Transcript PowerPoint Presentation - Renewable Energy Consumption by

Electricity Deregulation and the
California Energy Crisis
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Electricity and energy
What happened in California?
Utility deregulation in NE and Maine
Future trends, including renewables
The big picture
What is electricity?
• Electricity is a naturally occurring physical
force created by the interaction of
negatively and positively charged particles.
– Benjamin Franklin, 1752 (electricity transmitted from
lightning to iron spike to key)
– Michael Faraday, 1831 (generated electricity by rotating
magnets around a coil of wires)
– Thomas Edison, 1882 (world’s first electricity-generating
plant, NY)
Electricity Flow, 1999
(Quadrillion Btu)
Consumer Prices, 1999
Electricity Net Generation by
Source, 1999
California Utility Generation by
Primary Energy Source, 1998
Electricity Net Generation at
Electric Utilities
Vertically Integrated Utility
Why Deregulate?
ANSWER: Inefficient market
(move from monopoly to market and
choice)
CALIFORNIA DEREGULATION
Then
Now
• Utilities owned
generating plants,
prices regulated
• Utilities owned
transmission lines
• Utilities own
distribution systems to
homes and businesses
• Plants sold to private
companies. Prices set
at auction by CA
Power Exchange.
• Transmission lines,
grids in Independent
System Operator (np)
• Utilities still own
distribution systems
California Energy Crisis
Wholesale Electricity Costs
• 1999
$7.4 billion
• 2000
$27 billion
• 2001(6mo)
>$20 billion
– CA now has long-term contracts (peak purchase)
Who are the Players?
• Energy producers (natural gas, nuclear,
coal, other)
• Marketers/Traders (buy-sell energy and/or
buy-sell electricity)
• Power Plants (Utilities and others)
• Transmission(Utilities, ISOs, RTOs)
• Distribution (Utilities to users)
• Regulators (State and Federal)
Who to blame?
• Generating capacity tight; few non-utility owners; few new
plants
• Long–term contracts not allowed; spot purchases required
• Demand increased 25%; supply increased 6% in 10 yrs
• Transmission lines/infrastructure constraints
• Natural gas prices much higher than normal
• California electricity rates frozen (at utilities’ request);
couldn’t pass price increases on to consumers
• Generators and fuel suppliers were reluctant to sell to
bankrupt utilities
• Poor sight by FERC, state regulators
UK Electricity Deregulation
New England Utilities
• Nine plants built since 1998. 30 plants
under construction.
• Demand at a steady pace.
• Increased dependence on natural gas.
• Utilities use long term contracts (20% spot)
• NE imports from other states (Canada, also)
New Approach to Deregulation
• Electricity is a special
commodity
• Better wholesale
market design (less
spot market use)
• Create real-time
pricing for consumers
• Provide transparency,
efficiency, choice
• Add co-generating
capacity/rethink size
• Think distributed
generation/”off grid”
• Improve transmission
infrastructure
• Use gas storage to
moderate volatility
• Re-evaluate regulatory
system
• Use life-cycle analyses
• Anticipate surprises
New Utility Generating Units
by year of entry into service
125
1,250
Number of
new units
100
1,000
75
750
50
500
25
250
Maximum
new size, MW
0
0
1993 1994 1995 1996 1997 1998 1999 2000
Sources: US Energy Information Administration; Rocky Mountain Institute
Natural Gas Overview
Power Shopping
A variety of distributed-generation technologies are available or under development.
Costs of producing power can vary widely, depending on location, size, use and fuel prices,
but here are estimates:
Technology Description
Photovoltaics (solar panels)
Wind turbines
Diesel generators
Microturbine
Fuel cells
Cost*
Converts sun lights into electricity
Wind blades power electricity-producing turbines
Similar to truck engines, also run on natural gas
Scaled-down jet engines that run on natural gas,
methane or waste gases
Chemical reaction produces electricity and water
22-40 cents
4-28 cents
7-12 cents
7-10 cents
No commercial production
* Per kilowatt-hour, without subsidies. For comparison, the average U.S. retail electricity price
earlier this year 6.9 cents per kwh.
Source: Department of Energy; National Renewable Energy Laboratory;
American Wind Energy Association; manufacturers
From WSJ, Sept 17, 2001 Think Small by Robert Gavin
Marketing Renewables
• Life cycle analysis/resource equity
– Goal of true cost of all energy sources
– Level playing field
• Co-generation
– How/should/could renewables integrate with fossil fuels
– Production, storage, utilization issues
– Scale issues (distributed energy)
• Energy price and supply
– Conservation, efficiency, volatility, reliability, technology
– BP(solar), Shell(hydrogen, geothermal), Texaco(fuel cells)
– Choice, diversity
Food for Thought
• 40% of world not on grid (>2 billion people)
• Increased energy demand in China (5-8%/yr)
• 20,000 gas wells drilled in US last 12 mos;
deliverability increased by 4%
• What happens when the world economy
recovers?
Demand>supply
World Consumption of End-Use
Fuels, %
1997
5,808
Mtoe
11
Coal
8
1
Renewables
2
4
Heat
3
17
Electricity
20
18
Gas
18
49
Oil
49
* Million tonnes of oil equivalent
2020
Forecast
9,117
Mtoe*
Source: International Energy Agency