects and allocate those costs. Clear and transparent procedures that result in the sharing of information regarding common needs and potential solutions across neighboring transmission planning regions to facilitate the identification of interregional transmission facilities that more efficiently or cost-effectively could meet the needs identified in individual regional transmission plans. Reliability transmission upgrades, market efficiency transmission upgrades and public policy transmission upgrades Order 1000 is broken into three main requirements. Planning: non-transmission solutions considering public policy requirements Cost allocation requirements across beneficiaries Nonincumbent developer requirements: merchant transmission encouragement. 10/23/2014 27

VARIABLE RESOURCE INTERCONNECTION 10/23/2014 28

Variable Energy Resources Distributed Energy Resources (DER) are now poised to reach significant levels in the region. Based on a review of current state policies and goals, a total of approximately 2,000 MW of DER is now anticipated in the New England region by 2023 Most DER are anticipated to be solar PV that is inverterinterfaced 10/23/2014 29

Variable Energy Resource Interconnection Challenges There are several key issues associated with Variable Resources that may need to be addressed in the short term: Voltage control High or low voltage Frequency control Reactive power issues Ramp rates- instantaneous reduction in generation 10/23/2014 30

Irradiance (W/m2) and Plant output (kw) Irradiance (W/m2) and Plant output (kw) Solar Penetration 1200 La Ola PV System, Lanai, HI 1000 Irradiance 1400 La Ola PV System, Lanai, HI 800 1200 600 Note that irradiance ramps are much higher than power output ramps due to the effect of geographic diversity within the plant. 1000 Irradiance 400 Plant output 800 200 This ramp rate event: 240 kw drop in 53 sec or or 4.5 kw/sec. Ramp rate would have been higher if the system were not limited to 400 kw 0 1.07 1.075 1.08 1.085 1.09 1.095 1.1 1.105 1.11 x 10 4 Time (1-second samples spanning 5:30 am to 9:30 PM) 400 Irradiance and PV system AC output A typical partly cloudy day in July PV system rating: 1,300 kw ac, presently limited to 400 kw ac (intentionally) 600 200 0 Plant output 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Time (1-second samples spanning 5:30 am to 9:30 PM) x 10 4 31

High Solar Penetration No renewables 11% renewables 23% renewables 35% renewables Lew et. al. How do Wind and Solar Power Affect Grid Operations: The Western Wind and Solar Integration Study. National Renewable Energy Laboratory. (September 2009). p. 6 32

Variable Resource Interconnection: Distribution or Transmission? Massachusetts interconnection standard applies to generators that will connect (grid tie) to the Distribution System (below 69kV). Above this level, interconnection requests must be submitted to the Independent System Operator, ISO New England (ISO-NE) Size of 5 MW or more must also notify ISO-NE 10/23/2014 33

U.S. Interconnection Codes and Standards 10/23/2014 34

National Electric Safety Code (NESC) 10/23/2014 35

WHAT COULD HAVE BEEN DONE BETTER? 10/23/2014 36

What could have been done better? Smart grid Renewable Energy Energy Efficiency Demand Response Energy storage 10/23/2014 37

How does this apply to East Africa? Some transmission, some local generation, some solar, battery, renewable energy, energy efficiency, make the system able to address clean energy resources when thinking of transmission. It does not need to provide transmission everywhere to provide service, i.e. microgrids, storage, renewables, hydro to connect local communities, solar thermal East Africa is very energy rich, it can be done at a reasonable cost with a high possibility of revenue from electricity sales across the continent 10/23/2014 38

Reference Slides

History: Transmission Before FERC Individual high voltage transmission lines were built to reliably deliver power from generators to specific load Centers Regional planning was limited to joint planning with neighboring (interconnected) utilities and building of jointly owned transmission lines jointly owned transmission lines State regulator involvement was limited Some coordination was done by power pools 10/23/2014 40

Prior to the 1970s Utilities handled every aspect of providing electricity: Generation Transmission Distribution to homes and businesses Utilities were regulated local monopolies that operated independently of each other. 10/23/2014 41

The Great Northeast Blackout of 1965 On Nov. 9, 1965, a blackout occurred as several Northeastern states and parts of Canada were hit by a series of power failures lasting as long as 13 hours. The blackout covered 80,000 miles and affected more than 30 million people. The blackout was caused by a faulty relay at a station in Ontario, Canada. 10/23/2014 42

Response to the Northeast Blackout of 1965 Concern about the system s reliability at the national and local levels. At the national/international level, the industry responded by creating a voluntary, utility-managed reliability organization, the North American Electric Reliability Council in 1968. At the regional and local level, the Northeast's power companies formed three "power pools" to ensure a dependable supply of electricity. 10/23/2014 43

Restructuring of Wholesale Electric Power As early as the 1970s, the United States Congress and the Federal Energy Regulatory Commission ( FERC ) which oversees the electricity industry nationally began enabling the restructuring of wholesale electric power. By the mid-1990s some of the New England states began to open proceedings to examine restructuring how their utilities operated. 10/23/2014 44

Legal Basis Federal level FERC was created by Congress under federal law and is an independent agency. Independent from political party influence because no more than 3 of the 5 Commissioners can be from one party. Independent from President s/congress influence because FERC decisions are reviewed by a court. Independent from parties influence because private discussions in contested case- specific proceedings are prohibited by FERC s ex parte regulation (18 CFR 385.2201). Because FERC is a creature of statute, it can only do what a statute allows it do. 10/23/2014 45

FERC-led Changes FERC created a level playing field for competitive markets, ensuring equal access to transmission grids. FERC encouraged states to require utilities to sell off power plants and gradually eliminate regulator-set rates in favor of prices determined by the markets. FERC also created independent system operators ( ISOs ) to oversee restructuring on a regional basis. These ISOs were given responsibility for ensuring reliability and establishing and overseeing competitive wholesale electricity markets. 10/23/2014 46

FERC Orders and U.S. Policy 1992- Energy Policy Act of 1992 (EPACT92) permitted generators to sell wholesale power to noncontiguous utilities 1996-To implement EPACT92, FERC orders 888and 889 opened access to transmission for all wholesale buyers and sellers of generation, established Open Access Same Time Information System (OASIS) and standards of conduct. Order No. 888 provided for an entity (e.g., ISO) to facilitate open access, it was not written with the intent to establish one 10/23/2014 47

FERC Orders and U.S. Policy 1999- Order No. 2000 codified what it means to be RTO-- Minimum characteristics, functions and ratemaking policy, principal of voluntary membership 2007 Order Nos. 890 and 890A identified nine transmission planning principles (Coordination, Openness, Transparency, Information Exchange, Comparability, Dispute Resolution, Regional Participation, Congestion Studies, Cost Allocation), consistent available transmission capacity 2011-- Order 1000 furthers regional and interregional coordinated transmission planning and cost 10/23/2014 48

INTERCONNECTION 10/23/2014 49

When is an Interconnection Request Submitted to the Utility? Interconnecting generation to a distribution circuit that does not have a wholesale transaction at the time of the application (State Jurisdictional) Generating facility will not be used to make wholesale sales of electricity in interstate commerce Energy will be consumed only on retail customer s site (Except in the case of Net Metering) Qualifying Facility, as defined by the Public Utility Regulatory Policies Act, selling 100% of its output to interconnected electric utility (i.e. through Power Purchase Schedule) 10/23/2014 50

When is an Interconnection Request Submitted to ISO-NE? Interconnecting generation to a distribution circuit which already has a wholesale transaction (FERC Jurisdictional) When selling power to a third party Increasing capacity of an existing generating facility* Materially modify an existing generation facility* Changing from energy only to energy and capacity unit There is no minimum size Net Metered Facility which wants to enter the capacity market *NOTE = Generation Facility with wholesale sales of electricity in interstate commerce (i.e. not compensated under Net Metering Tariff or Power Purchase Schedule) 10/23/2014 51

Responsibility for Costs Interconnecting Customer responsible for: Costs of the review by the Company and any interconnection studies conducted. (Application Fee, Supplemental Review, Impact Study, Detailed Study) All costs associated with the installation and construction of the Facility and associated interconnection equipment on the Interconnecting Customers side of the Point of Common Coupling (PCC). All costs incurred by Company to design, construct, operate, and maintain the System Modifications. May include ongoing charges. Costs for new services, service upgrades, service relocations, etc. Construction costs include CIAC tax liability. 10/23/2014 52

Why all the Reviews/Studies? Interconnecting Customer will ensure its Facility meets or exceeds requirements including: Transient Voltage Conditions Noise and Harmonics Frequency Voltage Level Machine Reactive Capability 10/23/2014 53

Why all the Review/Studies? Part 2 Protection Requirements for New or Modified Facility Interconnections with the EPS. NPCC underfrequency settings; 57Hz in 0.16 seconds and 58 Hz in 32 seconds for DG 30 KW and larger As size of DG increases and more DG is added to circuits, more studies are required, even for smaller DG. There is an interconnection queue and applications are processed in order received on the circuit and/or substation 10/23/2014 54

Energy Consumption in the U.S. 10/23/2014 55

The U.S. Transmission System 10/23/2014 56