Holistic Planning (For the Good of the Whole)

Holistic Transmission and
Resource Planning
- For the Good of the Whole

Stephen Lee
Senior Technical Executive
Power System Planning and Operation
March 3, 2008

Presented to IEEE Power Engineering Society
IEEE Power and Energy Magazine,
San Francisco Chapter
Sept/Oct 2007 Hosted by California PUC, San Francisco

Outline

• Electricity – Central Planning or Free Market
• What is Holistic Planning?
• Integrated Planning Revisited
• Reliability Assessment of Whole Operating Space
• Holistic Transmission Planning
• Holistic Resource Planning
• Concept of Unity in Diversity
• Optimal Holistic Resource Mix with CO2 Cost
• Costs and Benefits Distribution
• Demonstration of the CAR software

© 2007 Electric Power Research Institute, Inc. All rights reserved. 2

Electricity – Central Planning or Free Market

• Decades of the regulatory model or “Central Planning”
– Problems of cost-overrun and/or over-capacity
– Central planning does not handle uncertainties well
• Power markets
– California market meltdown and bankruptcy of Enron
– Free markets tend to be short-sighted and not social
conscious
• Lessons learned
– Both systems have problems


Need for New Approach

• With restructuring and greater market activities, the power
grid is being used in ways not in the original designs
• Increased reliability risk to grid operation
• Increased burden on greater situational awareness by
operators
• It is time to revisit the way we plan the power grid
• The power grid should again be designed to be operated
in the new ways it will be used, and perhaps even in
unanticipated uses
• Key words: HOLISTIC, ROBUST, FLEXIBLE


What is Holistic Planning?

• Holistic Planning is to develop a whole or a part of the
electric power system, with full consideration of all its
parts, responsive to the public, modeling all reasonably
probable scenarios of uncertainties affecting planning as
well as future power system operating conditions, with
additional tests to assess the robustness of the system
when exposed to “unlikely” but potentially devastating
disturbances or other events, in order to achieve a system
which has:
– Economic efficiency
– Adequate reliability
– Acceptable environmental impacts


Principles of Holistic Planning

• To compare alternative plans, a comprehensive and quantitative
metric which corresponds to the maximization of public benefits for
the whole system.
• Probabilistic reliability criteria in lieu of deterministic criteria; otherwise,
transmission investments could be driven equally by contingencies
that have widely different probabilities, resulting in non-optimal
resource allocation.
• The scope of the whole system extends beyond the power system to
include the local, regional and global environment.
• Fair and equitable method for allocating costs and benefits having a
causal and proportional relationship between the use of the assets
and the costs or benefits to be borne by the parties.
• The rules of the road for each party should be such that its incentive
does not induce decisions against the global objective of the whole
system. Instead, each party would stand to gain if the whole system
achieves more and more global optimality. By following individual and
diverse incentives, unity in global objective should be achieved.


Integrated Planning Revisited

• The ideological platform is “optimal resource allocation”
• A balanced evaluation of the supply side and the demand
side in which all energy supply alternatives and all
conversion of energy into energy services are subject to
evaluation on a level playing field.
• Involves individuals as well as collective preferences
• For example, on the individual side, customers want full
control of choices which they make based on the options
presented to them; on the collective side, customers do
accept affiliation to a group and therefore admit to
assume their share of a collective responsibility
• Integrated planning can be viewed as a process for
balancing individual as well as collective preferences.


Reliability Assessment of Whole Operating
Space

• We assess reliability for limited operating conditions, e.g.,
– Annual peak load
– All transmission lines in service
• What about?
– Other load levels or other hours
– Maintenance schedules of transmission and
generation
– External or market transactions


Boundary Conditions

Wh
c
at
M
–p
sis
wD
Outside Boundary i
tF
ln
oo
Conditions eer
ra
P ow
en
G
Load and Load Profile

Inside Boundary Conditions
Voltage

Operating
State – “You are here”

System Operating
Limits

Transmission and Generator
Connectivity and Topology

G1 is net export out of area A1, when positive.
Community G2 is net export out of area A2, when positive.
Activity G3 >0 G3 is net export out of area A3, when positive.
G4 = - G1 - G2 - G3, is automatically given,
Room when G1, G2, and G3 are specified.

G3=3000 G2 >0
G3=2000

A 4-Area
Interconnection
G3= 0
G1 >0
A1 A2

G3= -2000
A3 A4

G3= -3000

The Constraints on Any Combination
of Net Exports (G1, G2, G3 and G4)
are walls of this 3-D “CAR”
A floor plan is a two-dimensional nomogram.

G3 >0

G3=3000 G2 >0

G3= 0
G1 >0

G3= -3000


N-0
N-1

Boundary = N-1
Contingency Criteria


N-1 criteria
enforce
possibly uneven
reliability

N-1

Boundary = N-2
Contingency Criteria


CAR Provides Statistics of Contingency
Constraints to TNB (Malaysia)


Bar Chart for a Month


Holistic Transmission Planning

• White space is the inside
of the CAR (community
Activity Room) where
operation is reliable
• Future growth requires
operating outside the
white space
• How do we expand the
grid to fit all future
Line 2-4 operating conditions
(described by the ellipse?)
Line 1-4 • CAR gives the holistic
answer by moving all
necessary walls the right
amount (increase
capacities of line 1-4 by
2500 MW and 2-4 by 1200
MW)


Variation of CAR with Different Load Levels
Duration

Load Level

Relate Monthly Load Duration Curves to
Scheduled Outages

Monthly Load Duration Curves
Hours

0 5000 10000 15000 20000 25000

Load (MW)


No. of Simultaneous Scheduled and Unscheduled Line
Outages (Within Same Day) Over 12 Months of a Year
(Maximum, Average and Minimum)

Simultaneous Line Outages (All)

20.0

15.0
No. of Lines

10.0

5.0

0.0
1 2 3 4 5 6 7 8 9 10 11 12
Month
Max Outages / Day Min Outages / Day Average Outages / Day


Holistic Resource Planning

• How to achieve results of integrated planning in today’s
non-vertical utility structure?
• Parts of the whole maximizing their separate incentives
may work against achieving the good of the whole


Unity in Diversity

• Diversity means the exercise of an individual’s right of
free choices.
• Unity in Diversity means creating unity while preserving
diversity, or allowing diversity to achieve unity.
• Hypothesis –
– Align an individual’s selfish incentive more with the
socially optimal objective
– Then the creative energy of individuals would achieve
the social objective.


Optimal Decisions

Total Cost = Tier 1 Cost + Tier 2 Cost

Tier 1 Costs Tier 2 Costs (Public Good)
(Direct Costs)

* Best Decision

Decision is not optimal if Tier 2 costs are ignored


Common Property of the Human Race?

“It is a position not to be controverted that the earth, in its natural,
cultivated state was, and ever would have continued to be, the common
property of the human race.” -- Thomas Paine, Agrarian Justice

• Tier 2 assets (e.g., air, water, land) with PROPERTY RIGHTS
belonging to the inhabitants
• Create a Tier 2 class of ownership
• Distribute Tier 2 revenues and benefits to all Tier 2 owners
through Public Benefits Funds (PBF)
• People will then behave in accordance with the objectives of
minimizing the total Cost (direct Tier 1 + Tier 2 costs)


Basic Principles of UDi-ism
(Unity in Diversity)

• Tier 2 Assets and Prices to capture externalities
• Tier 2 Ownership and Property Rights

What if the price of a hamburger includes a medical cost
due to health effect?
What benefits will it bring to the consumer and to the country?

What new and healthier food will become good businesses?


Levelized Annual Cost for Six Power Plant Types with
CO2 Cost = $40/ton

1000

900

800

700 Nuclear
600 COAL
$/kW/yr

Comb Cycle
500
IGCC
400 CT
300 Wind/Solar w Storage

200

100

0
0 1000 2000 3000 4000 5000 6000 7000 8000
Hours per Year Operation


CO2 Price Sensitivity of Electric Generation Market Shares
with Oil Price at 60 $/bbl, Coal Price at 4 $/MBTU and
Wind/Solar w Storage at 5000 $/kW
100%

90%

80%

70%
Wind/Solar w Storage
Market Share

60% CT
IGCC
50%
Comb Cycle
40% COAL
Nuclear
30%

20%

10%

0%
$-

$5

5

0

5

0

5

0

5

0

5

0

5

0
0

5

0
$1

$1

$2

$2

$3

$3

$4

$4

$5

$5

$6

$6

$7

$7

$8
CO2 Cost ($/ton)


Oil Price = $60 / bbl


Oil Price = $90 / bbl


Flow of Money for Cap and Trade System

Exchange
$
$

Allowance Certificates

Green Power Plant Non-compliant
Power Plant

$ $

Electricity Electricity
Electricity Consumers


Flow of Money with CO2 Public Benefits Fund

Accountable to International Agreements

Trustee of
CO2 Charge
High $
0 or Low $

Rebate incentives and
Electricity subsidies

Green Power Plant Non-compliant
Power Plant

$ $

Electricity Electricity
Electricity Consumers

Costs and Benefits Distribution

• Economics should be based on costs and not on prices
• Rational decisions by non-public entities are based on
financial incentives (selfish) + other factors of persuasion
• If costs and benefits are not distributed equitably, rational
decisions may not be compatible with optimal resource
allocation for the Good of the Whole


Holistic Planning (For the Good of the Whole)

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