A Bold Vision for Transmission
and Distribution
Conference on Electricity
Transmission in Deregulated Markets
Carnegie Mellon University
December 15, 2004
Kurt Yeager, EPRI
Transforming Society
The vast networks of electrification are
the greatest engineering achievement of
the 20th century
– U.S. National Academy of Engineering
2
Copyright © 2003 Electric Power Research Institute, Inc. All rights reserved.
The obligation to serve
remains alive and vital in
the public mind
3
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Breaking the Limits on Electricity Value
Performance
• Networked digital
economy
Transformation
• Electric Light
• Refrigeration
Investment
4
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Pacing Issues to be Resolved
1. Poorly designed market reforms that
ignore the laws of physics
2. Depressed financial health reinforced by
regulatory confusion
3. Ineffective commingling of regulation and
competition
4. Lack of clear accountability and incentives for
infrastructure development & investment
5. Growing tension between electricity sector &
national well-being
5
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Restructuring Trilemma
Politics
Economics
Technology
Policy
6
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What is the root cause?
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Average U.S. Price of Residential Electricity
Service (1984 $)
¢/kWh
20
• Economies of scale
• Demand growth
18
16
14
12
10
8
6
4
2
0
1920
8
1930
1940
1950
1960
1970
1980
Copyright © 2003 Electric Power Research Institute, Inc. All rights reserved.
1990
2000
Average U.S. Price of Residential Electricity
Service (1984 $)
¢/kWh
20
18
16
14
Corporate
“Liposuction”
12
10
8
6
• Fuel costs
• Environmental requirements
• Lack of innovation
4
2
0
1920
9
1930
1940
1950
1960
1970
1980
Copyright © 2003 Electric Power Research Institute, Inc. All rights reserved.
1990
2000
Relative Consumer Prices, 1985-2001
(Prices calculated in 2001$, 1985=100)
160
150
140
Health Care
130
Phone Service*
120
Single-Family Homes
110
Cars
100
Electricity*
90
80
70
60
1985
1987
1989
1991
1993
1995
1997
* Average Household Monthly Bill
10
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1999
2001
Relative Consumer Prices, 1985-2001
(Prices calculated in 2001$, 1985=100)
160
150
140
Health Care
130
Phone Service*
120
Single-Family Homes
110
Cars
100
90
Electricity*
80
70
60
1985
1987
1989
1991
1993
1995
1997
* Average Household Monthly Bill
11
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1999
2001
Four Areas of Vulnerability
SQRA
• Security of power delivery and market systems
• Quality of power supplied
• Reliability of power supplied
• Availability of high value energy services
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Cost Pressures on the Electricity Sector
12
11
Price per kWh
10
9
8
7
1.
2.
3.
4.
5.
6.
6
5
4
3
2
Fuel
Environmental
Reliability Costs
Security
Capital
Labor
Today
13
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2015
Electricity Sector Life-Cycle
A Fork in the Road
Formation
Consolidation/
Growth
Maturity/
Stability
Energy
Crisis
Transformation
Financial
Crisis
Decay
PUHCA
1900
14
1935
1970
2005
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2035
Key Issue to be Resolved
Will the bulk electricity system
evolve to become the critical
infrastructure supporting the
digital society of the 21st
century, or be left behind as an
industrial relic of the 20th
century?
15
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Forward to Fundamentals
• Electricity is the engine of
prosperity and quality of life
• Electricity is a consumer
service- based enterprise
• Technology can relieve cost
pressures through elevation
of electricity service value
• Realizing these opportunities
requires transformation of
the electricity infrastructure
16
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Needed: An Interstate Electricity
Communications Superhighway
17
11/22/02
3163c1.17
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The Transformed Electricity Enterprise for
the 21st Century
• Digitally control the power
system
• Integrate electricity and
communications
• Transform meter into a two-way
consumer services gateway
• Integrate distributed resources
• Accelerate end-use efficiency
• Enable a robust advanced
generation portfolio
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Value of the 21st Century Transformation
Increasing the functionality and
value of electricity through
consumer benefits that far
outweigh the cost
• Increased U.S. productivity and
GDP growth rates
• Substantially improved energy
efficiency and electricity
intensity
• Accelerated reduction in
carbon emissions
• Improved power system
security and functionality
• Reduced cost of infrastructure
upgrades and expansion
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The Intelligrid: The Power Delivery System
of the Future
• “Smart”: With sensors
• “Flexible & Resilient”:
An intelligent network
w/real-time monitoring &
control
• “Self Healing”: Capable
of predicting and
immediately containing
outages
• Established Standards:
Enabling “plug & play”
distributed resources
and digital appliances &
devices
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The Intelligrid Technology Program
Intelligrid is centered around five
active projects:
1. Integrated Energy and
Communications Systems
Architecture
2. Advanced Distribution
Automation / Distributed Energy
3. Resources / Fast Simulation and
Modeling
4. Customer Portal
5. Power Electronics
21
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What Will it Take to Achieve this Vision?
• A modernized power delivery
infrastructure will cost ~$15
billion a year for 20 years
• Broken down per household,
the cost is equivalent to one
medium pizza each month!
• Consumers would save
$100s per year in cost of
goods and services, and
enable $1000s more in
personal income
22
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Capital Invested as % of
Electricity Revenues
60%
50%
40%
30%
Generation
20%
Transmission
10%
Distribution
19
25
19
30
19
35
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
0%
23
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The Plan of the Best Minds in Electricity R&D
“Every node in the
power network of the future will
be awake, responsive, adaptive,
price-smart, eco-sensitive
and interconnected with
everything else”
24
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“Consumers and
businesses need
reliable supplies of
energy to make our
economy run -- so I
urge you to pass
legislation to
modernize our
electricity system,…”
George Bush State of the Union
1/20/2004
25
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