by Planning Engineer and Jill Tietjen
The power system is a matter of extreme importance relating to economic development, quality of life as well as health and safety. In order to best meet the needs of any given area, it is necessary to balance the factors of economics, reliability and public responsibility. An imbalance in any area will lead to repercussions in other areas and may, in fact, prove to be counterproductive across all areas.
Note – The authors wrote a piece called “Drivers & Determinants for Power System Entities” (located here on P#31) describing the impacts and motives of various entities responsible for the bulk power grid. This post summarizes parts of that article and expands upon its concluding remarks with regard to balancing the priorities of economics, reliability and public responsibility.
Economics
The price of energy has tremendous direct and indirect costs on society. Energy costs make up more than one-fifth of the after-tax income of America’s lowest income quintile. Higher energy costs for agriculture and manufacturing production are passed on to consumers in higher prices for products, thus lowering overall the standard of living. To the extent that energy costs are high in a region, the less economically competitive that region will be with likely correspondingly lower wages and higher unemployment.
Affordable energy provides greater comfort, health and safety while allowing machinery to improve lives and reduce drudgery. Higher energy costs limit these benefits to smaller segments of the population. Affordable energy is associated with high standards of living, improved health and better environmental protection. Third world countries see a dilemma. Low cost energy greatly increases the value of manpower. But, unfortunately, although low cost energy would help spur economic growth and development, many of these countries cannot yet afford the needed energy systems.
Reliability
Reliability of electric service is a critical factor in most modern societies. Power outages have serious socioeconomic impacts. Businesses in the US lose billions of dollars annually and, in addition, outages disrupt lives and threaten health and safety.
The costs for improving reliability increase exponentially as outage times are reduced.
Building a system that can endure extreme weather without risk of outage would be extremely costly. When evaluating reliability, it is important to look at both the expected impacts and the likely frequency of potential outage events. In recent years, high-impact, low-frequency events including geomagnetic disturbances (GMDs), electromagnetic pulses, coordinated attacks and pandemics have garnered a lot of attention and exposed the challenges in providing certainty for high levels of reliability. However cost-reliability tradeoffs occur at multiple levels on all grids – for each of generation, transmission and distribution.
Public Responsibility
Essentially all generating and transmission resources have some adverse impacts upon the environment. Materials must be mined and components manufactured. The resources take up space that might otherwise exist in a natural state. Power systems must be sustainable and not create excessive adverse impacts. Significantly degrading the environment would work against the goals of the power system to improve living standards, health and safety.
The impacts of power system additions must be compared against what would happen in their absence. A huge central generating plant might be a large point source of emissions when looked at in isolation. Comparing the net impacts of the plant to the small widely scattered resources it would displace, might show considerable environmental benefits, however.
As with reliability improvements, the costs associated with mitigating environmental impacts tend to increase exponentially as well. As an example, although scrubbers remove emissions from the air, the associated costs may include increased infrastructure, increased solid wastes, and decreased plant efficiency. There are multiple tradeoffs between technologies and alternatives as to how they impact different parts of the environment. For example, some resources have a big impact on a small footprint, others a small impact on a huge footprint. Seeking the best solution in terms of limiting environmental impacts from a public responsibility perspective is challenging enough, but these concerns must be balanced with reliability and economic concerns.
The Balance
The balance among the three factors will vary by location and across time. These factors should be weighted and evaluated very differently depending upon such factors as wealth, technological developments, support required for existing infrastructure and population densities. While rotating blackouts are seen as unacceptable in the U.S., intermittent electric power might be vastly preferable to the alternative of no affordable power at all in other parts of the world. Thus, it might be counterproductive to insist upon higher reliability levels that make the electric power unaffordable.
Too much of a focus on any single factor might backfire. Too much attention on reliability might result in exorbitantly priced electricity. Too much concern with environmental impacts could result in expensive power as well as dirtier alternatives filling the need. Too much attention on cost could result in unacceptably low levels of reliability as well as unacceptable environmental impacts.
Can Environmental Regulations End Up Causing Greater Net Harm?
The third world case may provide the most easily grasped illustration of an example of a case where environmental regulation could result in greater harm through unintended consequences. Poor inhabitants of third world nations burn dung, cardboard and twigs inside their homes to cook and provide heating. It has been estimated that this results in 3.5 million deaths a year. The environmental benefits associated with the substitution of fossil fuels for these far “dirtier” resources would result in an overall net benefit. While replacing these resources with “clean” technology may theoretically provide even greater benefits, none will accrue if the “clean” technology is unaffordable. A more widespread penetration of fossil fueled generation is likely to have greater net benefits than the more narrow adoption of “clean” resources. When outside entities seek to limit the expansion of fossil fueled resources into third world countries, they may unintentionally be increasing damage to the environment as well as limiting the quality of life and potential for economic development.
Current Efforts to Make the Grid More Environmentally Responsible May Have Net Adverse Environmental Impacts
Current efforts to make the grid environmentally responsible place a large weighting upon reducing carbon dioxide (CO2) emissions. Some challenge that the externalities and adverse impacts of non-coal based generation do not receive the same amount of scrutiny. However, operating on the presumption that “clean” alternatives are in fact environmentally sound and existing resources are “dirty”, a singular “unbalanced” focus on swapping out such resources might lead to counterproductive results. Replacing old “dirty” technology with “clean” technology creates a short-term impact as the new technology will be manufactured with “dirty” technology. Premature retirement of “dirty” technology might result if “lifetime” impacts of resources are not balanced.
An unreliable power system imposes burdens on the environment. Also if the “clean” technology does not provide the same degree of reliability, there will be pressures to provide that relativity through other, perhaps less clean, alternatives. Germanys Energieweinde (Germany’s energy transition plan to encompass more renewable energy) was accompanied by increased CO2 emissions, in part attributable to the backup measures required to provide needed grid reliability.
In the U.S. as well as in third world countries, higher electric costs lead to a higher likelihood that energy consumers will turn to other alternatives which may have more significant environmental consequences.
How Do We Ensure Balance in the Future?
The Clean Power Plan (CPP) will have a major impact on the future grid. Whether it is upheld or overruled, how will the proper balance be maintained in the future? In formulating the CPP, the EPA was apparently unconcerned with economics and reliability, relegating those issues to the states. The North American Electric Reliability Corporation’s (NERC) goal is to ensure reliability. NERC has taken no position on the environmental necessity or impacts of the CPP and they also explicitly reject being involved in considerations of economics. The other players including the state commissions and other regulatory entities may struggle to bring economics back into the mix. The fair interplay of competing interests will be important as we noted in “Drivers and Determinants for Power System Entities“:
Whether the CPP is overturned on constitutional grounds or not, we will likely see continued pressures from the various relevant entities as they promote competing visions for the future. We need the independent and collective voices of economics, reliability and public responsibility to speak up and be part of the dialogue. Only if the resulting voices are merged will we arrive at policies that provide for balance.
As was the case for earlier rules and regulations affecting the electric power system, it is important for consumers’ voices to be heard around issues like the CPP. Elected officials need to be aware of the balance between the three goals and the tradeoffs that are required. Our form of government often seems like making sausage, but its value is that all voices are heard and considered in the process of developing legislation and regulations. A presidential election year, a vacancy on the U.S. Supreme Court, and the actions of the states all will affect the trajectory of the CPP as we move through 2016. Our sincere wish is that all three goals will be considered through this process as a reasonable balance is struck.
Bio Notes: Jill S. Tietjen, P.E., President and CEO of Technically Speaking, Inc., has spent 40 years in the electric utility industry, most recently as a planning consultant and expert witness. She serves as an outside director on the board of Georgia Transmission Corporation (Tucker, Georgia) and as Vice Chair of the Board of Directors of Merrick & Company (Greenwood Village, Colorado). A graduate of the University of Virginia and the University of North Carolina at Charlotte, she is a registered professional engineer in Colorado.
Moderation note: As with all guest posts, please keep your comments civil and relevant.
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