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Supplying our Region’s Electric Power

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

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Supplying our Region’s Electric Power

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  1. Supplying our Region’s Electric Power Choices, Money and Policy Tom Ferguson 3M McKnight Professor Department of Electrical and Computer Engineering

  2. Key Points • 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

  3. Demand is Growingbut Conventional Resources are Not Source: EIA

  4. Demand is Growingbut Conventional Resources are Not Electric Energy Demand in Minnesota Source: CapX2020 Certificate of Need Filing with MPUC

  5. Electrical Power Dominates US Energy Conversion In quadrillion Btu Energy Sources Energy Uses Source: EIA

  6. Plosses= I2R

  7. 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

  8. Demand is Growing Future demand will be met primarily with non-renewable fuels (given today’s policy and economics) • Non-Renewables • Fossil (coal, gas, oil) • Nuclear • Renewables • Biomass • Geothermal • Hydro • Solar • Wind Source: EIA

  9. Demand is Growing Future demand will be met primarily with non-renewable fuels (given today’s policy and economics) Texas Upper Midwest Southeast US California Source: EIA

  10. Demand is Growing Fuel and technology costs are significant factors . . . Source: EIA

  11. Demand is Growing . . . leading to questionable predictions of reasonable future prices But, how will new policies change this outlook? Source: EIA

  12. Climate Change is Shaping Decisions • OPENING REMARKS, UN High Level Event on Climate Change – 24 September 07 • Mr. RajendraPachauri • 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 anticipated earlier. If we stabilize the concentration of these gases at 445 to 490 parts per million of CO2 equivalent which will give us an equilibrium increase, limit the equilibrium increase to 2 to 2.4 degrees centigrade, that will cost the world less than 3 per cent of the GDP in the year 2030. This means that the prosperity that we would normally achieve by 2030 may be postponed by a few months at the most. And as the honorable Secretary General has told us, we have up to 2015 if we want to stabilize at that level, 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 technology development; a price on carbon is absolutely crucial. Technology by itself will not do unless there is a pricing framework that ensures that low carbon technologies are developed and disseminated on a large scale. Investments in energy infrastructure have to be in a manner that is going to be climate friendly because these investments will serve society for a long time to come.Lifestyle and behavioral changes are important and in very simple terms that means the use of walking, cycling, all of which will make human beings healthier and so also the planet. . .” Source: IPCC

  13. Climate Change is Shaping Decisions Source: Intergovernmental Panel on Climate Change

  14. Climate Change is Shaping Decisions . . . and will overshadow current efforts to reduce emissions 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 enough Expected increase in residential rates by 2010: 6.7% Source: Minnesota Power Web Site

  15. Climate Change is Shaping Decisions . . . and will overshadow current efforts to reduce emissions Minnesota Power’s Boswell 3 Coal Unit Assume all CO2 from Unit is captured: $45-$225 million/yr cost 24% to 122% increase in rates How does this compare with the cost of substituting a renewable technology? Sources: IPCC, author calculations Assumes $15-75/ton capture cost

  16. Many Policies, But No Policy 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

  17. Some Policies Change Annually . . . Installed Megawatts of wind . . . And Minnesota Is Heavily Affected Sources: American Wind Energy Association

  18. Many Policies, But No Policy 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

  19. More Transmission Needed Regardless of Generation Type Long-term Investment Uncertainty • By 2020, Minnesota needs $2 Billion in new transmission • Perhaps $20 Billion in new generation • Some success with legislation

  20. Result of Not Adding Transmission Not Green=Not OK Source: PowerWorld Simulation from CapX2020

  21. Reliability is at Speed of Light

  22. Progress on 2006 Findings Progress on 2006 NERC Findings Finding 1: Electric capacity margins continue to decline — action needed to avoid shortage Some improved, some decreased. Fair progress overall Finding 2: Construction of new transmission is still slow and continues to face obstacles Almost 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 reliability Studies 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 reliability Industry 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

  23. 10-Year Outlook Progress on 2006 NERC Findings Finding 1: Capacity margins are still inadequate Demand will exceed committed capability early in next ten years Finding 2: Integration of wind, solar and nuclear resources require new planning approaches Intermittent 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 required Double whammy of aging infrastructure and limited new construction is number one reliability concern Finding 5: Aging workforce still a challenge On 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

  24. Issues • 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

  25. Regardless, Investment and Employment Opportunities Are Immense, Particularly in Technologies That Are Deemed “Sustainable”

  26. Campus Coursework is Growing 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

  27. Conclusion • 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

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