supplying our region’s electric power

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Choices, Money and Policy Tom Ferguson 3M McKnight Professor Department of Electrical and Computer Engineering

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Supplying our Region’s Electric Power. Choices, Money and Policy Tom Ferguson 3M McKnight Professor Department of Electrical and Computer Engineering. Key Points. Demand is growing Climate change is disrupting status quo Many policies, but no energy policy - PowerPoint PPT Presentation

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Page 1: Supplying our Region’s Electric Power

Choices, Money and Policy

Tom Ferguson3M McKnight Professor

Department of Electrical and Computer Engineering

Page 2: Supplying our Region’s Electric Power

Demand is growing Climate change is disrupting status

quo Many policies, but no energy policy Alignment of policy, capital and

technology is essential UMD has potential to shape this

alignment

Page 3: Supplying our Region’s Electric Power

Source: EIA

Page 4: Supplying our Region’s Electric Power

Electric Energy Demand in Minnesota

Source: CapX2020 Certificate of Need Filing with MPUC

Page 5: Supplying our Region’s Electric Power

Energy Sources Energy Uses

Source: EIA

In quadrillion Btu

Page 6: Supplying our Region’s Electric Power

Plosses= I2R

Page 7: Supplying our Region’s Electric Power

• Most electricity generated by use of fuel to produce steam

• Steam turns the blades of a turbine that spins a generator • Rotating

magnet in generator turns inside stationary coils of copper wire and generates flow of current

Page 8: Supplying our Region’s Electric Power

Future demand will be met primarily with non-renewable fuels (given today’s policy and economics)

Source: EIA

Non-Renewables• Fossil (coal, gas, oil)• Nuclear

Renewables• Biomass• Geothermal• Hydro• Solar• Wind

Page 9: Supplying our Region’s Electric Power

Future demand will be met primarily with non-renewable fuels (given today’s policy and economics)

Upper Midwest

Southeast US

Texas

California

Source: EIA

Page 10: Supplying our Region’s Electric Power

Fuel and technology costs are significant factors . . .

Source: EIA

Page 11: Supplying our Region’s Electric Power

. . . leading to questionable predictions of reasonable future prices

But, how will new policies change this outlook?Source: EIA

Page 12: Supplying our Region’s Electric Power

OPENING REMARKS, UN High Level Event on Climate Change – 24 September 07 Mr. Rajendra Pachauri Chairman of the Intergovernmental Panel on Climate Change (IPCC)

“. . . As far as mitigation is concerned the costs are going to be much lower than what was anticipatedearlier. If we stabilize the concentration of these gases at 445 to 490 parts per million of CO2equivalent which will give us an equilibrium increase, limit the equilibrium increase to 2 to 2.4degrees centigrade, that will cost the world less than 3 per cent of the GDP in the year 2030. Thismeans that the prosperity that we would normally achieve by 2030 may be postponed by a few

monthsat the most.

And as the honorable Secretary General has told us, we have up to 2015 if we want to stabilize at thatlevel, after which we will have to ensure that emissions go down substantially.There are several measures that we have assessed in terms of policy actions: incentives for

technologydevelopment; a price on carbon is absolutely crucial. Technology by itself will not do unless there is apricing framework that ensures that low carbon technologies are developed and disseminated on alarge scale. Investments in energy infrastructure have to be in a manner that is going to be climate

friendlybecause these investments will serve society for a long time to come. Lifestyle and behavioralchanges are important and in very simple terms that means the use of walking, cycling, all of whichwill make human beings healthier and so also the planet. . .”

Source: IPCC

Page 13: Supplying our Region’s Electric Power

Source: Intergovernmental Panel on Climate Change

Page 14: Supplying our Region’s Electric Power

Example: Minnesota Power’s Boswell 3 Coal Unit, near Grand

Rapids$200 million project; reductions of

81% in nitrous oxides emissions 90% in sulfur dioxide 93% in particulate matter Up to 90% in Mercury

Aggressive, early, costly enoughExpected increase in residential rates by 2010:

6.7%

Source: Minnesota Power Web Site

Page 15: Supplying our Region’s Electric Power

Minnesota Power’s Boswell 3 Coal Unit

Assume all CO2 from Unit is captured:

$45-$225 million/yr cost24% to 122% increase in rates

How does this compare with the cost of substituting a renewable technology?

Sources: IPCC, author calculationsAssumes $15-75/ton capture cost

Page 16: Supplying our Region’s Electric Power

Some important energy acts and policies:

Federal Power Act, 1935: Hydro, transmission regulation

PURPA, 1978: Birth of non-utility generators EPACT92: Exempt wholesale generators;

transmission access EPACT05: Incentives for nuclear, renewables Minnesota’s Next Generation Energy Act of 2007

Page 17: Supplying our Region’s Electric Power

. . . And Minnesota Is Heavily Affected

Sources: American Wind Energy Association

Installed Megawatts of wind

Page 18: Supplying our Region’s Electric Power

Who is influencing energy decisions? Hollywood, activists, politicians, business Jane Fonda MRI versus NMR Activist agency staff Vocal citizens with personal agendas

Who is missing? Informed, strategic thinkers good at debate

Page 19: Supplying our Region’s Electric Power

Long-term Investment Uncertainty

By 2020, Minnesota needs $2 Billion in new transmission

Perhaps $20 Billion in new generation

Some success with legislation

Page 20: Supplying our Region’s Electric Power

161 kV230 kV

345 kV

500 kV

Overloaded Line

Transmission Facilities

Source: PowerWorld Simulation from CapX2020

Not Green=Not OK

Page 21: Supplying our Region’s Electric Power
Page 22: Supplying our Region’s Electric Power

Finding 1: Electric capacity margins continue to decline — action needed to avoid shortageSome improved, some decreased. Fair progress overall

Finding 2: Construction of new transmission is still slow and continues to face obstaclesAlmost 2,000 miles of transmission were added in the past year. Fair

progress.

Finding 3: Fuel supply and its delivery to electric generation are vital to maintaining reliabilityStudies but no action in the critical, natural gas-dependent areas of FL,

CA, and New England. Poor progress.

Finding 4: Aging workforce presents challenges to future reliabilityIndustry largely uncommitted to investing in university programs to

meet 25% increase. Poor progress.1North American Electric Reliability Corporation (NERC) 2007 Long-term Reliability Assessment, 2007-2016; October 16, 2007

Progress on 2006 Findings

Page 23: Supplying our Region’s Electric Power

Finding 1: Capacity margins are still inadequateDemand will exceed committed capability early in next ten years

Finding 2: Integration of wind, solar and nuclear resources require new planning approachesIntermittent nature of renewables, and long lead times for nuclear, are challenges

Finding 3: High reliance on natural gas in some areas of US must be properly managed to reduce the risk of supply and delivery interruptions

Finding 4: Transmission situation improves, but more still requiredDouble whammy of aging infrastructure and limited new construction is number one

reliability concern

Finding 5: Aging workforce still a challengeOn all types of positions. Blame demographics, cost cutting, early retirements, fewer

programs

1North American Electric Reliability Corporation (NERC) 2007 Long-term Reliability Assessment, 2007-2016; October 16, 2007

10-Year Outlook

Page 24: Supplying our Region’s Electric Power

Public Understanding of Energy Elasticity of Public Behavior on Energy International Response to Climate

Change Availability of Skilled Professionals and

Craft Reliability, Robustness, Security of Supply Global Competitiveness that Results

Page 25: Supplying our Region’s Electric Power

Regardless,

Investment and Employment Opportunities Are Immense,

Particularly in Technologies That Are Deemed “Sustainable”

Page 26: Supplying our Region’s Electric Power

Courses in Catalog: Anth 4631: Human Ecology Biol 1089: Northland Environmental Issues Biol 1096: Science, Policy, Environment Econ 4721: Natural Resource and Energy

Economics Geog 2306: Environmental Conservation Geol 3100: Earth’s Climate and Environment Geol 5220: Global Climate Change Phil 3325: Environmental Ethics Phys 5561: Astrophysics

New Courses: Environmental Science Degree and courses ECE 5995: Energy Conversion Systems

Page 27: Supplying our Region’s Electric Power

Demand is growing Climate change will impact choices

significantly The U.S. has failed to create comprehensive

policy; state efforts are not sufficient Alignment of policy, capital and technology is

essential to long-term energy policy UMD has growing potential to shape this

alignment through its graduates and faculty