Like a physician with her stethoscope at the outset of a check-up, astute shareholders and directors should use the level and trend of a utility’s market-to-book ratio (MtB) as one of the first...
Evolutionary directions for electric system architecture.
clear outline, morphing over time, and not being subject to any control from the vantage point of this analysis. The analysis simply posits that within each of these factors are key drivers of trends and discontinuities that, combined, create forces for change in T&D.
Having acknowledged the difficulty of defining exogenous factors and isolating them from each other, the analysis proceeds (boldly or naïvely) for the purpose of the exercise to choose two of these candidate forces to consider as the main drivers of the scenarios. But how to choose?
First, note that there’s no right or wrong answer here: it’s possible to perform a scenario analysis exercise with any pair of factors taken to be exogenous. The most instructive exercise, however, will likely result from choosing those drivers that entail the highest degree of uncertainty. A bit more specificity involves listing candidate forces for change in T&D. Again, these forces overlap and interrelate, but they’re considered here as a spectrum of conditions that will in some way bear on how T&D systems are built.
Though far from certain, the more confident predictions include suppositions that there will be economic pressures to keep costs down; that electric demand will grow and continue shifting from resistive or inductive to electronic loads; and that there will be less land available on which to build T&D facilities. Somewhat more uncertain are developments such as the future deployment of energy efficiency, demand response, renewable generation and distributed generation. 3 Within the category of technological change, the least well-known elements include smart-grid enabling technologies such as power electronics along with a sensing, communications and control infrastructure, as well as new T&D material technologies. Finally, the greatest uncertainty probably lies in the area of policy: this includes energy markets and tariffs, siting of power plants and grid facilities, regulation or taxation of carbon emissions, and other societally determined constraints on what can and can’t be done in the context of providing electricity.
How the above forces currently act on planning and operations of the T&D system bears brief examination. Sites for large new generation projects are increasingly constrained to locations relatively far from load centers, whether for environmental health and safety reasons (coal and presumably nuclear) or due to resource availability (renewables). This condition exerts pressure to extend the high-voltage transmission system in order to provide access to these generation resources. 4 Another force acting on the build-out of T&D is the need to accommodate the behaviors of various generators with respect to inertia: this includes intermittency (e.g., wind, solar: low-inertia), must-run conditions ( e.g., nuclear: high-inertia), and ramp rates for different units. Again, this factor pushes toward increasing transmission links between distant locations so as to facilitate complementing different types of generation with one another.
At the same time, anecdotal evidence throughout the industry suggests that building new transmission lines is becoming increasingly difficult and taking longer, largely because of public opposition or NIMBY effects and cost-allocation deliberations. Some new lines are approved and built with considerable effort, while many more remain on