Roll Today:

Class times • Government regulation

Syllabus/readings of energy

Participation/class • Historically
discussion • Restructuring
Strategy memo • Renewable/alternative
Office hours energy technologies

MON: Introduction/historical context TUE: Siting facilities (law&politics)

WED: Renewables’ Role in the Electric System THUR: RPS Exercise
FRI: Alternative fuels policies
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Historical Context of Energy Regulation:
• What is energy?
• How have humans harnessed energy for their
own use?

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 USEFUL ENERGY
PRIMARY SOURCE USE

Mechanical energy for industrial

1. HYDRO (falling use (e.g., mills) or to run electricity-
water, waves, tides) generating turbines
or WIND

2. FOSSIL FUELS, Combustion to produce useable

heat or to generate electricity
BIOMASS, etc. (thermal)

Controlled atomic reaction

3. URANIUM releases heat to produce
electricity

4. SOLAR Passive solar heat used directly; or

for thermal generation; or
converted chemically to electricity.
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US data
Source: EIA

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Electrical energy

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 Watt – KW – MW- GW capacity generation mwh voltage
Load load balancing dispatch wheeling ancillary services

GENERATION TRANSMISSION DISTRIBUTION

End
Power Plant Distributor Users
Transmission Distribution
lines lines

Few kV or less 000s kV <10 kV 240V

most plants (home)
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Interconnections of the North American Electric Reliability Council in
the Contiguous United States

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U.S.
> 16,000 plants generating capacity > 1,000 GW
Generation 3.9 million gwh
Sept ’04 generation in CA: > 16,000 gwh

Europe
Approx 700 GW generating capacity
Generation 2.9 million gwh
UK 2003 generation: 370,000 gwh

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SOURCE=EIA
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Electric
Generation
Fuel
Sources,
Worldwide
Source: IEA Key
World Energy
Statistics 2001

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 Utility or state Utility or state
owned owned
generators generators

“natural
Residential
monopoly” users
IOU vs.
state Municipal Commercial
Utility users
ownership
Industrial
users
Distribution System

Residential Commercial Industrial

users users users

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 ECONOMIC REGULATION: Controlling price
and other aspects of competition
GOAL: Prevent monopoly pricing

Antitrust/Competition law Public Utility Regulation

• Acquisition of price- • chartered monopoly
setting power
• administrative price
• Collusion to fix price setting
• Use of market power
unfairly or unreasonably
Government Ownership
to squelch competition
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 Why choose public power?
• a reaction to perceived abuses of market power
• discomfort with private (and potentially foreign)
ownership of strategically important sector
• ideological imperative (communism)
• belief that rates will be lower if provider (a) does not
have profit motive, and/or (b) is electorally
accountable

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 PUBLIC POWER IN U.S.
1. Federal Power Agencies (TVA, BPA)
2. REA
3. Municipal power
4. Federal and municipal preferences

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 Municipal Utilities serve 43 million people, 14% of U.S.
customers

Source: APPA

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Private Ownership + Regulation

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 Private Ownership + Regulation
COMMISSION FORM:
• Plural executive; appointed (feds) or elected (some
states)
• Rate cases; few rulemakings
• “Staff” represents ratepayers
REGULATORY PRINCIPLES:
1. “Natural” monopoly; certificate of convenience and
necessity; duty to serve
2. Cost-based rate setting; “fair” rate of return for
shareholders on “prudent” investments

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 R = Br + O
FERC: wholesale rates under Federal Power
Act and Natural Gas Act must be “just and
reasonable”
State commissions: retail rate setting

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So why so much restructuring (and/or
privatize) in the 1990s?
• No cost minimization incentive  suspicion
that rates were unnecessarily high
• Changed thinking about scope of natural
monopoly
• Pressure / flight of industrial and municipal
power purchasers

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 Produces energy
Produces Produces energy at
at $.05 per unit
energy at $.06 $.04 per unit
per unit

Easton Gas & Electric Co.

Service Area hospital

Village
of
Eastville
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 Liberalisation of Gas and Electric Markets
Europe
1990
1989-94: Following privatization, U.K.
unbundles electric and gas sales
and distribution services
1996-98: First EU gas and electricity
liberalisation directives (96/92/EC
and 98/30/EC ) mandated some
unbundling and competition for
some customer classes
1995-2000: Competitive markets and
unbundling achieved in UK market;
uneven progress toward
liberalisation elsewhere in Europe
2003: New EU electricity and gas
directives (2003/54/EC and
2003/55/EC) mandated full
unbundling and competition by
2005 2007
U.S.
1992: full unbundling of interstate gas
transportation and sales (Order 636);
wholesale competition follows
1992-95: unbundling of interstate
power transmission and sales;
introduction of wholesale competition
(Energy Policy Act of ’92; Order 888)
1995-2000: some states require
unbundling of retail distribution and
sales, and retail competition (CA,
NY, TX, PA, MA and others)
2000-01: CA electricity crisis
2001-present: revision of market
dominance rules; criminal and civil
prosecution for anticompetitive and
fraudulent energy trading in CA.
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 Producer / Producer / Producer /
generator generator generator

Transmission
system – TSO, Residential
• Unbundling ISO or RTO users
• Wholesale Distribution
competition System - Commercial
• Retail DSO users
competition
Distribution System -
• Grid Industrial
DSO
management users

Residential Commercial Industrial

users users users

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Renewable and Alternative Technologies

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 Non-traditional energy sources
• PURPA “alternative” sources
• efficiency
• “clean” sources
• 80s ITC
• 90s PTC
• Renewables and RPSs
 Renewables Capacity/Production
U.S.
Europe: most of its renewables
Wind: <3 GW
production is hydro. Wind’s
Hydro: 94 GW share, while small, is growing
rapidly, particularly in northern
Solar: <1 GW Europe (U.K., Denmark,
Germany)
Biomass: 11 GW
Geothermal: <3 GW

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Typical coal or nuclear plant: 500-2000 MW.

Wind turbines: 50 KW – 5 MW (wind farm turbines are 700KW-2.5MW)

Wind farms: a few MW to hundreds of MW (20MW farm, approx. 100
acres)
Hydro stations: a few KW to 18,000MW (Three Gorges); most in US
are < 30 MW. Niagara Falls station is >1000 MW.
PV cells: 100W-300W/sq.m.
Solar concentrating stations: 1MW to 10s of MW. (5 acres per MW)
Biomass: 15-60MW. Landfill gas plants can be much smaller.
Geothermal: 100 KW – 100 MW

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Bren, Winter 2006
 Table 1-1 Classes of wind power density at 10 m and 50 m(a) .
SOURCE: NREL

Wind 10 m (33 ft) 50 m (164 ft)

Power Wind Power Speed(b) m/s Wind Power Speed(b) m/s
Class* Density (W/m2) (mph) Density (W/m2) (mph)

1 0 0 0 0
2 100 4.4 (9.8) 200 5.6 (12.5)
3 150 5.1 (11.5) 300 6.4 (14.3)
4 200 5.6 (12.5) 400 7.0 (15.7)
5 250 6.0 (13.4) 500 7.5 (16.8)
6 300 6.4 (14.3) 600 8.0 (17.9)
7 400 7.0 (15.7) 800 8.8 (19.7)
1000 9.4 (21.1) 2000 11.9 (26.6)

What is “wind power density”?

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U.S. wind
resources
 TABLE 3. Potential Electricity Production on Windy Lands in Texas
SOURCE: TX State Energy Conserv’n Office
WIND POWER AREA (km2) PERCENT OF POTENTIAL POTENTIAL % OF TEXAS ELECTRIC
CLASS STATE LAND CAPACITY (MW) PRODUCTION (Billion CONSUMPTION
kWh)

3 143,400 21.13% 396,000 860 371%

4 29,700 4.38% 101,6000 231 100%

5 5,000 0.74% 21,600 48 21%

6 300 0.04% 1,600 4 2%

Total 178,400 26.29% 524,800 1,143 493%

Is this a lot or a little?

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UK wind farms, proposed
(offshore)

Danish wind farm

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Solar technologies

• PV
• Passive solar
• Collection troughs – parabolic + medium
• Power towers – medium vs. no medium

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SOURCE: TX
State Energy
Conservation
Office

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 AVERAGE DIRECT NORMAL INSOLATION MAP LEGEND
Source = Tx State Energy Conserv’n Office
COLOR per day per YEAR
KEY (kWh/m2-day)
(MJ/m2) (quads/100 mi2)

<3.0 <3,940 <1.0

3.0 - 3.5 3,940 - 4,600 1.0 - 1.1

3.5 - 4.0 4,600 - 5,260 1.1 - 1.3

4.0 - 4.5 5,260 - 5,910 1.3 - 1.5

4.5 - 5.0 5,910 - 6,570 1.5 - 1.6

5.0 - 5.5 6,570 - 7,230 1.6 - 1.8

5.5 - 6.0 7,230 - 7,880 1.8 - 1.9

6.0 - 6.5 7,880 - 8,540 1.9 - 2.1

6.5 - 7.0 8,540 - 9,200 2.1 - 2.3

>7.0 >9,200 >2.3

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 Ocean and Tidal Energy Technologies

Ocean thermal energy

• Closed-cycle systems use the ocean's warm surface water to vaporize a
working fluid, which has a low-boiling point, such as ammonia. The vapor
expands and turns a turbine. The turbine then activates a generator to
produce electricity.
• Open-cycle systems actually boil the seawater by operating at low
pressures. This produces steam that passes through a turbine/generator.
• And hybrid systems combine both closed-cycle and open-cycle systems.

Ocean mechanical energy: A barrage (dam) plus turbine, moored tidal

turbines, or tidal fence (connected series of turbines spanning a channel),
is used to convert tidal energy into electricity by forcing the water through
turbines, activating a generator.

Wave energy:
• channel systems funnel the waves into reservoirs;
• float systems drive hydraulic pumps; and
• oscillating water column systems use the waves to compress air within a
container.
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 Geothermal Technologies
Dry steam power plants: steam is piped directly from underground
wells to the power plant, where it is directed into a
turbine/generator unit.

Flash steam power plants: use geothermal reservoirs of water with

temperatures greater than 360°F (182°C). This very hot water flows
up through wells in the ground under its own pressure. As it flows
upward, the pressure decreases and some of the hot water boils
into steam. The steam is then separated from the water and used
to power a turbine/generator.

Binary cycle power plants: use the heat from the hot water to boil
a working fluid, usually an organic compound with a low boiling
point. The working fluid is vaporized in a heat exchanger and used
to turn a turbine.

CA uses geothermal most widely

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 Non-traditional energy sources
PURPA Modern REP

Solar (active/passive) X X
Wind X X
Hydro (new dam/existing Small ?
dam)
Geothermal X X
Cogeneration X ?
Biomass (waste vs. virgin X ?
material)
MSWEnergy X ?
(incinerators/LF gas)