Greg Scheu, Senior VP-ABB Power Products and Mike Barnoski, Senior VP-ABB Power Systems, North America
In this issue, we are privileged to be able to share the thoughts and insights of two key executives from ABB’s North American Power Products and Power Systems divisions. Greg Scheu was recently promoted to Region Division Manager and head of Power Products after successfully heading ABB’s Automation Products division the last several years. His counterpart is Mike Barnoski, Region Division Manager and head of ABB’s Power Systems Division. Together, these senior executives are responsible for substantially all of the company’s power-related products, systems and services across North America.
As one of the most prominent and influential suppliers in North America as well as on a global scale, ABB is a company that is routinely on the leading edge of breakthrough technologies and new business strategies associated with both power generation and power delivery. This interview focuses on energy efficiency and provides an expanded and multi-dimensional view of initiatives for the rapidly-evolving Smart Grid that I think you will find both interesting and enlightening.
– Mike Marullo, Automation/IT Editor
EET&D: I’ve heard that from a generation perspective – clearly a key business area for ABB – power production can be fairly inefficient. In fact, I understand that as little as 30-35% of the energy produced from coal actually ends up as electricity at the end of the process in many cases. Do you find that inefficiency characteristic to be present in the transmission and distribution operations of utilities as well?
Barnoski: To gain an appreciation for the impact that improved efficiency can have, it helps to look at the price that’s paid for inefficiency, and nowhere is this more apparent than in the generation of electric power. Typically, the process converts the latent energy in a fuel stock (e.g., coal, gas, uranium) into mechanical energy in a generator and ultimately electrical energy. However, other generation sources like wind and hydro-power use the mechanical energy of moving masses of air or water to produce electric energy. Still other devices, such as fuel cells, use chemical reactions to generate electric energy. In all of these cases, though, some of the input energy is lost in the process.
The efficiency of generation varies widely with the technology used. In a traditional coal plant, as you mentioned, only about 30-35% of the energy in the coal ends up as electricity on the other end of the generator. So-called “supercritical” coal plants can reach efficiency levels in the mid-40s, and the latest coal technology, known as integrated gasification combined cycle (IGCC) is capable of efficiency levels above 60%. The most efficient gas-fired generators achieve a similar level of efficiency.
Obviously, though, even at 60% efficiency there is a tremendous amount of energy left behind in the generation process. That represents a higher cost of production for the generator, as well as a substantial waste of limited resources. There is, therefore, tremendous economic and ecological incentive to improve the efficiency of power generation so that more of the energy content of the input fuel is carried through to the output electricity.
EET&D: So, does that mean that there are specific costs that can be tied to the inefficiencies in the T&D system? If so, where do utilities have the greatest potential financial exposure?
Scheu: Once electric energy moves through the transmission and distribution system, some of the energy supplied by the generator is lost due to the resistance of the wires and equipment that the electricity passes through. Most of this energy is converted to heat. Just how much energy is taken up as losses in the T&D system depends greatly on the physical characteristics of the system as well as how it is operated. Generally speaking, T&D losses between 6% and 8% are considered normal.
It’s possible to calculate what this means in dollar terms by looking at the difference between the amount of electric energy generated and the amount actually sold at the retail level. According to data from the Energy Information Administration, net generation in the US came to over 3.9 billion megawatt hours (MWh) in 2005 while retail power sales during that year were about 3.6 billion MWh. T&D losses amounted to 239 million MWh, or 6.1% of net generation. Multiplying that number by the national average retail price of electricity for 2005, we can estimate those losses came at a cost to the US economy of just under $19.5 billion.
Congestion charges represent another significant cost of inefficiency in the T&D system. Congestion is the result of a number of factors, notably a lack of adequate transmission investment and an increase in bulk power transactions in competitive energy markets.
The California Independent System Operator reported congestion costs of $1.1 billion in 2004, $670 million in 2005, and $476 million in 2006. So, despite the progress being made, the cost of inefficiency in the T&D system is still quite significant. However, a more robust T&D system can provide a level, congestion-free playing field on which generators can compete.
EET&D: What is demand-side (i.e., as opposed to supply-side) energy efficiency, and how successful have demand-side efficiency measures been in your experience?
Scheu: The average person would likely point to energy consumption as the point where efficiency measures can be applied. Most of these discussions are on the supply-side, but there are definitely demand-side energy efficiency efforts as well.
Most people are probably familiar with the Energy Star program, or with the increasing popularity of compact fluorescent light bulbs. But the single largest consumer of electric power is the industrial motor, which is used to run everything from assembly lines to compressors to the fans that blow air into the combustion chamber of a coal-fired generator.
EET&D: It’s estimated that fully 65% of industrial power is used in motors of various sizes, most of which run at full speed whenever they are turned on. What can be done to alter that huge operational inefficiency?
Scheu: The vast majority of industrial motors are controlled by fixed-speed drives that cannot alter the speed of the motors they control. Variable speed drives ramp the motor’s speed up or down to meet the requirements at a given moment in time. The resulting energy savings can be enormous. VSDs can reduce consumption by as much as 60%, which in energy-intensive facilities can equate to millions of dollars a year in energy costs.
EET&D: What can you tell us about some of the newer, more advanced technologies and measures that have the greatest potential for improving efficiency in the transmission environment?
Scheu: One efficiency measure aimed primarily at the utilities is a US Department of Energy initiative aimed at implementing new efficiency standards for distribution transformers. There are over 40 million distribution transformers in service today in the US and are among the most ubiquitous and the most standardized pieces of electrical equipment.
The proposed standards will have a relatively modest impact on the efficiency of a given transformer, around four percent over current models. However, when this incremental gain is multiplied across the thousands of units operated by even a small utility, the result is impressive.
Barnoski: At the transmission level, there are numerous technologies that are already being applied to boost efficiency in transmission, and still more that have yet to reach full commercial implementation. Some of these technologies include:
• HVDC: Most of the transmission lines that make up the North American transmission grid are high-voltage alternating current (HVAC) lines. Direct current (DC) transmission offers great advantages over AC, however: 25% lower line losses, two to five times the capacity of an AC line at similar voltage, plus the ability to precisely control the flow of power. In addition HVDC underground applications eliminate the issue that many environmentalists have with overhead AC lines.
• FACTS Devices: FACTS – a family of power electronics devices known as Flexible AC Transmission Systems - provides a variety of benefits for increasing transmission efficiency. Perhaps the most immediate is their ability to allow existing AC lines to be loaded more heavily without increasing the risk of disturbances on the system. Actual results vary with the characteristics of each installation, but industry experience has shown FACTS devices to enhance transmission capacity by 20-40%.
• Gas-Insulated Substations (GIS): Gas-insulated substations essentially take all of the equipment you would find in an outdoor substation and encapsulate it inside of a metal housing. The air inside is replaced with a special inert gas, which allows all of the components to be placed much closer together without the risk of a flashover. The result is that it is now possible to locate a substation in the basement of a building or other confined space so that the efficiency of high-voltage transmission can be exploited to the fullest extent.
EET&D: The Business Roundtable’s Energy Task Force T&D Working Group, chaired by ABB, recently published a list of energy-efficient actions and technologies. Can you share what some of those technologies are?
Scheu: This working group recently published a summary of efficiency-enhancing actions and technologies. Technology options for improving effects of T&D may be classified into three categories:
1. Technologies for expanding transmission capacity to enable optimal deployment and use of generation resources
2. Technologies for optimizing transmission and distribution system design and operations to reduce overall energy losses
3. New industry standards for energy efficiency power apparatus.
Some specific measures likely to employ these technologies include:
• Distributed generation/Microgrids
• Underground distribution lines
• Reduction of overall T&D transformer MVA
• Energy storage devices
• Three phase design for distribution
• Ground wire loss reduction techniques
• Higher transmission operating voltages
• Voltage optimization through reactive power compensation
• Asset replacement schedule optimization
• And, power electronic transformers.
EET&D:Where are the most important benefits that can be derived from improved energy efficiency within the power T&D infrastructure?
Scheu: The “business case” for energy efficiency is fairly straightforward: Using less energy means paying less for energy. But a simple cost-benefit analysis might overlook some very important benefits that efficiency brings.
Greater energy efficiency in the T&D system means lower emissions in generation to deliver the same amount of consumed energy. Moreover, improved T&D efficiency will allow for the support of renewable generation sources that are cannot currently be accommodated at many injection points on the grid.
Within the context of the power system itself, it’s important to recognize how interrelated energy efficiency is with grid reliability. In many areas of the US, transmission constraints have reached the point where they not only cost consumers billions of dollars in congestion charges; they actually threaten the integrity of the power system itself.
Over the past twenty years, the situation has continued to deteriorate to the point where now the question of installing a new line is nearly moot in some locations. By the time it was completed, demand would long since have outstripped the ability of the local grid to meet it, so a short-term solution must be implemented in the interim.
As the reliable supply of energy, especially electric energy, continues to grow in importance, the potential impact of energy efficiency cannot be overstated. With the array of technologies and methodologies now available, efficiency stands ready to play a much larger role in the energy equation.
EET&D: The power infrastructure and subsequent equipment has aged over many decades of use, and there are risks associated with it. How can the efforts from many in IT, software and network management help shape the direction of what we now refer to as the Smart Grid?
Barnoski: IT, analytical software, and the ability to monitor the network in a real-time mode will enable operators to know what is actually taking place on the grid that is creating certain conditions or occurrences. Operators will be able to make much better informed decisions in much shorter time periods to reduce the risk of brownouts, blackouts and other system disturbances whose underlying cause is often obsolete equipment on the system.
Scheu: The concept of “intelligence” as applied to power systems is centered on the idea of pushing sensory and analytic capabilities further down the system hierarchy. In a smart grid, more can be done locally at the substation - or even the device level - sometimes without involving the operators or the computing resources in the control center. Utilities are already implementing smart devices in various applications (e.g., fault detection). The smart grid concept simply extrapolates this trend to encompass the entire grid.
EET&D: What are the key characteristics that separate the intelligent grid from legacy power systems?
Scheu: Some of today’s networks do incorporate certain “smart” elements, but generally not in a comprehensive way. The intelligent grid, therefore, is comprehensively:
• Self-healing, being able to manage itself with less reliance on operators, particularly in terms of quick response to changing conditions
• Predictive, in terms of identifying potential outages before they occur and also in applying operational data to equipment maintenance practices
• Real-time, in terms of communications and control functions
• Optimized to maximize reliability, availability, security, efficiency and economic performance
All of this is predicated on the widespread deployment of technologies designed to bring the required level of intelligence to various grid components as well as the communication and control systems that administer the system as a whole.
EET&D: What are the basic principles that underlie all of the intelligence technology being developed today?
Barnoski: There are a number of specific technology areas that enable the smart grid, but perhaps more importantly, there are two basic principles that underlie all of the technology. First is the idea of interoperability and by extension, open systems. For several years now, there has been a decisive move in the utility IT world away from proprietary standards and protocols toward commonly used commercial products. This is especially true of the non-specialized system components (e.g., databases) where off-the-shelf tools are taking the place of custom-developed applications.
The second underlying principle is real-time, two-way communications, which in turn facilitates the functionality improvements envisioned by the smart grid concept. A highly robust communications function is therefore a prerequisite for all of the detection and analysis that characterize the smart grid.
EET&D: What are the benefits to utilities and to customers of automating more of the operational decisions that in the past were made by human beings?
Scheu: Improved interfaces and decision support amplify human decision-making, and transform grid operators into knowledge workers. This speaks to the transformation of the utility enterprise that will come with the realization of the intelligent grid.
By automating more of the operational decisions that in the past were made by human beings, operators can focus their attention on the larger decisions that genuinely require operator intervention. By the same token, there are actions that intelligent system can take that would be impossible for a human being to replicate. So, one of the ways the intelligent grid optimizes performance is by leveraging both human beings and machines to do what they do best.
EET&D: How are automation and IT personnel meeting the growing demand for intelligence in the grid infrastructure?
Barnoski: Some specific examples of how smart technologies – and the practices they enable – can impact the operation and overall health of the grid.
• Real-time situational awareness and analysis of the distribution system can drive improved system operational practices that will in turn improve reliability
• Feeder automation (FA) improves reliability indices and helps utilities avoid penalties. FA enables fault location and preventative failure analysis to avoid costly outages. FA can also enhance work force management to increase productivity and improve safety.
• Substation automation (SA) provides a data warehouse for information on equipment condition from the feeder to the substation. SA enables the ability to plan, monitor, and control equipment below the control center.
• Smart communication-enabled devices can provide necessary information that enable better-informed operation and maintenance decisions
• System analysis and loss evaluation can improve efficiency of grid operations. Business case evaluation and tailoring of technology applications to fit business needs can further drive better use of resources.
EET&D: What are some of the drivers for adopting smart grid technologies?
Scheu: There are already strong drivers for utilities to adopt smart technologies and update aging infrastructure. From the regulatory side, the Energy Policy Act of 2005 requires state regulators to investigate advanced metering, time-based pricing and demand response programs.
The Energy Security and Independence Act of 2007, Title XIII, is specifically focused on smart grid functionality providing for the encouragement of demonstration projects, federal grants and matching funds for smart technology adoption.
Currently, the application of smart grid technologies is often approached in an isolated, piecemeal fashion. Automatic meter reading (AMR) is often the first phase of an intelligent grid initiative. These projects involve huge capital outlays – one study put the average at $700 million – and are typically driven by regulatory policies designed to improve customer pricing and reduce system costs. AMR can, however, and often does, act as the gateway to larger, more ambitious improvements. With the communications infrastructure in place, feeder automation, substation automation and other operations improvements can be justified.
EET&D: So, with a rational approach, it would seem that the business case for smart grid enhancements builds upon itself as more elements are added. With economic, regulatory and environmental forces driving it forward, what is it going to take for the grid of the future to become the grid of today?
Scheu: The T&D system is an efficiency enabler. With well-designed systems, consumers should be able to purchase power from the cheapest, most efficient or least polluting source. Reality, however, is not quite there yet. But the evolution to a smart grid, starting now, will enable a much more efficient energy value chain. You can be assured that we will do whatever we can to ensure it happens as quickly as possible using tools that are technologically advanced, affordable and easy to deploy and support.
