On August 14, 2003, the world was once again reminded about the importance of electricity as a blackout struck the northeast United States and eastern Canada. It was by far the largest power outage in history. The blackout affected over 50 million people and is estimated to have resulted in an economic loss of between $6 billion and $10 billion.
Given the urgency of needed improvements to the nation’s electric transmission system in order to avoid future blackouts and better handle the flow of electricity, government policy makers need to focus on the provisions within the National Energy Act now before Congress. The specific provisions will provide strong “backstop” authority to expedite the upgrade of electric transmission systems in instances where the existing regulatory process is incapable of making timely decisions. Such action is contemplated to overcome the slow pace of regulatory restructuring, a process that has been underway for over a decade.
Considering the enormity of the backlog and urgency of needed improvements, policy makers should focus the backstop mechanism on projects to bolster near-term reliability. Stakeholders must be encouraged to bring the restructuring effort to closure so that it can address longer-term projects. In both instances, regulatory uncertainty must be resolved to reduce investment risks that has hampered expansion of the nation’s transmission grid.
Frustration with the existing review and approval mechanisms creates temptation to use the prospective new authority to undertake a wide range of backlogged projects. However, under the best of circumstances developing new transmission corridors, acquiring necessary rights-of-way, and constructing miles of transmission towers and lines is a slow and contentious endeavor. While backstop authority consolidates the review and approval process among federal agencies, construction of new transmission corridors would still be subject to much the same scrutiny seen today. Although timelines would be compressed, it would most likely still take many years to achieve real progress. In the interim, key vulnerabilities in the grid would persist.
By some estimates it will take at least a decade and more than $56 billion to update the electric transmission infrastructure. With needs of this magnitude, if even just “key” projects are directed through a backstop mechanism, the process would still likely bog down. Instead, the backstop process must be designed to work in tandem with the restructuring process and not in lieu of it.
The nation’s economic health and well-being are dependent on an extremely complex system to deliver safe, affordable, and reliable electric power. That system is comprised of a wide range of technologies, computer systems, and people to make the system work. While efficiencies have greatly improved, the basic architecture of the process in use today is the same used by George Westinghouse to electrify the 1893 Chicago World’s Fair: Generation of electric power by central station generating plants; transmission over high voltage transmission lines; and distribution to end use lighting, motors, and other equipment over a low voltage distribution system.
What has changed dramatically is the manner in which the industry is organized and regulated. More than any other single factor, the incomplete restructuring of the electric utility industry from a vertically integrated, regulated rate of return business to an “unbundled” mix of regulated and market-based components is the primary reason why investment in the nation’s electric transmission infrastructure has dwindled to dangerously low levels.
While the proponents of unbundling tout the benefits that electric consumers can realize from a competitive market of diverse energy suppliers, the technical, economic, regulatory, and political issues surrounding the reconfiguration of the transmission system have proved to be a daunting challenge. At its core, the issue is an economic one: “who benefits?” and “who pays?” While federal and state regulators grapple with the immense complexity of recasting the regulatory process to accommodate a changing structure, each constituency involved examines the prospective outcome from their own position.
After 12 years consensus remains illusive. While states question if their residents will end up paying more than their fair share to support the grid at large, prospective investors in transmission projects attempt to evaluate the prospects of gaining a return on their investment amid changing sets of rules. The result has been virtual stagnation of resources to expand the grid.
A portfolio of long-term and near-term projects should be pursued in order to improve transmission system reliability as soon as possible while making steady progress on adding long-term capability to the grid. While the exact mix requires careful assessment, using the backstop mechanism to advance near-term projects can quickly dampen the likelihood of outages and blackouts that undermine economic growth, public safety, and national security.
For the near term, deployment of “high temperature-low sag” transmission cables can go a long way to resolve today’s problems. Replacing, or reconductoring, existing lines with composite core aluminum conductors, that transmit as much as twice the power of traditional high voltage conductors, is a highly cost-effective option for reinforcing electric paths through congested transmission corridors. It is far easier and less expensive to replace existing wires rather than developing new transmission routes and building new tower corridors. Moreover, this type of cable can be retrofitted in a very cost effective installation that does not require new engineering of tower support systems. Replacing existing cable with composite core conductor can typically be achieved for a capital expenditure of about 6 times less than the current alternative of constructing a new line (exclusive of the cost of land and associated permitting).
Using aluminum conductors with a time-tested, aerospace-derived composite core, made of glass and carbon fibers, provides four critical benefits. These benefits can accrue on the order of months instead of the seven to 10 years it otherwise takes to conduct environmental assessments, resolve public opposition, secure approval, and engage in major construction. Deferring or eliminating the need to build conventional new transmission facilities could save or postpone at least $10 billion of new capital expenditures. Early deployment would also contribute to the reduction of congestion costs, i.e., the extra costs consumers ultimately pay because access to low cost electricity sources is constrained. In the U.S., congestion costs are estimated to be well over a billion dollars per year.
Speed
Near-term projects can be reviewed, approved and installed quickly. The review process is simplified since a much narrower palate of alternatives need be considered and evaluated. Because land acquisition and large scale construction are avoided, implementation can be much faster.
Quick Payback
To be economical, a near-term project must have relatively short payback of several years or less. Large-scale transmission projects typically have paybacks of 15-20 years or more. Short paybacks enable customers to get immediate relief from congestion costs and accrue economic benefit from reduction in outage frequency.
“No Regrets” Flexibility
Even if a longer-term solution is implemented later and the near-term fix becomes obsolete, it will have most likely already paid for itself and provided needed relief in the interim. Considering the 7 to 10 years necessary to complete large scale projects, near-term relief can be well-worth the effort.
Low Cost
Near-term projects can be implemented for a fraction of the cost of large-scale transmission line projects. Adding a third transmission line and towers to relieve congestion on California’s notorious 83 mile long Path 15 will cost $323 million or almost $3.9 million per mile. Near-term projects, such as reconductoring to higher capacity, can be undertaken for $40,000 to $120,000 per mile. Lower cost enables more projects to be completed and simplifies financing.
Broad and Equitable Coverage
Because of their relatively low cost, a large number of projects can be pursued across the country for the same price of building one new transmission corridor. This enables more equitable transmission congestion relief nationwide than would otherwise be the case if resources were focused on a few big ticket projects.
Measurable Reliability Improvement
Most important is the economic value obtained by clearing system bottlenecks. Reducing the likelihood of catastrophic outages of the magnitude of risk of an August 14th scale event reduces the expected value of economic disruption by as much as $100 million for every percent improvement obtained in overall grid reliability.
While the near-term solution offers a fairly rapid, cost-effective way to alleviate current grid congestion, increase capacity and enhance reliability, a long term solution is needed that will facilitate the faster deployment of new, more reliable lines while keeping a lid on capital expenditures.
Again, advanced, high-tech composite core aluminum conductors and state-of-the-art composite-based towers offer cost-effective options for resolving the nation’s ongoing power demands. Because of their strength, resilience, low-sag, and high-temperature capabilities, new lines can be deployed in many locations that would not be possible due to the excessive sag and the higher electromagnetic fields (EMF) of the traditional steel cored cables.
Composite-based poles and lattice-structure towers are lighter, stronger, easier to erect, safer, more weather resilient and easier to deploy. For example, current steel towers require as many as 14 men, 2 cranes and 5 days’ time to erect. Three men can erect a composite-based tower in about a day without a crane – a substantial cost savings in man-hours, equipment, construction time, etc.
Moreover, composite towers are not as easy to bring down. They are typically engineered to withstand 200-mph winds and 6.9-Richter-Scaled earthquakes. They do not burn quickly or buckle in high heat…so they can withstand the ravages of devastating forest fires. And, if attacked with explosives, they dissipate the blast effects over a far greater area rather than in a single point. Therefore, they are less likely to collapse and pull down key transmission infrastructure.
New technologies also provide far more operational control for electric power utilities and distributors. Since 90 percent of all line failures occur at the cable splice, sensors can be integrated into composite core aluminum cable splices enabling providers of electricity to monitor changes in temperature, pressure, tension and vibration. This allows operators to implement preventative maintenance procedures and negate potential problems well before they can occur. New lines and towers can also be color-coded for enhanced safety and security. This is especially important in areas that may suffer “white out” conditions during blizzard conditions. Also, sensors can be used that provide real-time information about local weather and atmospheric gases, so that officials can better monitor and enforce homeland security issues.
In conclusion, Congress has recognized that the vulnerability of the nation’s electric grid is a matter of urgent national concern. Focusing backstop authority on projects that can provide relatively quick relief improves the odds that the country will not have to confront a series of avoidable disruptions that undermine the nation’s future.
ABOUT THE AUTHOR
Benton Wilcoxon, Chairman & CEO, Composite Technology Corporation, a global provider of electric utility solutions featuring its breakthrough composite technologies. CTC’s premiere product is a composite-reinforced conductor known as ACCC (Aluminum, Conductor Composite Core) cable, which has the potential to revolutionize electrical grids by offering twice the power of traditional aluminum cables, 25% stronger materials and dramatically improved reliability. CTC is based in Irvine, CA. For ore information visit: www.compositetechcorp.com.
Given the urgency of needed improvements to the nation’s electric transmission system in order to avoid future blackouts and better handle the flow of electricity, government policy makers need to focus on the provisions within the National Energy Act now before Congress. The specific provisions will provide strong “backstop” authority to expedite the upgrade of electric transmission systems in instances where the existing regulatory process is incapable of making timely decisions. Such action is contemplated to overcome the slow pace of regulatory restructuring, a process that has been underway for over a decade.
Considering the enormity of the backlog and urgency of needed improvements, policy makers should focus the backstop mechanism on projects to bolster near-term reliability. Stakeholders must be encouraged to bring the restructuring effort to closure so that it can address longer-term projects. In both instances, regulatory uncertainty must be resolved to reduce investment risks that has hampered expansion of the nation’s transmission grid.
Frustration with the existing review and approval mechanisms creates temptation to use the prospective new authority to undertake a wide range of backlogged projects. However, under the best of circumstances developing new transmission corridors, acquiring necessary rights-of-way, and constructing miles of transmission towers and lines is a slow and contentious endeavor. While backstop authority consolidates the review and approval process among federal agencies, construction of new transmission corridors would still be subject to much the same scrutiny seen today. Although timelines would be compressed, it would most likely still take many years to achieve real progress. In the interim, key vulnerabilities in the grid would persist.
By some estimates it will take at least a decade and more than $56 billion to update the electric transmission infrastructure. With needs of this magnitude, if even just “key” projects are directed through a backstop mechanism, the process would still likely bog down. Instead, the backstop process must be designed to work in tandem with the restructuring process and not in lieu of it.
The nation’s economic health and well-being are dependent on an extremely complex system to deliver safe, affordable, and reliable electric power. That system is comprised of a wide range of technologies, computer systems, and people to make the system work. While efficiencies have greatly improved, the basic architecture of the process in use today is the same used by George Westinghouse to electrify the 1893 Chicago World’s Fair: Generation of electric power by central station generating plants; transmission over high voltage transmission lines; and distribution to end use lighting, motors, and other equipment over a low voltage distribution system.
What has changed dramatically is the manner in which the industry is organized and regulated. More than any other single factor, the incomplete restructuring of the electric utility industry from a vertically integrated, regulated rate of return business to an “unbundled” mix of regulated and market-based components is the primary reason why investment in the nation’s electric transmission infrastructure has dwindled to dangerously low levels.
While the proponents of unbundling tout the benefits that electric consumers can realize from a competitive market of diverse energy suppliers, the technical, economic, regulatory, and political issues surrounding the reconfiguration of the transmission system have proved to be a daunting challenge. At its core, the issue is an economic one: “who benefits?” and “who pays?” While federal and state regulators grapple with the immense complexity of recasting the regulatory process to accommodate a changing structure, each constituency involved examines the prospective outcome from their own position.
After 12 years consensus remains illusive. While states question if their residents will end up paying more than their fair share to support the grid at large, prospective investors in transmission projects attempt to evaluate the prospects of gaining a return on their investment amid changing sets of rules. The result has been virtual stagnation of resources to expand the grid.
A portfolio of long-term and near-term projects should be pursued in order to improve transmission system reliability as soon as possible while making steady progress on adding long-term capability to the grid. While the exact mix requires careful assessment, using the backstop mechanism to advance near-term projects can quickly dampen the likelihood of outages and blackouts that undermine economic growth, public safety, and national security.
For the near term, deployment of “high temperature-low sag” transmission cables can go a long way to resolve today’s problems. Replacing, or reconductoring, existing lines with composite core aluminum conductors, that transmit as much as twice the power of traditional high voltage conductors, is a highly cost-effective option for reinforcing electric paths through congested transmission corridors. It is far easier and less expensive to replace existing wires rather than developing new transmission routes and building new tower corridors. Moreover, this type of cable can be retrofitted in a very cost effective installation that does not require new engineering of tower support systems. Replacing existing cable with composite core conductor can typically be achieved for a capital expenditure of about 6 times less than the current alternative of constructing a new line (exclusive of the cost of land and associated permitting).
Using aluminum conductors with a time-tested, aerospace-derived composite core, made of glass and carbon fibers, provides four critical benefits. These benefits can accrue on the order of months instead of the seven to 10 years it otherwise takes to conduct environmental assessments, resolve public opposition, secure approval, and engage in major construction. Deferring or eliminating the need to build conventional new transmission facilities could save or postpone at least $10 billion of new capital expenditures. Early deployment would also contribute to the reduction of congestion costs, i.e., the extra costs consumers ultimately pay because access to low cost electricity sources is constrained. In the U.S., congestion costs are estimated to be well over a billion dollars per year.
Using backstop authority to pursue an array of good near-term projects makes good public policy. Such projects share desirable attributes including:
Near-term projects can be reviewed, approved and installed quickly. The review process is simplified since a much narrower palate of alternatives need be considered and evaluated. Because land acquisition and large scale construction are avoided, implementation can be much faster.
To be economical, a near-term project must have relatively short payback of several years or less. Large-scale transmission projects typically have paybacks of 15-20 years or more. Short paybacks enable customers to get immediate relief from congestion costs and accrue economic benefit from reduction in outage frequency.
Even if a longer-term solution is implemented later and the near-term fix becomes obsolete, it will have most likely already paid for itself and provided needed relief in the interim. Considering the 7 to 10 years necessary to complete large scale projects, near-term relief can be well-worth the effort.
Near-term projects can be implemented for a fraction of the cost of large-scale transmission line projects. Adding a third transmission line and towers to relieve congestion on California’s notorious 83 mile long Path 15 will cost $323 million or almost $3.9 million per mile. Near-term projects, such as reconductoring to higher capacity, can be undertaken for $40,000 to $120,000 per mile. Lower cost enables more projects to be completed and simplifies financing.
Because of their relatively low cost, a large number of projects can be pursued across the country for the same price of building one new transmission corridor. This enables more equitable transmission congestion relief nationwide than would otherwise be the case if resources were focused on a few big ticket projects.
Most important is the economic value obtained by clearing system bottlenecks. Reducing the likelihood of catastrophic outages of the magnitude of risk of an August 14th scale event reduces the expected value of economic disruption by as much as $100 million for every percent improvement obtained in overall grid reliability.
While the near-term solution offers a fairly rapid, cost-effective way to alleviate current grid congestion, increase capacity and enhance reliability, a long term solution is needed that will facilitate the faster deployment of new, more reliable lines while keeping a lid on capital expenditures.
Again, advanced, high-tech composite core aluminum conductors and state-of-the-art composite-based towers offer cost-effective options for resolving the nation’s ongoing power demands. Because of their strength, resilience, low-sag, and high-temperature capabilities, new lines can be deployed in many locations that would not be possible due to the excessive sag and the higher electromagnetic fields (EMF) of the traditional steel cored cables.
Composite-based poles and lattice-structure towers are lighter, stronger, easier to erect, safer, more weather resilient and easier to deploy. For example, current steel towers require as many as 14 men, 2 cranes and 5 days’ time to erect. Three men can erect a composite-based tower in about a day without a crane – a substantial cost savings in man-hours, equipment, construction time, etc.
Moreover, composite towers are not as easy to bring down. They are typically engineered to withstand 200-mph winds and 6.9-Richter-Scaled earthquakes. They do not burn quickly or buckle in high heat…so they can withstand the ravages of devastating forest fires. And, if attacked with explosives, they dissipate the blast effects over a far greater area rather than in a single point. Therefore, they are less likely to collapse and pull down key transmission infrastructure.
New technologies also provide far more operational control for electric power utilities and distributors. Since 90 percent of all line failures occur at the cable splice, sensors can be integrated into composite core aluminum cable splices enabling providers of electricity to monitor changes in temperature, pressure, tension and vibration. This allows operators to implement preventative maintenance procedures and negate potential problems well before they can occur. New lines and towers can also be color-coded for enhanced safety and security. This is especially important in areas that may suffer “white out” conditions during blizzard conditions. Also, sensors can be used that provide real-time information about local weather and atmospheric gases, so that officials can better monitor and enforce homeland security issues.
In conclusion, Congress has recognized that the vulnerability of the nation’s electric grid is a matter of urgent national concern. Focusing backstop authority on projects that can provide relatively quick relief improves the odds that the country will not have to confront a series of avoidable disruptions that undermine the nation’s future.
ABOUT THE AUTHOR
Benton Wilcoxon, Chairman & CEO, Composite Technology Corporation, a global provider of electric utility solutions featuring its breakthrough composite technologies. CTC’s premiere product is a composite-reinforced conductor known as ACCC (Aluminum, Conductor Composite Core) cable, which has the potential to revolutionize electrical grids by offering twice the power of traditional aluminum cables, 25% stronger materials and dramatically improved reliability. CTC is based in Irvine, CA. For ore information visit: www.compositetechcorp.com.
