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Changes are required for Railbelt electricity transmission grid The Railbelt electricity transmission grid needs upgrading & new business model Alan Bailey for Petroleum News
The Railbelt electricity transmission grid needs upgrading & new business model
With pending natural gas shortages in the Cook Inlet region and a desire to move to the increased use of renewable energy sources for power generation in the Alaska Railbelt, the deficiencies of the Railbelt electricity transmission system have become a focus of attention. The state Legislature is currently considering bills that would change the manner in which the system is managed and funded. The Railbelt electricity utilities have been planning potential upgrades to the system, to meet future transmission needs. And the state was recently awarded a $206-million federal grant for the construction of a second transmission line from the Kenai Peninsula to the Anchorage region -- that grant is contingent on matching state funds.
Importance of the system During a March 26 meeting of the House Energy Committee Gwen Holdmann, University of Alaska Fairbanks Associate Vice Chancellor for Research, Innovation & Industry Partnerships, provided an overview of the current status of the transmission system and the issues that the system faces. Holdmann emphasized that an effective transmission system is critical to ensuring electricity supply reliability while also enabling the delivery of the lowest cost power to consumers, from wherever that power is generated.
And, while consumers are becoming increasingly aware of the importance of the security of energy supplies from the electricity grid, there is also recognition that the grid has certain single points of failure, Holdmann said.
"Everyone benefits from being part of an interconnected transmission system," she said.
In addition, although the Railbelt has an interconnected transmission system, that system is split up in terms of how it is owned, managed and operated, Holdmann said. Essentially, the system is owned and operated by five independent utilities and the Alaska Energy Authority. At the same time it is necessary to be able to facilitate the various power generation projects that can be built at scale at different locations on the system to benefit Railbelt consumers.
"I think our goal for most of us for the Railbelt grid is to get the cheapest cost power to end users, wherever that power is produced, however it's produced, whatever that source is," Holdmann said.
Holdmann commented that over the years there have been several unsuccessful attempts at establishing a more unified approach to the operation and management of the system, but none of these efforts resulted in any change. Those efforts included an attempt in the 1950s by three Southcentral utilities to form the Central Alaska Power Association, with the objective of using cheap hydro power to enable the smelting of aluminum, she said. A number of years ago several of the utilities formed the Alaska Railbelt Cooperative Transmission and Electric Co., in another attempt at a more unified approach to power generation and transmission.
A 'prisoner's dilemma' Holdmann characterized the current management situation for the transmission grid as a form of "prisoner's dilemma," in which individual choices of individual utilities do not necessarily represent the best choices for the whole system.
"This is particularly important right now, because we have an opportunity for making generational investments in upgrading these transmission systems," Holdmann said, referencing the recently announced federal grant.
People would like to see a situation in which everyone could have open access to power generation of various types, wherever the generation facilities are located. And power generation needs to be built at locations where the relevant energy resources are available. Moreover, the expectation is that in the future independent power producers, rather than the utilities, will construct and operate new power generation facilities, Holdmann said. It is also desirable to make maximum use of the least cost power generation across the entire system, especially through a power sharing arrangement referred to as "economic dispatch."
Three constraints Holdmann characterized the Railbelt transmission grid as currently being subject to three factors that constrain its ability to support this emerging power supply situation: technical constraints, economic constraints and institutional constraints.
"The problems we're trying to solve here are not unique to Alaska and in many ways we're decades behind what other markets have done.," Holdmann said.
Technical constraints, the constraints on being physically able to transmit electrons across the transmission system from wherever the electrons are generated to wherever they are used, may be alleviated through transmission upgrades, such as the upgrade that is the subject of the federal grant. Currently the system has limited capacity for transmitting power between major load and power generation regions. And, in addition to the build out of transmission assets, there is a need for other improvements including additional energy storage.
The wheeling of fees A key economic constraint on the use of the system arises from what is referred to as the wheeling or pancaking of transmission fees. Essentially, each owner of a sector of the grid charges its own fees for use of its sector, to recover its costs involved in operating the system. Thus, if a utility connected to one point on the grid wants to purchase power from a power producer some distance away, the utility has to pay a stack of transmission fees to the various owners of the sectors of the grid used to transmit the power. This can render the power supply uneconomic.
At the same time, unless the system becomes overloaded, there is no additional cost to a transmission system operator for moving more electrons through the system. A fee system based on customers' contributions to peak load may be more appropriate, Holdmann suggested.
Local ownership and management Institutional constraints relate to the fact that different sectors of the grid are owned and managed at a local level, an arrangement that tends to cause decisions to be made in response to local priorities, rather than considering potential grid wide benefits. This constraint is becoming increasingly important, given the increasing diversity of energy sources and the accompanying trend towards power generation being located at a variety of sites.
The recently formed Railbelt Reliability Council is now the electric reliability organization that has oversight of the Railbelt high voltage electrical system, including the transmission system. The RRC is responsible for setting and enforcing reliability standards for the system; for integrated resource planning; and for ensuring consistent interconnection protocols for entities that wish to use the system, Holdmann said. However, these important roles do not encompass managing, owning, maintaining and operating the grid, she said.
Comparison with Iceland Holdmann commented that the closest analogy to the small and isolated Railbelt electrical system is the electrical system in Iceland -- Iceland's power grid is of a similar scale and supports a comparable number of consumers. Several years ago Iceland moved to the operation of an organization that oversees, manages and develops its transmission assets and has been very happy with the results, Holdmann said.
"They pretty much universally agree that this was a really important step for them in terms of opening up their energy market to competition and it has allowed them to keep costs low," Holdmann said.
As a possible model for future management of the transmission system Holdmann cited the Bradley Lake Project Management Committee, the committee that manages the Bradley Lake hydropower system on the Kenai Peninsula and that has members from each of the utilities and the Alaska Energy Authority.
Another possibility to consider is the future integrated planning of all aspects of the electrical system, including the generation, transmission and distribution systems, Holman suggested.
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