Planning and Operating Considerations for
a Carbon Constrained Grid
Some Practical Considerations for Utilization of Demand
Programs and Renewables
Presentation to
Central Virginia IEEE
Charlottesville, VA
30 April 2009
Harold Adams
Project Director – Business Development
Dominion Resources Services
© 2009 Dominion
Presentation Outline
• Presentation Objective: Highlight basic bulk power system operating
characteristics that affect utilization of new resources
• How can demand programs and renewables be deployed in combination
with existing electric system assets?
• The Bulk Power System and its Regulatory Framework: How the grid
is managed
• Regional Transmission Organizations
• North American Electric Reliability Corporation (NERC) standards
• Renewables and Demand Programs as a Part of Total Electric Supply
• Overview of resource supply stack and load characteristics
• Operating factors
• Long Range Planning factors
• Policy Considerations for a Carbon Constrained Grid
• Update of Dominion Generation plans for renewables and nuclear
Components of the Electric Power
System
Information courtesy of IEEE-USA - Electripedia.us
The US Electric Power System:
Three Interconnections
Reliability Oversight
FERC
NERC
•
FERC has regulatory
jurisdiction over transmission
tariffs, wholesale market rules
and grid reliability
•
NERC develops and enforces
FERC approved mandatory
reliability standards
•
RTOs and all “users, owners
and operators of the bulk
power system” are bound by
FERC/NERC standards and
regulations
RTOs
(PJM, MISO, ISO-NE)
Utilities and Market
Participants
Reliability Oversight
Regional Transmission Organizations (RTOs) and Utilities
share responsibility for planning and operation of the grid
under FERC/NERC oversight
Reliability Oversight
Dominion Virginia Power is part of the PJM RTO
NERC
• Established as voluntary reliability organization
following the Northeast blackout in 1965
• Industry standards formalized into regulations under
EPAct 2005, effective 1/1/07
• Congress required standards be tightened after the 2003
blackout
• Adherence to NERC reliability standards is mandatory
• Standards approved and enforced by FERC, effective 6/18/07
• Standards have the status of federal regulations comparable to
environmental laws or safety regulations like OSHA
• Standards apply to both operating and planning of the grid
• Fines of up to $1,000,000 per day for violations
Reliability Relationships
NERC Regions
NERC, Demand Response and
Renewables
• NERC standards apply to equally to demand programs,
renewables, conventional generation and the transmission
system
• NERC recognizes both reliability benefits and risks related to
expansion of both demand-side programs and renewable
energy:
“The potential benefits that demand-side and distributed generation
resources bring to bulk power system reliability must be balanced with
the operational and forecasting challenges being faced as the
penetration of these resources increases.”
“Wind resources are growing in importance in many areas of North
America as new facilities come online. With growing dependence on
wind generation, it is vital to ensure that these variable resources are
reliably integrated into the bulk power system.”
– NERC 2008 Long Term Reliability Assessment
Renewables and Demand Programs as a Part
of Total Electric Supply
• How are new resources integrated into the total supply
portfolio in real time?
• How do new resources fit into long range resource plans?
• Match supply to
demand
• Maintain stable
grid operation
within limits
• Meet NERC
standards
Photo Source: PJM 101 Training Materials
Renewables and Demand Programs as a Part
of Total Electric Supply
• How are new resources integrated into the total supply
portfolio in real time?
• How do new resources fit into long range resource plans?
Imagine this is you
Photo Source: PJM 101 Training Materials
DAILY AND REAL TIME OPERATION
Reliability Fundamental:
Frequency Control
Within an allowable bandwidth, the level of generation
MUST equal load at all times
• Frequency changes when
generator or load levels change
•If generation is less than load
frequency drops
• If generation is greater than
load frequency rises
Daily and Hourly Supply:
A Two Step Process
• Step 1 – What generation is needed to meet tomorrow’s
load?
– Assess day ahead load forecast against availability and costs of
generation that can be on line
– Some generators may have long start up times
– Some generators may be out of service for maintenance or
equipment failures
– Transmission system conditions can affect the selection of
generation
– Resources with variable output add uncertainty to the planning
process
Daily and Hourly Supply:
A Two Step Process
• Step 2 – In real time, what operating level should be
achieved by each unit to maintain reliability while minimizing
cost?
– Where does the next MW come from?
– “Security constrained economic dispatch” based on marginal
production cost or purchase price
– Transmission flows and voltages must be managed
– Need to maintain spinning and off line generation reserves for
unforeseen events
Daily and Hourly Supply:
A Two Step Process
Unforeseen Events: Actual operation never matches the plan
Daily and Hourly Supply:
A Two Step Process
• Consequences of not properly performing steps 1 and 2:
– If load is greater than generation, frequency drops below
60 Hz
– If load is much greater than generation, the system
becomes unstable and load must be disconnected to avoid
uncontrolled blackouts
– If equipment is overloaded or voltage is too low, load
must be disconnected
– Violations of mandatory NERC reliability standards
(EPAct 2005)
Load Demand and Supply Characteristics:
Where does wind generation fit?
Generation output must
match load at all times.
Conventional
Supply Stack
Peaking
Intermediate
lBase Load
Load Curve Source: PJM 101 Training Materials
Gas, Oil,
Hydro
Gas, Oil,
Coal,
Pumped
Storage
Hydro
Nuclear,
Coal, Run
of Stream
Hydro
Load Demand and Supply Characteristics:
Where does demand response fit?
Demand response
programs typically
targeted to reduce the
peak.
Demand
Response Peak
Reduction
Conventional
Supply Stack
Peaking
Intermediate
lBase Load
Load Curve Source: PJM 101 Training Materials
Gas, Oil,
Hydro
Gas, Oil,
Coal,
Pumped
Storage
Hydro
Nuclear,
Coal, Run
of Stream
Hydro
Load Demand and Supply Characteristics:
Where does energy efficiency fit?
EXAMPLE: Time
Period of Greatest
Benefit for High
Efficiency A/C
Energy efficiency
programs serve to alter
the load shape.
Conventional
Supply Stack
Peaking
Intermediate
lBase Load
Load Curve Source: PJM 101 Training Materials
Gas, Oil,
Hydro
Gas, Oil,
Coal,
Pumped
Storage
Hydro
Nuclear,
Coal, Run
of Stream
Hydro
Load Demand and Supply Characteristics:
Where does wind generation fit?
Adding wind displaces
other generation
operating on the
margin.
Generator output
must vary to match
changing demand.
Supply Stack
with Wind
Peaking
Variable output of
wind plants
affects operation
of peaking and
intermediate
generation
Intermediate
Gas, Oil,
Hydro
Gas, Oil,
Coal,
Pumped
Storage
Hydro
WIND
lBase Load
Load Curve Source: PJM 101 Training Materials
Nuclear,
Coal, Run
of Stream
Hydro
Load Demand and Supply Characteristics:
Where does wind generation fit?
Source: PG&E presentation at IEEE Plug In Hybrid Vehicle Symposium, September
19, 2007 http://www.ieeeusa.org/policy/phev/presentations/Panel%202%20Tang.pdf
Load Demand and Supply Characteristics:
Where does solar generation fit?
Like wind, solar
generation affects
operation of peaking
and intermediate
generation.
Supply Stack
with Solar
Peaking
Intermediate
Gas, Oil,
Hydro
Gas, Oil,
Coal,
Pumped
Storage
Hydro
SOLAR
WIND
lBase Load
Load Curve Source: PJM 101 Training Materials
Nuclear,
Coal, Run
of Stream
Hydro
Load Demand and Supply Characteristics:
Where does solar generation fit?
Note rapid and large drop in output
PV Plant output on a partly-cloudy day (Sampling time 10 seconds)
Source: NERC Special Report: Accommodating
High Levels of Variable Generation, April 2009
Load Demand and Supply Characteristics:
Where does renewable generation fit?
California average wind and solar output, along with net demand, July 2003
Source: NERC Special Report: Accommodating
High Levels of Variable Generation, April 2009
Renewables and Demand Programs:
Implications for Real Time Operation
• The more supply options there are to meet customer demand, the
better. Demand response and renewables can be important
contributors.
– Success of demand response and conservation programs is largely
dependent upon actions of individual consumers
• In general, the presence of large amounts of intermittent wind and
solar energy can add complexity to the generation commitment and
control process
– System must respond to variability in output to maintain frequency
– Intermittent resources are of limited value in responding to outages and
operating emergencies (output not controllable)
–Transmission system must be designed to accommodate output variability
• Technical issues must be addressed before a high reliance on
renewable resources can be achieved. High variability in output can
create reliability and customer service risks.
LONG RANGE SUPPLY PLANS
Renewables and Demand Programs:
Contribution to Long Range Supply Plans
• How could you run the system every day if adequate
generation, transmission and demand response resources
were not provided for in advance?
Imagine this is you
Photo Source: PJM 101 Training Materials
Renewables and Demand Programs:
Contribution to Long Range Supply Plans
• Forward assessment of peak
load and supply is essential to
maintain reliability.
– Long lead times for siting
and construction
• Resource plans must provide
for reserves to account for
forecast errors and other
uncertainties.
• Load forecasts must capture
the impact of conservation and
demand response.
• CO2 limits could put added
pressure on capacity margins if
plants are retired or carbon
controls are installed.
Capacity Margins in the U.S.
Source: NERC 2008 Long Term Reliability Assessment
Load Growth Drives the Need for New
Infrastructure
•
Load growth in Virginia is fueled by population increase and strong
business growth, particularly in hightech sector
•
Sufficient infrastructure must be put in place to assure compliance with
mandatory NERC standards for expected future loads
•
Demand response and conservation programs can reduce the level of
required infrastructure investment if they “move the curve”
Source: PJM 2009 Load Forecast Report
Long Range Capacity Planning:
Where do wind and solar fit?
• Wind farms are typically de-rated below
nameplate capacity for purposes of long term
reliability planning.
Supply Stack
with Wind
Peaking
Gas, Oil,
Hydro
– Capacity allowed is based on output
consistently produced during peak load periods.
– Typically less than 20% of nameplate
Intermediate
Gas, Oil,
Coal,
Pumped
Storage
Hydro
• Treatment of large solar installations is similar.
• Renewables will not eliminate the need for new
base load capacity without technology advances
SOLAR
WIND
lBase Load
– Higher firm capacity rating possible if justified by
actual performance
• Renewable sources must compete
economically with other sources of supply.
Nuclear,
Coal, Run
of Stream
Hydro
–Value of renewables credits a factor
•PJM wholesale capacity and energy markets
provide framework for reliability and economics
– Generation located close to loads
generally has benefits
Long Range Capacity Planning:
Where is the wind?
Long Range Capacity Planning:
Wind Availability and Demand Centers
Source: NERC Special Report: Accommodating High Levels of Variable Generation, April 2009
Blue - high wind potential,
Brown - large demand centers, and
Green - little wind and smaller demand centers.
Long Range Reliability Planning:
How do you deliver wind power to customers?
Possible $80B Transmission Expansion for Renewable Future
20% Wind Scenario - Joint Coordinated System Plan: http://www.jcspstudy.org/
POLICY CONSIDERATIONS FOR A
CARBON CONSTRAINED GRID
IEEE-USA National Energy Policy
Recommendations
Approved by IEEE-USA Board of Directors in January 2009:
• Increase Energy Efficiency
•
•
•
•
Education and user awareness
Energy efficient user technologies and standards
Delivery system losses
Information technology applications
• Break Addiction to Oil by Transforming Transportation
• Plug-in Hybrid Vehicles
• Alternative transportation fuels
Plug In Hybrid Vehicles and CO2
Source: Environmental Assessment of Plug-In Hybrid Electric Vehicles, July 2007. Joint study of the
Electric Power Research Institute and the Natural Resources Defense Council
IEEE-USA National Energy Policy
Recommendations
• Greening the Electric Power Supply
• Expanding Renewable Generation
• Expanding Nuclear Power
• Capturing Carbon Emissions from Fossil Power Plants
• Building a Stronger and Smarter Electrical Energy
Infrastructure
• Transform the network into a Smart Grid
• Create a truly national transmission system
• Develop Massive Electric Storage Systems
Considerations for a Carbon Constrained Grid:
Things to think about for Virginia
• Move ahead from where we are
• Existing investment is very large and not easily changed
• Changes will not occur overnight
• New options need to complement operation of what is already there,
not disrupt it
• Maintain NERC compliance
• Not optional. Renewables and demand programs as well as other
generation and transmission must comply with standards
• The full range of supply and demand options available is likely to be
needed to maintain NERC compliance in combination with carbon
constraints and load growth.
• Proposals not compliant with NERC can not be implemented or
operated effectively in practice
• Transmission investment is likely to be needed to support
widespread implementation of renewable power sources
Considerations for a Carbon Constrained Grid
• Fuel diversity in long range capacity plans is desirable
• Aids operators in the event of fuel supply disruptions
• Adds operating flexibility to overall system
• Renewables and nuclear can make an important contribution
• Expanded energy storage capability could add flexibility and
reliability
• Can work well in combination with intermittent resources
• However, energy storage may involve additional energy losses and
CO2 emissions
• Economic signals matter - retail rates and wholesale prices
• Required to optimize utilization of demand response and generation
in real time
• Needed for proper valuation of renewables and demand response
• Needed for proper evaluation of trade-offs – Generation vs.
transmission vs. demand response
Considerations for a Carbon Constrained Grid
• Don’t forget delivery system efficiency
• All new network high voltage transmission lines typically reduce
overall transmission system losses and improve delivery efficiency
• Reducing losses reduces generation output at the margin
• Reducing generation output reduces emissions including CO2
• Locating generation (renewable or conventional) near loads reduces
losses
• Demand and energy efficiency programs can reduce losses
proportionately
• Interconnection with a large Regional Transmission
Organization like PJM offers flexibility
• Greater range of intermediate generators to provide control response
as compared to smaller markets or individual utilities
• More options for operating strategies that maximize benefits
• Economic signals provided through wholesale market design
• GATS (Generator Attributes Tracking System) to verify RECs
Dominion’s Renewable Energy Portfolio
March 2009
© 2009 Dominion
Overview of Dominion:
Financial Summary
Fortune 500 U.S. (2008):
Ranked 161st
Forbes Global 2000 (2008)
Ranked 276th
Total Market Capitalization (2/4/09)
$21.3 billion
Total 2008 Revenues:
$16.3 billion
Total Assets (12/31/08):
$42.3 billion
Trading Symbol:
D (NYSE)
Overview of Dominion:
Our Footprint
Virginia’s Energy Gap
What Does This Energy Gap Mean In Virginia?
• Virginia is the second-largest importer of electricity
in U.S. (behind CA)
• Projected energy growth is equivalent to adding 1
million homes to the region
• Of 4,000 megawatts required, 2000 must be
“always-on” base load
• Conservation not expected to address all of the gap
Dominion’s Integrated Strategy
• Develop and maintain a diverse and broad energy
portfolio
• Promote major conservation and energy efficiency
programs
• Develop renewable generation
• Infrastructure development – clean coal, advanced
nuclear, natural gas, electric transmission upgrades
• Support Governor Kaine’s 10-year Energy Plan
Dominion’s Integrated Strategy
• Develop and maintain a diverse and broad energy
portfolio
• Promote major conservation and energy efficiency
programs
• Develop renewable generation
• Infrastructure development – clean coal, advanced
nuclear, natural gas, electric transmission upgrades
• Support Governor Kaine’s 10-year Energy Plan
Virginia’s Renewable Portfolio Standard
(RPS)
• Dominion’s existing utility-owned renewable assets reach 2% level
• Dominion is growing its renewable project portfolio
• To comply with RPS requirements, Dominion needs:
• 4% by 2010
• 7% by 2016
• 12% by 2022
• Evaluating all available options to meet the targets
• Existing utility-owned renewable generation
• Build new renewable facilities in Virginia
• Purchase RECs / renewable energy
DOMINION’S
RENEWABLE ENERGY ASSETS
Dominion’s Renewable Assets:
Utility-Owned Generation Portfolio
Utility-Owned Facilities – Operating
Pittsylvania – Virginia
Altavista – Virginia
Gaston – North Carolina
Capacity
Type
83 MW
Biomass
6 MW
Biomass
225 MW
Hydro
99 MW
Hydro
Cushaw – Virginia
2 MW
Hydro
North Anna – Virginia
1 MW
Hydro
Roanoke Rapids – North Carolina
Utility-Owned Facilities – Operating Total
416 MW
Utility-Owned Facilities – In Development (announced)
Virginia City Hybrid Electric Center * – Virginia
Various Sites – Wind Projects with BP – Virginia
Utility-Owned Facilities Total:
117 MW
TBD
Biomass
Wind
533 MW
* Represents up to 20% of proposed Virginia City Hybrid Electric Center 585 MW coal station
Dominion’s Renewable Assets:
Merchant Generation
Capacity
Type
NedPower Mount Storm Wind Farm** - West Virginia
132 MW
Wind
Fowler Ridge Wind Farm (Phase I)** - Indiana
150 MW
Wind
Fowler Ridge Wind Farm (Phase II)** - Indiana
175 MW
Wind
Prairie Fork Wind Farm - Illinois
300 MW
Wind
Merchant Renewable Facilities – Under Construction
Merchant Renewable Facilities – In Development (announced)
Merchant Renewable Facilities
TOTAL RENEWABLE FACILITIES:
757 MW
1290 MW of Renewable Assets
** Capacity shown as Dominion’s net share (projects are 50/50 partnerships)
WIND ENERGY DEVELOPMENTS
Dominion’s Wind Energy Developments:
Our Announced Wind Farms
Mount Storm
Grant County, WV
264 MW
(Operating)
Bluestone River
Tazewell County, VA
Size TBD
(In Development)
Mill Creek
Wise County, VA
Size TBD
(In Development)
Fowler Ridge
Benton County, IN
300 MW
(Operating)
Prairie Fork
Montgomery County, IL
300 MW
(In Development)
1 MW = Power for about 250
homes/businesses
Dominion’s Wind Energy Developments:
NedPower Mount Storm Wind Farm
262 ft
Completed
Wind Turbine (T-2)
Turbine Dimensions:
Rotor Diameter:
Tower Height:
262 ft
256 ft
Total Height to Blade Tip:
388 ft
256 ft
388 ft
Distance from Bottom
of Blade Tip Arc to Ground: 125 ft
Height of the
Federal Reserve Bldg
In Richmond:
125 ft
393 ft
Dominion’s Wind Energy Developments:
BP Partnership in Virginia
•
In April 2008, Dominion and BP announced their 2nd wind partnership
•
Dominion & BP will jointly develop, construct, and operate wind projects in Virginia
•
Dominion will participate through its utility, Virginia Electric & Power Company
•
Two wind project sites announced in January 2009: Tazewell and Wise counties
VIRGINIA
Dominion’s Wind Energy Developments:
BP Partnership in Virginia (continued)
• Evaluating several VA opportunities; our WV wind experience is readily
exportable to VA wind development
• Dominion and BP are in the early stage of site analysis
• Utilizing the VA landscape classification system (VWEC/JMU)
• Performing Phase I environmental analyses
• Characterizing sites based on desktop and field analysis
• Plan to bring in state regulatory / environmental agencies early
Virginia Wind Resources – Ranked 28th
BIOMASS ENERGY DEVELOPMENTS
Dominion’s Renewable Assets:
Pittsylvania Power Station (Biomass)
•
Pittsylvania Power
Station
•
Dominion Virginia
Power asset
•
Capacity: 83 MW
•
Largest biomass
facility in eastern
U.S.
•
High reliability
•
Base-load
resource
Biomass: It’s all About the Fuel
• The key to a successful project is a long-term economic fuel supply
• Green wood chips from forest residue selected as fuel of choice
• Byproduct of timbering for pulp and lumber industries
• Currently a waste product with low competition to purchase
• Long-term supply expected due to sizeable pulp and lumber operations and
extensive timber tracts
• Consistent product with minimal foreign material
• Ash has beneficial reuse as fertilizer, favorable emissions
• Supply market will need to be developed for new plants
• First mover advantage is critical vs. pellet and cellulosic ethanol producers
• Can support plants sized 50–60 MW without straining local supply
Biomass – Different Technology than Coal
•
Coal systems much larger
• Individual units 100 to 1000 MW
• Typically pulverize the coal and burn it in suspension
•
Biomass systems much smaller
• Typically 1 to 50 MW
• Typically burn on a grate
Pittsylvania “Wood Basket”
• Pittsylvania Station
•
90 MW Gross Capacity
•
Capacity Factor 66% (2007)
•
660,000 Biomass tons (2007)
– VA 84.5%
– NC 15%
– MD/WV 0.5%
• 30, 60, 90, 120 minute drive times shown
• 70% of fuel (2007) within 90 minute
drive time
• Numbered circles represent other large
users of low-grade wood (primarily pulp
and lumber operations)
Virginia Biomass Resources
Green Tons Per Acre Per Year:
de minimus
< 0.05
0.05 – 0.10
0.10 – 0.20
> 0.20
VCHEC Biomass Plan
• 585 MW coal and biomass plant, under construction
• Fuel Requirements
• Up to 20% Biomass authorized by Air Permit – 1,370,000 Tons/Year
• Air Board imposed minimum Biomass Combustion Requirements
– Within 3 years after COD (2012) – Biomass Combustion must = 5%
– Year 5 after COD, increase 1% each year to minimum of 10%
• Beginning Year 2016 5% = 275,000 Tons of Biomass
• Beginning Year 2017 6% = 330,000 Tons of Biomass
• Year 2021 10% = 550,000 Tons of Biomass
• Fuel plan being developed by Fuels group
ENERGY STORAGE
Bath County Pumped Storage Facility
• World’s largest pumped storage station
• Unique resource
• Jointly owned with Allegheny Energy
• 10% of U.S. pumped storage capacity
• Helps make renewable energy dispatchable.
Summary:
Benefits of Renewable Energy Investment
• Reduces Dominion’s carbon intensity
• Diversifies Dominion’s new build portfolio
• Lowers risk to fuel price volatility
• Development pipeline/infrastructure is scalable up or down to respond
to regulations/market (such as Federal RPS or Carbon Legislation)
• Provides shareholder benefits
• Competitive ROEs
• Green expansion may enhance Dominion’s EPS multiple
• Provides ratepayer with carbon hedge
Renewables Summary
1.
Dominion is committed to achieving Virginia’s voluntary goal of 12% of base
year electricity sales coming from renewable resources by 2022
2.
Wind, biomass, and hydro energy will be the largest contributors to
Dominion’s renewable energy supply in Virginia & North Carolina
3.
Wind and biomass will be the next major developments for Dominion’s
renewable energy growth in Virginia
DOMINION’S NUCLEAR POWER
DEVELOPMENTS:
NORTH ANNA 3
Proposed North Anna 3 Nuclear Unit
• Proposed for the same site as existing North Anna Units 1 and 2
• Approximate size = 1500 MW
• In service date after 2016
New Nuclear at North Anna
• Existing North Anna site is suitable for additional
nuclear generation
• The infrastructure is largely in place
• The proposed reactor produces almost the same
amount of electricity as the two existing North Anna
reactors combined
• Advanced cooling towers would be added to cool
the unit
• No additional heat placed into Lake Anna
New Nuclear at North Anna:
Benefits for Region
• Helps fill the Virginia Energy Gap without carbon
emissions
• Creation of up to 3,000 jobs to build the unit over a
four year period
• Permanent employment for 750 workers to operate
the unit
• Millions of dollars in new tax revenues
• Positive economic impact to surrounding
communities from employees buying homes, cars
and other services
North Anna 3 Development Status
• NRC approval is in process
• Dominion's Early Site Permit (ESP) for the North Anna Power Station
site received approval from the NRC on Nov. 20, 2007.
• Dominion submitted a Combined Operating License (COL)
application to the Nuclear Regulatory Commission on Nov. 27, 2007.
• Progress of the project can be tracked at the
Dominion and NRC websites:
• http://www.dom.com/about/stations/nuclear/northanna/naps3.jsp
• http://www.nrc.gov/reactors/new-reactors/col/north-anna.html
© 2003 Dominion