U.S. Electrical Transmission System Becoming Outdated

A Fitch Investment report states that strains on the U.S. power delivery system are beginning to show with the current system characterized by aging infrastructure, significant underinvestment and outdated technologies.

There are concerns regarding both reliability and capacity. With integrated regulated utilities as traditional owners of transmission (following a period of corporate restructuring and industry deregulation in many states coinciding with a period of financial stress for many utilities), the transmission system has been both underinvested and, as many believe, not adequately maintained.

In the last decade most transmission investments were made to meet additional demand rather than maintaining the existing system. According to the U.S. Department of Energy (DOE), 70% of the transmission lines are 25 years or older, 70% of power transformers are 25 years or older and 60% of circuit breakers are more than 30 years old.

The strain on this aging system is beginning to show, particularly as market participants and regulators are placing new functions, such as facilitating competitive regional markets for which it was not designed. Due to a doubling of electricity demand and generation over the past 30 years as well as the advancement of wholesale electricity markets, transfers of large amounts of electricity across the network have increased significantly in recent years.

Getting new transmission on the ground continues to be hindered by siting, historically the greatest hurdle to adding new transmission capacity. 'Transmission developers still face a struggle before state utility commissions despite Federal enhancements to FERC,' said Karen Anderson, Director, Fitch Ratings Global Power team.

Congestion occurs when available low-cost energy cannot be delivered to the demand location due to transmission limitations. At these times, higher cost power generation located closer to the load center must be dispatched to meet load requirements. American Electric Power Co., Inc.’s (AEP) Wyoming-Jacksons Ferry line provides a good example of the challenges in siting new multistate transmission. This line went into commercial operation earlier this year, 16 years after it was first formally proposed. Fourteen years were spent disputing siting issues with state and federal agencies. Construction of the line was completed in 27 months.

The slowdown of merchant generation investment since the building boom of the late 1990s and a developing trend toward diversity in the generation mix are causing utilities and their state and federal regulators to re-evaluate the role of transmission in bringing wind, coal and hydro resources onto the network.

The level of investment in longdistance, high-voltage wires that move electricity around and between regions of the country has not been keeping pace with the growing demands imposed on the system.

On Aug. 8, 2006, the DOE released its National Electric Transmission Congestion Study. The DOE identified three classes of congestion areas that merit further federal attention.

1. Critical congestion areas are parts of the country where it is critically important to remedy existing or growing congestion problems because the current and/or projected effects of the congestion are severe. The DOE identified two such areas: Southern California and the region stretching from metropolitan New York to northern Virginia.
2. Congestion areas of concern exhibit large-scale congestion problems or the potential for such issues, but more information and analysis is necessary to determine the size of the problem and how new transmission could address it. The areas of concern were New England, Phoenix-Tucson, Seattle-Portland and the San Francisco area.
3. Conditional congestion areas are where transmission congestion is not acute at present but could become exacerbated if significant wind, coal or nuclear generation is built without simultaneous development of associated transmission capacity. The conditional congestion areas were Montana-Wyoming, the Dakotas- Minnesota, Kansas-Oklahoma, Illinois, Indiana and Upper Appalachia, and the Southeast as shown on the map below.

Unfortunately, there are practical limitations in the distance electricity can be transmitted, and electricity flows are monodirectional. Since electricity just flows where it wants to and suffers some level of degradation, transmitting electricity across long distances does not occur, and there is currently no way to transmit electricity between the East and West coasts, for example.

Due to its new backstop authority, FERC can now site transmission lines, under certain circumstances, when states fail to do so in a reasonable time frame or lack the authority to approve the siting. FERC received comments on its rulemaking regarding how it plans to implement this authority and will likely finalize the rule in the next few months.

CONCLUSION

Despite planned and projected increases in transmission investment, it remains to be seen whether or not it will be enough to fix the aging grid. On Oct. 16, 2006, in the NERC’s first reliability assessment as the electric reliability organization (ERO), it stated that North American transmission systems are expected to meet reliability requirements in the near term.

However, as customer demand increases and transmission systems experience increased power transfers, portions of these systems will be operated at or near their reliability limits more of the time. Under these conditions, coincident unavailability of generating units, transmission lines or transformers, while improbable, can degrade bulk power system reliability.

Furthermore, some portions of the grid will not be able to deliver available resources to areas to meet minimum levels for adequacy or be able to support all desired electricity market transactions. In the long term, reliable transmission will depend on the close coordination of generation and transmission planning and construction as well as the adoption of longer term planning horizons that are 10 years or more.

The complete report Frayed Wires: U.S. Transmission System Shows its Age (15 pages) is available here. (registration required)

Comments

[Thomas Pedersen]

I'm so glad our powerlines in Denmark are under government control (wholly owned by the minister of energy) :-)

Powerline owners do not make more money because of surplus capacity. In fact, it is quite the opposite, and you risk ending up with a monopoly/Enron type situation when grid capacity is strained. Surplus capacity and the ensuing increased stability, however, has beneficial effects for society.

There has been a wave of privatization in the power sector in Denmark for the past ten years. But luckily our private-sector-friendly government realized that power transmission is too vital to rely on the "how can I get higher profit next quarter" business environment.

I was puzzled when visiting an electronics store (TVs, computers, etc.) in the US to see a market for power conditioners..? We don't have those in Denmark, because they are not necessary. Our power is always pristine quality, even with 20% wind power on average.

At the moment, Denmark has two grids that are not connected and out of sync. One is linked to Sweden and the other is linked to Germany. But now it has been decided to invest $100M on a new DC link between the two grids to reduce the average price of electricity. I believe the estimated annual savings will be $10-20M. It will also smoothe out the effect of wind fields moving across the country. Such an investment would hardly be made in the private sector today.

Strong power grids = good

Weak power grids = bad

[amazingdrx]

Distributed renewable energy generation and storage coupled with conservation. Invest in that instead of huge grid upgrades.

That way smaller upgrades of transmission, for bringing in wind, wave, and solar power from where large installations generate, and to storage areas like big cities with millions of electric vehicles plugged into the grid acting as distributed storage.

Local and regional superconducting energy storage can also help reduce strain on the grid. The trillions estimated for upgrade and new buildout of the grid could be saved by investing 100s of billions over a 10 year period on renewable distributed power and smaller upgrades instead.

But it must be done before the grid really starts deteriorating past all help. 30 year old transformers. That doesn't sound too good.

Think of all the lightning that has already hit that equipment, and now global climate change is making storms much worse. Yikes. No wonder home power generating equipment is a hot item. Distributed generation and storage would cure it.

[Harvey D.]

USA masters all the cards required to update the power grid. Just put an end to this foolish Irak war NOW and use the savings (for the next 3 to 5 years) to actively promote the construction of a brand new fool proof power grid + 40 000 wind mills + 20 to 30 million V2G + 100 million solar panels etc.

This program would drastically reduce oil imports , GHGs, the trade deficit and create 10 million new jobs.

Where has the American innovation will gone to.

[Pelkabo]

How interesting that Thomas Pederson's condescending comments come just two days before a massive blackout across Europe. Any more advice for us, Thomas?

[Quentin D]

There is a company called Composite Technology Corp that makes a new kind of power transmission line. The new Aluminum Composite power lines can transmit twice the electric current as standard lines and with a lot less signal (power loss). American Electric Power has been buying it up lately. They could double the transmission capacity of the grid just by upgrading to these new cables. There was an write up about it on here about a month ago.

Quentin

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[モンクレール]

rather than maintaining the existing system. According to the U.S. Department of Energy (DOE), 70% of the transmission lines are 25 years or older, 70% of power transformers are 25 years or older and 60% of circuit breakers are more than 30 years old.