Wisconsin Public Television University Place  Innovation for our Electricity Infrastructure  Dale Burmester  1/30/13 UP830  cc >> Welcome, everyone, to Wednesday Nite at the Lab. I'm Tom Zinnen. I work here at the UW Madison Biotechnology Center. I also work for UW Extension Cooperative Extension, and on behalf of those organizations and our other sponsors, Wisconsin Public Television, Wisconsin Alumni Association, and the UW Madison Science Alliance, thanks for coming to Wednesday Nite at the Lab. We do this every Wednesday night, 50 times a year, even the Wednesday nights when it's really pretty snowy out. Tonight, it's my pleasure to introduce to you Dale Burmester with the American Transmission Company. I owe Dale a lot because he is speaking on a very intriguing topic, which is the greening of the grid, but he's doing it on pretty short notice because Professor Bob Lasseter got called to Washington, DC, and I really appreciate, Dale, the fact that you would come in and give a talk on the same general topic of the electric power grid, and we'll look forward to hearing Bob's talk later. We'll probably have it on some warm, balmy night in May. Dale is from Madison. He went to UW Madison, studied electrical engineering here. 

He works with the American Transmission Company, and his talk tonight will be on the greening of the grid. The thing that amazes me about the grid is that it's one of the great engineering challenges. One of the grand challenges is facing us as a country, and if we hope to have renewable energy, one of the things we have to be able to do is figure out how we are going to get a whole bunch of little sources of energy onto a grid so that we can have reliable energy all day long, all year round. I'm looking forward to hearing how some of the ideas that you have on that. Please join me in welcoming Dale to Wednesday Nite at the Lab. [APPLAUSE]  >> Well, thank you, Tom, and thank you, everyone, for coming out on a very wintery Wisconsin evening tonight. I appreciate making the time to come and listen. Like Tom said, I am Dale Burmester. I'm the manager of economic planning at American Transmission Company, and the team that I work with evaluates the transmission system and looks for deficiencies in the transmission grid and ways that we can improve the transmission grid to make sure we deliver reliable and economic power across the state. Tonight, I'm going to talk about renewable resources. 

I'm going to talk about where the renewable resources exist in the country, and I'm going to talk a little bit about ATC and what ATC is, and then we're going to go into a case study, a particular project that I've been working on for the last few years to deliver some renewable resources into the state of Wisconsin. So, there's an entity called the National Renewable Energy Lab, and they've developed maps of the United States to show where renewable resources are. I think that people have seen wind turbines go up across the country. There's some locally here, even in Dane County, that have been popping up. There's a tremendous amount of wind resource in this area, as we'll see in the upcoming slides. Solar resources also hold great potential, but there's other renewable resources that are available throughout the country, and we'll look at those as well. One of the key facts of renewable resources is they're often not close to load centers. Load centers is where the load gets used or the power gets used. And in order to deliver those resources, we need to have transmission lines. So, the first slide is a map of the United States. 

You probably can't see the legend on here, so I'll walk you through it. First of all, you see there's a large purple area right through the center of the United States, through the Dakotas and down through Oklahoma. And I don't know if you've ever been out to North Dakota before, but those of you that have probably can verify for me that it's windy. The wind blows hard, and it blows a lot. Okay? That's kind of what this maps represents is where there are wind resources. In other words, where the wind blows the hardest and where it blows most consistently. So the purple is where there's really good resources for wind. Like I said, out in the Dakotas, Nebraska, Kansas, Oklahoma. You'll also see that offshore, offshore in the Atlantic, the Great Lakes, and then, to a certain extent, out in the Pacific, there's some very high resources as well. And then you can see that out in Iowa there's a great deal of high potential for wind. 

And then in Wisconsin you can see the colors start to go down a little bit. There are a few pockets where there is higher wind potential. You notice up here by lake Winnebago, it's called the Niagara Escarpment, and there's some pretty good potential for wind up there. In fact, if you've driven up there, you've probably noticed there's wind turbines. They've been built. They're relatively close to load centers, and it's relatively good potential for wind. So a lot of those resources have been exploited already. We'll move on to photovoltaic resources, and as you can imagine, get down to Arizona, New Mexico, Southern California, it's pretty sunny. It's not very cloudy, and they're in a lower altitude where the sun is shining quite a bit. Unfortunately, here in Wisconsin, it's cloudy, especially in the winter. 

Not a lot of solar potential here. I have talked with people and it's not that solar doesn't exist, it's just that, relatively speaking, if you're going to put a solar panel in, you'd get much more bang for your buck if you did it in Arizona as opposed to here in Wisconsin. There's other renewable resources, things that a lot of people don't always talk about, but one of them is biomass. And biomass is taking something that grows and converting it to some type of fuel to produce energy. And you can see that here in the Midwest there's a lot of potential for biomass, relatively speaking, compared to the rest of the country. And you may have heard, also, of geothermal. Drilling a hole in the ground, putting some type of fluid or some type of liquid into this, and then heating up the liquid and producing steam or producing something and generating electricity. You can see here in Wisconsin, not a lot of potential for geothermal, but out in Nevada, a lot of potential. These dots are actual identified hydrothermal sites. So, you pull this all together and the next map is going to be a series, it's going to be an overlay of where the highest potential for renewables is by type. 

The first one is photovoltaics. You'll see that in Arizona, New Mexico is a darker color. Then we layer on concentrating solar thermal. And then we layer on wind. And you can see wind, as I mentioned before, the greatest concentration of resources is out to our west. And we layer on biomass. And geothermal. And hydropower. Hydropower is something we didn't talk about earlier. Hydropower is building a dam, damming up and then generating electricity from the flow of water. 

>> Is hydro also tidal? >> No. And I think the next one is tidal. That's a good question. A perfect lead into the next slide is there is potential for tidal or wave power as well, and it's typically along our coastline, western coastline. Eventually, I'm going to get to this. The final slide I wanted to show you is the theoretical potential for these renewable resources I was pretty amazed when I saw this at first. I knew that there was relatively limited potential for bio, hydro, geothermal, and I knew there was a pretty decent potential for wind. The study shows that there's a potential of 11,000 gigawatts of onshore wind, and then another 4200 gigawatts of offshore wind. But then you get to solar, and it's a very large number, 155,000 gigawatts. And I imagine you'd have to cover a good part of the states of Arizona and New Mexico to achieve that, but the potential exists. 

The potential is there. So, these high quality resources, as you probably saw, they're oftentimes a long ways from the load centers. You've got large cities which consume a lot of the power, and then industrial plants also consume power. They're oftentimes a long ways away from where these renewable resources exist. So, there's been studies that have been done that show that a combination of locally produced and in combination with regional resources provides a lowest cost option for supplying energy. And I think this is probably best depicted in the next slide. You probably can't read the legend very well, but the graph basically goes on the left from all generation is local, all the way to the right where all generation is regional or it's a greater distance away from the load centers. And this was a study that MISO did. MISO is a regional entity that's responsible for the transmission grid in the entire Midwest. And MISO did this study, and they plotted a number of points on here as to what the total cost of generation and transmission would be if we went with a plan, for example here on the left, where we did all local generation. 

And then going to a mix of local and regional generation. And then getting into more and more regional generation until you get to a point where all of your renewable resources would come from a regional location. Some were far way. And you can see that there's a sweet spot here. And you might think, well, Dale, you just showed me all these graphs that showed that the greatest potential is farther away. You'd think that it'd be great, you should do all regional resources because that's where the most potential is. Well, there's a cost associated with that. You have to build transmission lines. Then, for those people that don't like transmission lines, and there's plenty of people out there that don't, they would say, well, why don't we just put a photovoltaic cell on everybody's house? Or put a wind turbine in everybody's backyard? Well, that gets very expensive as well. So that's where we come up with this sweet spot. 

It's a combination of local resources and regional resources. So that gets me into my sales pitch. Who is ATC? So, ATC started just over 10 years ago in 2001, and it was the first multi-state transmission-only utility in the United States. We're headquartered in Pewaukee, Wisconsin, just outside of Milwaukee, and we've got offices here in Madison, De Pere, and Kingsford, Michigan. When we started, we had $550 million in assets, and we've grown to over $3.1 billion in 2012. We haven't exactly expanded our system that much. That's a sixfold increase. The $550 million is a depreciated value, so lines that were built, say, 40 or 50 years ago have been depreciated significantly so. We operate over 9,000 miles of transmission lines, and we have over 500 substations in Wisconsin, Michigan, Minnesota, and Illinois. I got a question from somebody just before the presentation started on who owns ATC. 

Is it publicly traded? And I do get that question quite a bit. We are a privately held company. We have 29 different owners. Some of those owners are investor-owned utilities. Some are municipal. Some are co-ops. For example, Madison Gas & Electric is a part owner in ATC. And our customer, and we call them customer owners, our customer owners share our goals, and a couple of our goals are putting together projects that serve multiple needs, multiple issues. And, also, we want to make cost-efficient projects. When we take a look at a project, we take a look at the cost and impact of a transmission line along with the cost of providing energy to the entire grid. 

And we'll talk about that a little bit upcoming in the case study. A couple of bigger projects that I'm proud to talk about. We had the first access project in MISO. It was a 35-mile line between Wisconsin and Illinois. We also constructed the Arrowhead to Weston 345 kV line. It was 220-mile line between Duluth, Minnesota, and Wausau, Wisconsin, and it was energized in February of 2008. And, as many of you are aware if you drive down the Beltline, we are nearing completion of a 32-mile line, and that goes between Rockdale, which is just outside of Cambridge, to our west Middleton sub, which is cleverly just west of Middleton. It's a 345 kV line. That line is almost complete. It will be energized shortly. 

This slide just shows some of the connections that the ATC system has to the outside world. We've got, the blue line on here is a 345 kV line. It comes generally from Minneapolis. A couple that come from the Chicago area, and then a couple from the Rockford area. The green dotted lines are proposed projects. One in particular, the Badger Coulee line, which is going to run from La Crosse to Madison, is a project I'm going to talk about in more detail coming up in a little bit. In 2011, some of you may have heard of a joint venture that American Transmission Company went in to, and it's with Duke Energy, and it's called DATC. And DATC has announced seven projects in five Midwestern states totaling 1800 miles. And not that long ago, DATC acquired a 950-mile project. It's called Zephyr Power Transmission, and it's designed to move high quality wind from eastern Wyoming to California. 

One of the things that I'm particularly proud of working at American Transmission Company is our process for bringing people into the process of constructing transmission lines. Some of you may have been to our open houses. We engage stakeholders. We want to get their feedback on the transmission project itself. A lot times we hear people don't want it in their backyard, and that's pretty common. We go further. We want to ask more questions. We want to find out what are the overall impacts and if we do have to build a transmission line, where we're going to have the least amount of impacts. Where are we going to impact the least number of people, the least number of farms and things of that nature. And that's why we have the open houses when we have a proposed project. 

In addition to that, we do put out a 10-year assessment, and there's a web link in my presentation. The 10-year assessment is published every year, and what it does is it identifies the deficiencies that we see in our transmission system, and then it also identifies what fixes we think need to be built in order to address those deficiencies. So, as it says, it looks out 10 years and tries to get people some warning of different things that are going on in the transmission system. I'm not Bob Lasseter, but I do have a slide on Smart Grid. In fact, I went to school here in Madison, and I had classes with Bob back in the day. So I'd be interested to see his presentation. ATC did receive $12.7 million in grants from DOE for Smart Grid. And the two projects in particular that we're working on implementing those grants are PMUs, or phasor measurement units, and those are installed at substations, and they're used to monitor the system in real time. Prior to PMUs, we would scan the system, and we'd get input on the state of the system every few seconds. With these PMUs, they're synchronized with the satellite signal, and we know right to the microsecond what's going on with this system. 

Very valuable in identifying what happened on the system in case there's a fault or in case something went wrong. The other part of the grant is for OPGW, and that stands for optical ground wire. If you have seen the transmission line along the Beltline, which I'm sure many of you have, you notice that there's three large conductors there, and those are the power conductors. Those are the ones that carry the power for the transmission system. Above that are ground wires, and those are sometimes referred to as shield wires, and those are installed for lightning protection. They attract the lightning and keep them away from the transmission system. What we've done is inside those ground wires we installed fiber optic cables. And those fiber optic cables can be used to communicate between substations. And it's a fantastic, I think it's an innovative way, for implementing new technology. >> What happens when those get hit by lightning? >> If they get hit by enough lightning, they'll fail, and they need to be fixed. 

But it's better to fix a ground wire than it is to try to fix a power cable. >> [INAUDIBLE] >> Yeah, the optical cable is right, and I wish I brought an example. I should have brought an example of what it looks like. It's pretty clever. It's a cable wrapped around a tube, actually an aluminum tube, and inside that aluminum tube is several strands of fiber. So, some other technologies that we're working on at ATC is distributed superconducting magnetic energy storage devices. And I don't see any of my friends here from American Superconductor, but right here in the Madison area we do have some of the leaders in technology for superconducting magnetic energy storage. They create the devices right here in Middleton. And we've worked with them to install those devices on the system. There's digital sensing devices, microprocessor relays, and then, finally, phase shifting transformers. 

I won't go into the details of those, and I did talk a little bit about fiber optic. We are putting in a significant amount of fiber optic infrastructure, and that will definitely help support the Smart Grid of the future. So, let's go into a case study. A project that I've been working on for the last several years. It's called Badger Coulee, and it's a line that, a 345 kV line that would connect La Crosse to Madison. And I pull up this first slide here of the wind profile throughout the United States because it's one of the primary drivers for this transmission line is connecting the transmission system of the high quality wind resources out to the west into Wisconsin. There's existing transmission infrastructure and there's more transmission infrastructure that's being built as we speak to connect all this together, and the line from La Crosse to Madison is one piece of that. That's a piece that's in Wisconsin. So, as I alluded to earlier, there's what we call capacity factors of these wind turbines. And the capacity factor is simply if you put a wind turbine out there and maybe it's a one megawatt wind turbine and it's designed to be most efficient when the wind is blowing 20 miles an hour. 

Well, if the wind blows 20 miles an hour, 24 days a week, 7 days a years, that's 24 hours a day, 7 days a week, 52 weeks a year, 8,760 hours per year, then the capacity factor would be 100%. Okay? Well, that doesn't happen very often. In fact, even out in the Dakotas it doesn't happen where the wind blows it the maximum speed consistently all the time. But they are significantly better than the wind potential here in Wisconsin. And the difference between, say, Wisconsin and North Dakota can be as high as a 10% and 15% capacity factors. Well, this translates into a significant increase in the number of wind turbines that you'd have to build in Wisconsin compared to outside Wisconsin if you wanted to have the same amount of wind being generated. Another term I'm going to use is RPS, and that stands for renewable portfolio standards. And RPS expresses how much energy is mandated to come from renewable resources out of the total energy portfolio. I think the next map here shows on a state by state basis what the RPS is. And here in Wisconsin, we've got a mandate that 10% of all energy needs to come from wind by the year 2015. 

In Minnesota, Xcel has an RPS standard that 30% of their energy has to come from wind by the year 2020. Other entities in Minnesota are required to have 25% by the year 2025. You can see that some states have got more, some states have got less. Iowa, for example, is, I'm not sure what the 105, anyway, Michigan has got a 10% requirement by the year 2015 as well. So, the next slide that I'm showing you is a snapshot of the MISO transmission system, and it's an LMP contour map. And I probably could talk the entire time about this map. This is one where a picture is worth a thousand words, and I'm going to try and condense it and try to convey something useful for today's discussion. Essentially, what this is showing is it's showing a color to represent the LMP, or the locational marginal price, at various locations throughout the Midwest ISO. And you notice that the scales starts off in black or deep purple, goes up through blue, green, yellow, orange, and finally up to red. Where the purple colors represent the lowest price for energy at that time, and the red, or I guess in this case it's going to be the green, is the higher cost of energy on the system. 

And the way the market works is MISO's responsible for dispatching units throughout the entire region on an hour by hour, minute by minute basis. And what they want to do is they want to make sure that they've got the least expensive overall generation available for all the customers within MISO. If there were no transmission constraints, this map would be pretty boring. It would be all one color. It would be whatever the incremental cost of the next unit of generation to produce on the system. And it would be, like I said, pretty boring. However, there are transmission constraints on the system. There's lines that would be overloaded if you put too much generation on the system in location as compared to another. So, there's times on the system where you have to run more expensive generation in one location in order to prevent a problem on the transmission system. And that's what we're seeing here on this map is we're seeing a pretty good split between almost along the Mississippi River. 

There's some transmission constraints between the western part of the MISO system and the central part of the MISO system. And then you'll see there's another split then between the central part of the MISO system and then those out further to the east. And the prices are going from lowest to highest, west to east. This is just showing that there's low cost energy that's available out to the west, and they're having to run more expensive units further to the east. And, like I said, it's because of transmission congestion, constraints on the transmission system. So, in comes the Badger Coulee project. Did you have a question? Oh, okay. Badger Coulee is a project that we, as planners we go through and we take a look at the deficiencies in the transmission system, and we come up with a variety of different alternatives to try and fix those deficiencies. And we take a look at what the cost of a project is compared to what the advantages would be. Badger Coulee was a project that we had identified a number of years ago that would be one of the least expensive alternatives to help address this problem of congestion, bringing low cost resources from the west into the Wisconsin area. 

So, I said least cost, you'll notice it says $425 million. It's not exactly a cheap project. It's about 150 miles long, and right now we're projecting an in service date in the year 2018. And this map just shows just generally the study area that we're looking at for routing the transmission line. And this actually was a map that came out of the open houses that we've held for the Badger Coulee project. I'm going to try to condense the advantages of Badger Coulee into just a couple of slides here. I've got a hundred-page document that we're working on back at the office that goes into a little bit more detail. I'll try to go through these without glossing them over. There's several advantages to the Badger Coulee project. One is building a new transmission line certainly increases reliability. 

It provides opportunities to bring power into the area in times of emergencies. It does also have economic savings. By being able to tap into these low cost resources, it gives the utilities in Wisconsin the ability to purchase power on the wholesale level at a lower cost. There's increased employment and economic development associated with building a line. You spend $425 million, you're going to have, a lot of those costs are for the crews. Those crews go out and they have to stay in hotels and they have to buy meals and things like that. So there's a local employment economic development benefit for building these transmission lines as well. We've got something called insurance benefit, and I won't go into a lot of detail on that one. That one is for events that beyond our standard planning criteria. Something that is what I would call an extreme outage. 

There's benefits for having more transmission on the system, and we've come up with a way to start to quantify what those benefits might be. You build a new transmission line and you're going to lower the transmission losses on the system. The losses go down, and there's a significant savings by lowering losses. I think we talked about delivering wind from the upper Midwest states into Wisconsin to help Wisconsin utilities meet their RPS. And there is a economic savings of the overall MISO footprint. It's not just Wisconsin that benefits from a project like this. It's the entire MISO region. And, finally, I'm going to talk about the renewable investment benefit, and there's an arrow on there because I'm going to talk a little bit more in detail about a metric that we've developed behind quantifying this what I call renewable investment benefit. And there's going to be some math, so just hold on. It will be fun. 

In addition to the local benefits that we've identified for Badger Coulee, it has been a part of a regional planning study. It's been part of the Upper Midwest Transmission Development Initiative, the UMTDI. It was also a key component to what we refer to as the MISO Regional Generation Outlet Study, the RGOS. And it was also included in the Midwest ISO, or the MISO, Transmission Expansion Plan in 2010. And it's listed as what's called a candidate MVP project, and the MVP projects are multi-value projects. And those projects are, actually, they've been identified as having enough benefit to the entire region where they're going to be cost shared throughout the entire region. So, ATC customers aren't going to pick up the entire tab for this project. It's going to be cost shared across the entire MISO region. And then, finally, it will help ensure compliance with RPS standards, both here in Wisconsin as well as probably Minnesota and Michigan too. So, I told you I was going to talk a little bit more about renewable investment benefit, and what we did is we developed a metric to measure the value of tapping into this high quality wind resource out to the west. 

And it's pretty significant. And just a couple of slides here. I guess we're trying to quantify this and we're quantifying it in terms of dollars. So, I showed you the map, and it had some pretty colors on it, and I didn't get into a lot of details of how many megawatts are you talking about. What kind of difference are you talking about? What this shows is if you wanted an equivalent of 1,000 megawatts of wind turbines, you're going to build 1,000 megawatts of wind turbines in Wisconsin, how much fewer wind turbines would you have to build somewhere else to get the same amount of energy output? And if you look out here in North Dakota, it's a minus 333. So that means we would have to build 333 megawatts less worth of wind turbines. So, if a wind turbine was one megawatt, we would have to only build 667 wind turbines out in North Dakota compared to the 1,000 we'd have to build here in Wisconsin. Now, you notice North Dakota is a pretty significant number. You go here and Iowa and Minnesota, you're still talking about 200 megawatts fewer wind turbines that you'd have to build. Okay? So, there's a pretty significant capital cost associated with building these wind turbines. 

So, if you only have to build 800 compared to 1,000, the savings will add up. So, what do we need to do this calculation? Well, what we do is we take a look at something called the first contingency incremental transfer capability, FCITC, and what that is, that's a measure of how much power the system can import. And by building a new transmission line, we increase the ability of the system to import power, and we can measure this doing a calculation called FCITC. We have to take a look at the wind capacity factor differential, effectively the slide I just showed you just a little while ago. Where do you want to bring that power from? You want to bring it from southern Minnesota. So what's the differential between the wind in Minnesota compared to that in Wisconsin? You have to know the capital cost for constructing these wind turbines. How much do they cost You have to know what the LMP differential is between these wind turbine sites in Wisconsin. When we get into the example, I'll show you where that comes into play, but, basically, you can't just say, well, I only have to build 800 megawatts worth of wind turbines out in Minnesota compared to Wisconsin, and then I can do the quick math and I can tell you how much a wind turbine costs because it's going to cost something to get that power into Wisconsin. You're going to have losses and you're going to have congestion on the transmission system. So you have to be able to take that into account in the calculation, so that kind of knocks off some of your savings. 

And then, you have to know the real levelized fixed charged rate and your inflation and discount rates to do the financial part of the analysis. I'm definitely not going to get into that. But here's a table showing an example, and I'm sticking with my 1,000 megawatts. It makes for a nice round number. Transmission line, increase in import capability can be in the neighborhood of 500 to 1,000 megawatts. It's pretty common for building a new transmission line. Wind capacity factor, outside of Wisconsin, pretty typical to get 35% outside of Wisconsin. Inside Wisconsin, 30% is probably an optimistic number for inside Wisconsin, but for this example, it will work out well. So, the first thing we do is we calculate what's the difference between 35% and 30%, and that's 16.7%. So, if we built 1,000 megawatts worth of wind turbines in Wisconsin, we'd have to build 1,167 megawatts outside of Wisconsin. 

So that gives us a net savings of 167 megawatts. That's pretty good. So, if we take 167 megawatts and costs about, sorry about that, costs about $3,000 per kilowatt to build these wind turbines, times your conversion factor of 1,000 kilowatts per megawatt, we come up with $500 million. Pretty big number. It almost pays for the line just on its own right there. But that's not good enough. Yes? >> [INAUDIBLE] >> This would be the cost over the life of a wind turbine. So, a 25-year life or a 50-year life. So, like I said before, I can't take credit for that $500 million. That would be a little bit too optimistic. 

There's going to be losses and there's going to be congestion on the transmission system, and I need to take that into account. So, I go through a little bit more math, and I assume a real levelized fixed charge rate of 13%, and I get an annual savings of $65 million, and then I take a look at the amount of wind energy that's generated outside of Wisconsin, and that's three million sixty-six thousand. I had this on a note somewhere. That's 8760 hours by 1,000 megawatts outside the state, multiplied by, oh, crud. Sorry. I've got it in a note somewhere. Anyway, that's the total amount of energy that needs to be delivered into the state. The difference in LMPs, locational marginal prices, between Wisconsin and where these wind turbines would be outside of Wisconsin, for this example we're going to say is $5. So then, the delivery cost of bringing that power into Wisconsin would be $15.3 million annually. We'd apply our levelized fixed charge rate, and we come up with a life cost of $49 million, almost $50 million. 

So then, I come up with a present value of the renewable investment benefit of about let's say $380 million. Okay? So it's a pretty big savings. It doesn't pay for the entire project at all. We talked earlier about some of the other savings that the project provides, and this is one of the key components of it. And I've got a few links on here, locations you can go to for more information. The ATC website, the 10-year plan which outlines the projects in here, and then we do have a specific projects website and a specific website for the Badger Coulee line itself. And then my email address on there. And with that, I thank you. [APPLAUSE]