Payments on the Grid
In my opinion, payments and policy on the grid will determine our future energy mix.
Most people believe that they know about power sources: gas, nuclear, hydro, coal, solar, wind. We know what the plants look like, and we have opinions.
In contrast, most people know almost nothing about the grid: how plants are dispatched, how plants are paid, what the controversies are. Yet these grid-level decisions will determine our power mix in the future.
Update 2018: The video still exists, but its URL has changed.
Here's the new URL.
http://reflect-catv.cablecast.tv/vod/4853-OSHER-Grid-Class-2-April-2016-Medium-v1.mp4
I think that most people will learn something from watching this video, and pro-nuclear people will find it especially interesting.
(The first class session consisted of an introduction to the course, followed by an introduction to the physical grid. Howard Shaffer gave the guest lecture on the physical grid. The entire first class session is posted at The Grid: Power and Policy Introduction and Shaffer on the Physical Grid.)
Showing posts with label Power purchase agreements. Show all posts
Showing posts with label Power purchase agreements. Show all posts
Tuesday, May 17, 2016
Friday, August 31, 2012
Where's the Magic Switch? Guest Post by Howard Shaffer about the Grid
Where's the Magic Switch?
In March 2012, Vermont Yankee’s contract with Vermont utilities ended. Ever since then, plant opponents have said that Vermont no longer uses any power from the plant. The plant opponents have a certain conception of how the grid works.
Is there a switch somewhere that shifted at the stroke of midnight, March 21? Did this switch send the electric current from Vermont Yankee to other places, while the plant continued at full power? This would be something like a valve in a municipal water system.
There is no switch. Electric current doesn’t flow like water.
The Source of Confusion
The confusion arises because the electric power industry talks about current and power flow as if it were like water. We talk as if the current from a particular plant could be identified, just as water could be identified with a little food coloring.
A Helpful Picture
To get a picture of what is going on physically, think of the electric power circuit connecting all the supplying plants and all the loads using power--think of them as all connected together by a giant bicycle chain. All the suppliers and all the loads are connected to the chain by sprockets. There are spare sprockets for suppliers and users who are not on the grid at the moment.
Each supplier and each user has a meter that shows how much they are supplying or using. In this system, the chain needs to run at an almost constant speed. In the U.S., it runs at 60 hertz (cycles per second for us old-timers). On this big chain, each supplier and user knows what they are doing, and they know the chain's speed.
No user can say: “My power is coming from that supplier over there, or those suppliers.” All any supplier can say is: “I’m supplying my power to the chain (grid)." All any user can know is: "I am getting my power from the chain (grid)."
Supplying Power, Using Power, Paying for Power
This can be maddening to explain.
Let's start with supplying and using power. The language has gotten scrambled by the way the chain system is used and paid for.
Some users are taking power all the time, some only part time. Some suppliers provide power all the time, some only part time. The chain must run at a nearly constant speed, and any supplier might break down and quit at any time.
To keep the chain going, the other suppliers must have some extra capacity to make up for the loss, at least for a short time. In addition, the manager of the chain needs to be able to tell other suppliers to start when needed.
If the chain manager can’t get enough suppliers started and supplying, the chain will slow down (brownouts and low frequency). In severe shortages some users may have to be disconnected from the chain (dropped load, rolling blackouts). In the worst case, the chain stops (blackout).
Paying for Power
All the suppliers need to be paid. All the users need to pay for what they get. The chain owner and manager needs to be paid too.
Different kinds of supply and use cost different amounts. If you are a supplier who is always ready to start supplying if another supplier breaks down, it costs money to stay ready. The same is true if you back up a supplier that is only available for a few hours a day. If you are a supplier who promises to stay ready to do backup, you usually get paid more.
If you are a user and know how much you want to use over time, it is cheaper for you to have a contract with certain suppliers. Then these suppliers are “on the chain” for you. If you don’t have such a contract, you take the “chain’s price”-- a complicated average price from all the suppliers.
Careless Descriptions
People in the utility industry say: “X utility has a contract with Y plant for so much power.” In reality the contract is for Y plant to supply power to the chain while X utility is using power from the chain. Since everyone in the utility industry knows that power is put on the grid (on the chain), not sent specifically to a user, the shorter expression ("has a contract for so much power") came to be used.
The shorter expression was OK until the public wanted to know more. Then the short expression caused confusion about how the physical system actually works.
The Midnight Accountant
If you are a user, and your contract with a supplier ends, the chain will keep you going. The chain doesn't know about your contract. The chain just keeps moving, and you keep taking power off the chain the same way you did before.
However, when your supplier contract ends, you must pay the chain’s price. This price includes the higher cost "stay-ready" suppliers.
On March 21, at midnight Vermont Yankee kept right on powering the chain (grid).
No physical switch shifted. The accountants shifted -- the billing. At midnight, Vermont utilities no longer paid specifically for Vermont Yankee. Vermont Yankee put power on the grid, and they took power off the grid, same as before. However, at midnight the utilities began to pay specifically for other suppliers: Seabrook for example. They pay the chain (grid) price when they don't have enough contracts with suppliers. Some of Vermont Yankee’s power is mixed in that price.
The accountants arrange the pricing, but the power to move the bicycle chain (grid) in Vermont was the same after midnight as before midnight. The work of the accountants changed at midnight, but the work of the power plant continued.
-----
Howard Shaffer is a Licensed Professional Engineer in nuclear engineering in Vermont, New Hampshire and Massachusetts. He has a Bachelor's in Electrical Engineering from Duke, and was a nuclear submarine officer. Subs have their own ac-dc grid. Later, he was startup engineer for EBASCO when they designed and built Vermont Yankee. From Vermont, he went to the Ludington, Michigan Pumped Storage plant as Lead Startup Engineer. When pumping, that plant draws 2040 MW, which is twice the power that all of Vermont uses. Working with this pumped storage unit, Shaffer learned a great deal about grid operations. After Michigan, Shaffer went to MIT and received a Masters in Nuclear Engineering. He then continued his career with assignments in plant startup and plant support. He has been active for many years in nuclear public outreach, including service on the Public Information Committee of the American Nuclear Society.
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| Panasonic Electric Drive bike chain |
Is there a switch somewhere that shifted at the stroke of midnight, March 21? Did this switch send the electric current from Vermont Yankee to other places, while the plant continued at full power? This would be something like a valve in a municipal water system.
There is no switch. Electric current doesn’t flow like water.
The Source of Confusion
The confusion arises because the electric power industry talks about current and power flow as if it were like water. We talk as if the current from a particular plant could be identified, just as water could be identified with a little food coloring.
A Helpful Picture
To get a picture of what is going on physically, think of the electric power circuit connecting all the supplying plants and all the loads using power--think of them as all connected together by a giant bicycle chain. All the suppliers and all the loads are connected to the chain by sprockets. There are spare sprockets for suppliers and users who are not on the grid at the moment.
Each supplier and each user has a meter that shows how much they are supplying or using. In this system, the chain needs to run at an almost constant speed. In the U.S., it runs at 60 hertz (cycles per second for us old-timers). On this big chain, each supplier and user knows what they are doing, and they know the chain's speed.
No user can say: “My power is coming from that supplier over there, or those suppliers.” All any supplier can say is: “I’m supplying my power to the chain (grid)." All any user can know is: "I am getting my power from the chain (grid)."
Supplying Power, Using Power, Paying for Power
This can be maddening to explain.
Let's start with supplying and using power. The language has gotten scrambled by the way the chain system is used and paid for.
Some users are taking power all the time, some only part time. Some suppliers provide power all the time, some only part time. The chain must run at a nearly constant speed, and any supplier might break down and quit at any time.
To keep the chain going, the other suppliers must have some extra capacity to make up for the loss, at least for a short time. In addition, the manager of the chain needs to be able to tell other suppliers to start when needed.
If the chain manager can’t get enough suppliers started and supplying, the chain will slow down (brownouts and low frequency). In severe shortages some users may have to be disconnected from the chain (dropped load, rolling blackouts). In the worst case, the chain stops (blackout).
Paying for Power
Different kinds of supply and use cost different amounts. If you are a supplier who is always ready to start supplying if another supplier breaks down, it costs money to stay ready. The same is true if you back up a supplier that is only available for a few hours a day. If you are a supplier who promises to stay ready to do backup, you usually get paid more.
If you are a user and know how much you want to use over time, it is cheaper for you to have a contract with certain suppliers. Then these suppliers are “on the chain” for you. If you don’t have such a contract, you take the “chain’s price”-- a complicated average price from all the suppliers.
Careless Descriptions
People in the utility industry say: “X utility has a contract with Y plant for so much power.” In reality the contract is for Y plant to supply power to the chain while X utility is using power from the chain. Since everyone in the utility industry knows that power is put on the grid (on the chain), not sent specifically to a user, the shorter expression ("has a contract for so much power") came to be used.
The shorter expression was OK until the public wanted to know more. Then the short expression caused confusion about how the physical system actually works.
 |
| Big Ben at Midnight |
If you are a user, and your contract with a supplier ends, the chain will keep you going. The chain doesn't know about your contract. The chain just keeps moving, and you keep taking power off the chain the same way you did before.
However, when your supplier contract ends, you must pay the chain’s price. This price includes the higher cost "stay-ready" suppliers.
On March 21, at midnight Vermont Yankee kept right on powering the chain (grid).
No physical switch shifted. The accountants shifted -- the billing. At midnight, Vermont utilities no longer paid specifically for Vermont Yankee. Vermont Yankee put power on the grid, and they took power off the grid, same as before. However, at midnight the utilities began to pay specifically for other suppliers: Seabrook for example. They pay the chain (grid) price when they don't have enough contracts with suppliers. Some of Vermont Yankee’s power is mixed in that price.
The accountants arrange the pricing, but the power to move the bicycle chain (grid) in Vermont was the same after midnight as before midnight. The work of the accountants changed at midnight, but the work of the power plant continued.
-----
Wednesday, August 3, 2011
Power Purchases in Vermont: Not Really Replacing Vermont Yankee But Adding Greenhouse Gases.
The chart above comes from the Vermont Department of Public Service website. Dave Lamont of that department drew this chart in March of this year. It shows the "committed resources" for Vermont's electricity supply. Vermont uses approximately 6000 GWh electricity per year. The chart shows power plants and utilities that have agreed to sell power to Vermont.
We can see the more-than-2000 GWh from Vermont Yankee (bottom left gray area) coming to an end in 2012. We can also see old Hydro-Quebec (HQ) contracts coming to an end in 2016 and new HQ contracts starting around that time frame, for slightly less supply than the old contracts.
The most noticeable thing on the chart is all that white space to the right of 2012--the who-knows-where-it's-coming-from part of Vermont's electricity supply. Roughly half the electricity supply after 2012 on this chart is white space: it simply isn't there.
Recently, new announcements of power purchases by Vermont utilities have re-assured people in Vermont that there's going to be plenty of electricity anyhow, if Vermont Yankee closes. However, there is less in these contracts than meets the eye, in my opinion.
The New Contracts
The big new contract is GMP (Green Mountain Power) with Seabrook Station Nuclear power plant in New Hampshire. GMP is going to buy 60 MW of power from Seabrook. That is about 1/3 of the power that Vermont obtains from Vermont Yankee. To see this amount on the chart above, draw a line at about 700 GWh above the existing lines. As you will note, the big supply gap is still there. For example, adding 700 GWh in 2017 (when the current HQ contracts phase out and we are on the new HQ contracts) moves the total supply to around 3600 GWh out of 6000 GWh required. Okay. So that's only 40% white space now. When we factor in the Seabrook purchase, only 40% of the electricity is "who knows where it is coming from?"
However, today's news included more announcements of power purchases, this time by Central Vermont Public Service (CVPS). CVPS bought 0.57 GWh through the end of 2012. The new contracts are opaque: CVPS said they held a "structured auction," and got a good price (4.75 cents per kWh). However, CVPS won't release the names of the auction winners. Nobody knows what kind of power CVPS bought. It's probably fossil based, because the Northeast grid is fossil based.
CVPS also had to get ready for the Vermont Yankee outage, and needed to buy power for that. As the Reuters article says: The contracts will also fill Central Vermont's energy needs during the planned Vermont Yankee refueling outage this fall, the utility said.
The Seabrook power purchased by GMP is available for many years, but the agreements announced today by CVPS are only for power through 2012, when the old and new HQ contracts are also both available. It's a short-term power purchase agreement.
That Chart Again: The Short-Term Power Purchase Agreements
- First, look at the medium blue area called Vermont PPAs. These are various short-term power purchase agreements set up by the Vermont utilities. With a PPA, the utilities hopes to get a better deal than they would receive from the spot market. PPAs are never arranged too far in advance, or for very much power. These CVPS deals announced today are just more PPA deals, which are usually not accompanied with such hoopla. Of course, anything that claims to replace Vermont Yankee power will be a major announcement, nowadays.
- Second, these CVPS contracts extend only through the end of 2012, so they could only be covering the small amount of white space at the top of the chart, through 2012. They have no effect on the big white space to the right of the chart.
It's hard to see what all the excitement was about.
Time for Perspective: Greenhouse Gases
Up until now, I have been describing the Committed Resources chart at the top of this blog post. It's not the only chart the Department of Public Service prepared for their March presentation.
Below is a companion chart, showing the sources of greenhouse gases for Vermont. While Vermont Yankee is running, the electricity section of the greenhouse gas emissions is low. However, after 2012, look at those emissions grow! By 2015, the electricity sector in Vermont is making more greenhouse gases than all the heating of all Vermont buildings (RCI fuel use). By 2020, with autos and home heating emissions steady, the electricity sector has grown to be the biggest emitter of greenhouse gases.
I have noticed that the emission chart says "electricity supply high-emission scenario" but I don't see a low-emission scenario in the presentation. I can think of a low-emission scenario, though.
If Vermont Yankee keeps operating, that is a low-emission scenario, and a very good one.
Notes: You can double-click on the charts to enlarge them.
I also blogged about the Committed Resources chart at ANS Nuclear Cafe.
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