A Year After the Blackout:
Grid reliability is still at risk unless the industry quickly takes action.
"Those who do not learn from history," the cliché goes, "are doomed to repeat it." The report issued by the U.S.-Canada Power System Outage Task Force on last summer's massive blackout in the Northeast certainly offers an excellent and thorough understanding of the causes of the event, which remains fresh in the industry's mind. Why, then, can't grid experts offer stronger assurances that similar failures will not occur in the future?
Rising demands and continuing low grid investment remain on a collision course. Transmission capital budgets have seen a modest post-blackout uptick that is nevertheless barely enough to keep pace with load growth and replacement, let alone boost system margins to foster more robust competition.
California's overtaxed grid has remained on a knife's edge all summer, and the pre-Olympics blackout in southern Greece reminds us of how rapidly and spectacularly grids can fail when they become unstable. Beyond improved understanding of the causes of blackouts, the industry must have clear grid investment signals to lift the specter of risk.
Other measures can certainly help. Under the strong leadership of the North American Electric Reliability Council, for example, inter-area coordination and communications have improved. But transfer limits are ultimately set by material properties and natural laws that even the most powerful legislatures cannot trump.
Legislators can, and must, frame broad policies that foster a healthier grid investment climate, yet the post-blackout momentum to enact reforms has stalled. In this highly polarized election season, many critical measures-mandatory reliability standards, siting reform, investment incentives, and tax-law changes to ease transmission asset sales-are stuck in neutral. Electricity consumption has long been one of the closest correlates of overall gross domestic product, so this combination of political and physical gridlock threatens to cripple our nation's prospects for long-term, sustainable growth.
Federal-State Tension, Agreement
In light of this gridlock, federal and state regulators must agree on steps they can take, under existing authority, to strengthen grid security and reliability. The recent history of propagating grid failures doesn't make such agreement easy. Many states have lost confidence in the Federal Energy Regulatory Commission (FERC) and its vision of transmission as an open-access "superhighway" supporting robust competition. Some wish to keep their grids as tightly regulated "cul-de-sacs" shielded from the unpredictable traffic of interstate commerce. After all, why endure the political, financial, and land-use costs of siting local grid upgrades to support regional power flows?
Yet beneath this surface disagreement there is gathering consensus on some key points. First, truly secure power networks are indispensable to our 21st century economy. Customers will not soon "cut the cord" but will demand the low-cost, reliable supplies the grid alone can provide. Second, land-use and space issues will intensify, and tomorrow's grid must be constructred largely within a fixed physical footprint. New technology solutions are urgently needed, and both the National Governors Association and FERC have voiced inteest in grid solutions that make fuller use of existing pathways.
Reactive Power Management
Regulators have divergent views on market structure, but certain steps can boost grid security and reliability under any regulatory regime. First, incentives must be realigned to reflect the true physics of grid operation. It's a simple case of "follow the money." Unfortunately, two decades of electricity policy reform measures have focused on inducing investment in generation to reduce or avoid the need for grid expansion. Judged by today's massive capacity glut, these policies succeeded, but the coincidence of large surpluses with a wave of reliability problems points to the need for a more balanced approach.
The real challenge facing today's grid operators is not how to attract supply, but how to keep the grid energized-that is, humming at near-constant voltage and frequency, continuously, at all locations. Meeting this challenge, all in the face of uncertainties caused by changing weather, shifting economic activity, and competitive supply market conditions is further complicated by uncertainty over market roles in today's hybrid, part-regulated, part-competitive market environment.
The power flowing through alternating current systems actually is a twin product. Real power is the industry's primary tradable commodity, while reactive power is the invisible force that ensures steady voltage. If the former (measured in megawatts) is our economy's lifeblood, then the latter (measured in megaVARs [volt-amperes reactive]) is the invisible but indispensable force that keeps the grid's blood pressure in check. If both forces are not kept in close balance, the system collapses. Unfortunately, markets and regulatory policies have focused overwhelmingly on megawatts because, as Willie Sutton said, "That's where the money is!" MegaVARs are not the subject of well-developed markets; until recently, reactive power received virtually no attention from policy-makers.
Reactive power issues now demand more regulatory attention because of our society's growing reliance on power generated by distant sources. Decades ago, cities were served by plants in or near their downtowns. Today, for air quality, land use, economic and other reasons, they are increasingly fed by large generators located tens or even hundreds of miles away. This trend is unlikely to reverse. New plants are now very hard to site in and near cities; old, inefficient, and dirty plants are under growing pressure to retire; and cheap natural gas supplies suitable for urban generation are receding into memory.
But physics will not be denied. While real power contracts span hundreds of miles, reactive power cannot "travel" well; due to line inductance, it is attenuated over distance. Reliable networks need local dynamic voltage support that is well distributed relative to loads. Imbalances can lead to catastrophe. Outages at large generators in Detroit, Toledo, and Cleveland, the Blackout Task Force found, left the grid bordering Lake Erie highly susceptible to collapse. Its report blamed many earlier grid failures on voltage problems; the recent outage in Greece was a textbook case of stability-induced voltage collapse.
Investment in Voltage Support
Among its recommendations, the blackout report presents one intriguing solution: Future power supply contracts should require generators to boost reactive power output if needed for reliability purposes-provided they are "paid for any lost revenues associated with a reduction of real power sales attributable to a required increase in the production of reactive power." If kept whole for such "lost opportunities," generators should become willing partners in ensuring wide-area reliability.
The engineering and physics of this recommendation make sense. Market-based compensation for VARs counters the incentive to make profitable sales that jeopardize reliability. It would reduce the need for cumbersome, market-unfriendly transmission loading relief procedures. But it neglects a simple precept-the best tool for the job. There's no reason to limit market-based payment for VARs to generators. With regional generation markets saturated and even depressed, investors won't back costly new generating facilities simply to meet local voltage criteria. In many cases, specialized dynamic VAR solutions offer a much faster, cheaper, and more cost-effective solution. Compact, mobile, and responsive on a sub-cycle scale, these devices can be deployed in a matter of months, inside existing substations, and relocated as system needs change.
If it makes sense to pay generators for the power they don't produce to support reliability, how much more sensible would it be to reward dynamic VAR generators for the value of increased power flows they enable-flows that could not occur but for their presence on the system? Dynamic reactive power support could become a highly attractive merchant power opportunity, yielding short paybacks while increasing grid reliability and deliverability. Several permutations can be envisioned. Unregulated generators could boost their grid deliverability by adding on-site supplemental dynamic VAR support, or the same equipment could be more valuable if sited remotely. Stand-alone merchant dynamic VAR projects could create valuable new power flow opportunities without any associated generation supply.
The blackout highlighted the growing threat of dynamic voltage problems. Technical solutions to this problem are readily available, but creative regulatory approaches are needed. A market-based framework for dynamic VARs could lead to rapid improvements in local grid reliability, enhanced trading opportunities, fuller utilization of existing grid and generation assets, and fast paybacks for investors, all with minimal environmental impact. Here is a case where the timeworn precept, "follow the money," offers a winning solution for the entire array of power system stakeholders.
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