IEEE Power & Energy Magazine - May/June 2014 - 124

in my view (continued from p. 128)
expected life cycle. Early retirements
of assets require reallocated costs
through tariff increases, or write off
against shareholder value. Early retirements of nuclear units, coal units, and
hydro units have altered life expectances. A new major cost component is
the interim term nuclear fuel storage.
Transmission project costs have increased as transportation distances have
dramatically increased, which leads to
more complex operation with heavy
compensation to increase
transfer capability. Transmission projects also
include more complex
equipment as high-voltage direct current (HVdc),
quadrature phase-shifting
transformers, and other
flexible alternating current
transmission devices (i.e.,
static VAr convertors).
Construction expenses
have increased also due to
routing issues such as "not
in my backyard" and other
siting restrictions. Transmission life expectancies
have decreased as more severe weather is
damaging assets, such as from Hurricane
Katrina, Sandy, and tornadoes.
HVdc links have been added in several long-distance projects to transport
energy over large distances. The choice
to move the fuel to the demand versus
producing the electric energy remotely
and then transporting electric energy
is the classic power system planning
question. An HVdc network has been
proposed to increase the transfer capability of the grid and to connect major
energy resources without incurring
other transportation costs.
Distribution systems are growing in
complexity due to the advent of distributed generation, energy storage, smart
meters, demand-side bidding (management), time of use rates, etc. Distribution often accounts for over 50% of the
capital requirements of the historical
utility. Distribution costs are increasing as equipment suppliers are reduced.

Installation costs are also increased for
the more complex smart grid equipment. note that such devices do not
produce or transfer one watt of electric
energy but increase costs dramatically.
Instead, the benefits of such equipment
are flexibility and reliability.
All of these expenses are to be allocated across time to be paid by present
and future customers. The use of bonds
and other debt instruments are intended
to enable this smoothing of the costs
from the present to
future time periods.
The risks of these
markets have led to
corporate bankruptcies not only in the
financial domain but
also other industrial
domains. The importance of selecting the
best portfolio for future energy consumption is the major key
to long-term company growth. Previous
forecasts did not predict that energy use
would decline over the last five years.
These forecast errors led to portfolio
selection errors that require increases in
energy rates.

All of these
expenses are
to be allocated
across time
to be paid
by present
and future
customers.

124

ieee power & energy magazine

Forecasts
Predictions indicate increased renewable energy resources, such as solar
cells and wind generation, as well as
off-the-grid installations based on
biofuels, even hydrogen and methane
generation, to provide for distributed
generation and to fuel transportation.
geothermal home energy storage is
promising to shift demand just as
pumped hydro did in the past. Such
forecast errors show a direct threat to
the present utility portfolios. The early
retirement of nuclear generation is no
longer unexpected. Early retirement
of coal generation is occurring more
frequently. Capital projects are being
delayed due to recovery uncertainty
and threats of regulatory changes.

Reliability
The reliability of the electric grid has
been debated for decades. Early experience demonstrated that the system was
available beyond expectations. It was so
reliable as to be called the gold-plated
grid as is obtained by installing overcapacity of generation, transmission, and
distribution. As costs escalated and the
complexity of the grid increased, less
redundancy was installed. reliability
calculations were revised, expanded, and
benchmarked against actual operation.
Computer models enabled reliability
calculations to be refined to increase the
productivity of each piece of equipment.
Several economists belabor the productivity of some transmission lines needed
less than 30% of the time. Manufacturing
facilities strive for 100% on a 24/7/365
basis to make best use of financial capital.
As with all systems, failure will
eventually occur as the redundancy is
reduced and productivity increases. All
systems eventually fail, as demonstrated by the risks faced in transportation,
housing, and finance. As more complex
controls were installed, especially digital relays, the probabilities of failure
extended beyond previous experience.
Blackouts were not on the public mind
before 1999. After 2003, blackouts were
the reason for extensive research, development of training simulators (similar
to flight simulators), and more computer monitoring and control of the electric
grid. Since that time, local and regional
blackouts have occurred. Each time
more extensive computer protection and
control has been applied, such as remedial action schemes (rASs), to maintain the reliability of the power grid. An
rAS is a concurrent processing of relaying rules through a matrix of computers.
The costs of computers (microprocessors and memory) have decreased dramatically, but the number of computer
systems as well as the communications
have increased just as dramatically.

Transfer Capability
reliability competes with transfer capability in our present market structure.
may/june 2014



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