W-G:
USING LAST YEAR’S MASSIVE BLACKOUT AS A BACKDROP, W HAT ARE THE
PROSPECTS FOR THE U.S.T&D EQUIPMENT MARKET GOING FORWARD?
JS: The short answer is we’ll
see an increase in spending. But to truly understand how the blackout
will impact us going forward, you first have to look at the market conditions
that existed prior to its occurrence. Anyone who has been following this
industry knows that U.S. spending, to a large extent, has been hampered
by a number of uncertainties brought about by restructuring - including
regulatory issues, asset ownership, and return on investment.
Prior to the blackout, only
absolutely critical transmission projects went forward. Granted, there
were some areas of growth. There’s been substantial spending on
IT infrastructure to meet the needs of the still-emerging Independent
System Operators (ISOs) and Regional Transmission Operators (RTOs). And
we also had the relatively high IPP spending bubble in 2000 and 2001.
But generally speaking, U.S.
business was slow before the blackout, with public power, government and
investor-owned utilities spending about $3 billion annually. As a result,
I believe the real impact of the blackout is that it will drive everyone
- from the federal government with the energy bill down through the state
regulatory bodies-to move more quickly than they were before to try to
resolve the uncertainties.
How will that impact the U.S.
T&D market going forward? We will see an increase in spending. The
question that remains, of course, is how much spending will occur and
when. That will be a function of the amount of time and the level of reliability
agreed to by the key players—the federal, state and regulatory organizations.
If they set the grid reliability bar high, and the time to achieve it
is short, there could be some substantial spending in the near term .
W-G: ASSUMING
THE UNCERTAINTIES ARE RESOVED , HOW WILL THE GRID IMPROVEMENT PROCESS
UNFOLD?
JS: I believe the primary focus—at
least initially—will continue to be on applying technologies and
services that improve the existing infrastructure. If we depend solely
on putting more lines across new spaces, the costs will be just too insurmountable
in the short term. Legitimate environmental and regulatory issues will
just be unsolvable.
On the other hand, if we can
take existing infrastructure and apply proven technologies that can significantly
increase our existing transmission system - some can nearly double the
capacity of existing power lines - that will be a much more feasible and
probable direction for the industry.
That’s why utilities
are now placing a greater emphasis on asset management programs, life-extension
programs and installing devices that improve the reliability of the already
installed base.
We won a contract last September
to help International Transmission Co. analyze and manage 2,500 miles
of overhead and underground transmission facilities in southeastern Michigan.
The project involves collecting and analyzing data on some 28 substations,
43 transformers, 700 circuit breakers, more than 6,000 relays, 50 battery
systems, 200 buses, 12 reactors and more than 50 RTU SCADA systems. These
analyses will then help them determine when and how to upgrade various
parts of their system for maximum benefit when they’re ready to
take the plunge.
W-G: WHAT
ABOUT T&D EQUIPMENT SUPPLIERS? W H AT ARE THEY DOING?
JS: At ABB we’re changing
our product lines to make them more suitable to today’s marketplace.
For example, we’re taking a modular approach to many key transmission
products — like substations, switch gear, and capacitor banks. In
today’s competitive markets, time is quite often more costly than
hardware. Today ’s utilities need to get power online and to their
customers faster, less expensively and with less drain on their own engineering
resources that ever before.
Our Raleigh, NC plant now allows
customers to choose from a menu of components and apply them to a new
generation of standardized, modular substations. The components can be
assembled in any configuration - giving the customer the ability to customize
the unit. Compared to traditional substations, these new modular designs
can be built in half the time while still maintaining 100 percent functionality.
We delivered a substation to
Keyspan Energy on Long Island, N.Y., in just four months. A few weeks
later Keyspan had the equipment installed and ready to energize. So the
entire project took less than five months. In the past, a custom-built
substation would have taken 12 to 18 months to design, build and install.
We’ve even put a Configurator
on our Website that allows registered customers to log on and literally
create their own substation. The program generates layout and control
drawings and bill of materials online. Suffice it to say, we believe modular
components are the future of the industry.
W-G: WHAT
ABOUT TECHNOLOGIES THAT INCREASE THE CAPACITY OF THE EXISTING INFRASTRUCTURE?
JS: Higher technology solutions,
like flexible AC transmission devices (FACTS), high voltage direct current
(HVDC) technologies, and gas-insulated substations will continue to emerge.
FACTS and similar technologies allow more power to be pushed over the
existing infrastructure, which allows you to address some of the grid
reliability issues in congested are as without putting more wire in the
air.
Overall, we’ve secured
more than $90 million in FACTS equipment contracts in recent years for
installations on both the east and west coast, as well as in the Texas
grid. But many more are needed. High power application of chip technology
pioneered over several decades has also produced high voltage direct current
(HVDC) technology that can isolate parts of the grid from disturbances
in adjoining are as, and/or provide adjoining areas with voltage and frequency
support.
Last November, we
commissioned an HVDC transmission system link that interconnected the
United States’ eastern and western power grids. Since the two alternating
current (AC) grids do not operate synchronously, the HVDC technology takes
the AC from one grid, converts it into direct current, and then re-converts
it into AC for the other grid. The back-to-back system is called the “Rapid
City Tie,” because it passes close to Rapid City, South Dakota.
It carries 200 MW of power and provides voltage and frequency support
in case of disturbances in either of the two grids. We supplied the system
as part of a joint project between Basin Electric Power Cooperative of
North Dakota, and Black Hills Power of South Dakota.
W-G: WHAT
ABOUT IT SOLUTIONS? WHERE DO THEY FIT INTO THE PICTURE?
JS: In every industry that
has been deregulated, the investment in IT has gone up by several orders
of magnitude. The power industry needs to catch up on IT investments to
improve operation of the vast, interconnected U.S. grid.
We are getting there. We’ve
developed a number of sophisticated IT systems in recent years that can
make the grid more flexible, secure and reliable. We can, for example,
significantly upgrade the grid’s monitoring, control and response
capability by simply applying technologies like “wide area monitoring
systems” (WAMS).
Our WAMS technologies
- which have been deployed successfully in pilot projects over the past
two years - use GPS satellite signals to accurately synchronize the measurement
of information and perform analyses on system conditions, and indicate
if system instabilities are beginning to occur.
These measurements can then
be aggregated and compared to see if and where the system is beginning
to be over-stressed. It’s even possible to monitor neighboring grids,
giving operators crucial additional minutes to react to a disturbance
and prevent it from spreading. As a leader in this technology, ABB testified
in Congress on WAMS in late 2003.
W-G: WHAT
OTHER NEW TECHNOLOGIES ARE ON THE HORIZON?
JS: You really can’t
describe these technologies as new. Many, such as FACTS devices and HVDC
have been around for some time. Again, the key issue here is applying
them - having the will, the ability and return on investment.
But ABB is developing and building
on its existing technology base. We’ve had HVDC technology for awhile
and now we’re working on HVDC Light, which is a smaller version
of HVDC that allows us to extend the practical and economic applications
of the use of direct current .
Our first U.S. application
was Trans Energie’s Cross Sound Cable project in 2002. The 35 mile
HVDC Light system runs under Long Island Sound and links the New York
and New England ISO grids-improving the reliability of each power supply
system by making it easier for both entities to share generating plant
capacity and provide emergency support. It also provides much needed electricity
to Long Island and promotes competition in the New York and New England
electricity markets by enabling electricity trade among power generators
and customers in both regions.
The project is also noteworthy
because the path for a traditional land-based transmission line would
have adversely impacted more people and property - making the project,
in all probability, difficult if not impossible to execute.
Beyond that, we recently received
a Global Energy Award for supplying the world’s largest battery
energy storage system (BESS) to a commercial operation in Alaska. It’s
a 40 MW system that stabilizes the local grid by providing continuous
voltage support during normal operation and backup energy during system
disturbances.
During an emergency, the system
can supply the grid with 40 MW of power for roughly six to seven minutes,
or 27 MW for 15 minutes. Fifteen minutes is enough to cover the time between
a system disturbance and diesel-powered backup generators coming online.
The BESS is expected to reduce power outages in the area by 70 percent.
Other benefits include reduced air emissions through reduced spinning
reserve operations, reactive power support and improved power quality.
As technological options go,
we believe BESS represents an extremely cost-effective and efficient alternative
to traditional backup solutions, which require maintaining transmission
and generation capacity in excess of that needed to satisfy normal demand.
And it allows you to do so without stringing more wire.
By the way, since the battery
is larger than a soccer field, it’s also been submitted to the Guinness
Book of Records. It’s manufactured from recycled material by the
Saft battery production company, is safe, reliable and will be recycled
again at the end of its 20-year life cycle.
W-G: DO YOU
BELIEVE THE BLACKOUT AND ITS AFTERMATH WILL SIGNIFICANTLY IMPACT THE T&D
EQUIPMENT MARKET?
JS: Yes, I think it will. We’re
optimistic that the net impact is going to be positive, in that it will
remove much of the uncertainty that surrounds the whole issue of transmission
investment. By reducing that uncertainty, we believe we’ll see significant
investments to modernize the grid and move forward .
The power grid serving the
United States and parts of Canada is a vast and complex network. It was
designed to serve the reliability needs of large, vertically integrated
utilities.
Today, we live in a world
of Genco’s, Transco’s and load serving entities that are fiercely
competitive. We have to make the grid more flexible in both design and
operation.
And to achieve that level
of flexibility does not necessarily mean we have to put more copper in
the sky. We can achieve it by simply enhancing much of the system that’s
already in place.
|