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All slides are Copyright 2008 Tristan Handy,
Dave Carlson, Kevin Lucas, and Colin Pistell.

All slides have been released under a Creative
Commons Share-Alike license:
http://creativecommons.org/licenses/bysa/3.0/
Tristan Handy
Kevin Lucas
Colin Pistell
Dave Carlson
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Develop a baseline of knowledge
Connect with other interested students
 Survey (link)
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Gauge interest
 Similar events in the future?
 Other possibilities?
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Industry Overview
Utilities and Renewables
Smart Grid Technology
Biofuels
The Stone Age did not end for lack of stone, and the Oil Age will end long before the world
runs out of oil. - Saudi Arabian petroleum minister Ahmed Zaki Yamani, (1986).
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Communications Technology
 Wireless data, consumer digital, network

infrastructure and software
Energy Technology
 Generation, delivery/storage, emissions

Advanced Materials
 Enzymes, catalysts, polymers, water
6
Source: Firelake Capital, 2008
6
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Communications Technology
 Wireless data, consumer digital, network
23%
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23%
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infrastructure and software
Energy Technology
 Generation, delivery/storage, emissions
Advanced Materials
 Enzymes, catalysts, polymers, water
39%
7
Source: Firelake Capital, 2008
7
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+ public lights
Communications TechnologyBuildings
Half residential
Half commercial
 Wireless data, consumer digital,
network
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infrastructure and software
Energy Technology
58%
Manufacturing
Mining
Construction
Agriculture
 Generation, delivery/storage, emissions

Advanced Materials
 Enzymes, catalysts, polymers, water
42%
8
Source: Firelake Capital, 2008
8
-70% in generation
- 9% in transmission/distribution
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Communications Technology
-40% in space heating
- 10% in other uses
 Wireless data, consumer digital, network
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infrastructure and software
Energy Technology
-20%
 Generation, delivery/storage, emissions
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Advanced Materials
 Enzymes, catalysts, polymers, water
- 63% overall
- 80%
9
Source: Firelake Capital, 2008
9
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Communications Technology
 Wireless data, consumer digital, network
infrastructure and software
 Energy Technology
15% imported
94% of imports from Canada
 Generation, delivery/storage, emissions

Advanced Materials
 Enzymes, catalysts, polymers, water
57% imported (half from OPEC)
46% imported in 1990
10
Source: Firelake Capital, 2008
10
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Joule (J) – the master
unit of energy
 Energy required to lift an
Other Units of Energy
Calorie
Electron Volt
Newton-Meter (1J = 1Nm)
average apple up 1m

kWh – used to measure
electricity
 1 kWh = 3,600,000 J

btu – used to measure
non-electrical energy
 1 btu = 1,055 J
It’s all the same
stuff – Energy!
Appliance
Watts
Run Time
(hours) to
Reach 1 kW
100-watt
bulb
100
10
Dryer
4,000
.25
Laptop
50
20
Toaster
1,000
1
Microwave
1,000
1
TV: 25”
150
6.67
Average annual household demand: 11,040 kWh
Source: http://www.evsolar.com/power.html
Generation
Technology
Price (cents per
kWh)
Gas
4.5 – 6.0
Coal
2.0 – 3.0
Nuclear
3.0 – 5.0
Wind
4.5 – 14.0
Geothermal
4.5 – 30.0
Hydro
5.1 – 11.3
Solar
15.0 – 30.0
Generation Cost Comparison
Solar
Hydro
Geothermal
Wind
Nuclear
Coal
Gas
0
5
10
15
Cost (Cents per kWh)
Sources: Clean Edge, PBS, and IEA
20
25
Global new investment in clean energy per
asset class, 2004-2007
Global new investment by technology,
2007
•$148.4 billion new investment in sustainable energy, 60% higher than 2006
•$ 50.2 billion into wind, mainly for new capacity build
•$28.6 billion into solar, growing at an average annual rate of 254% since 2004
•23% of new generation capacity added is renewable energy
•5.4% of global power generation is renewable energy
Source: Firelake Capital, 2008
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In a system, a process that occurs will tend to
increase the total entropy of the universe.
There is no magic source of matter, energy,
light, or indeed lunch.
 Translation provided by Robert A. Heinlein in his
1966 novel The Moon Is a Harsh Mistress.
Solar Cost Curve
Rates are calculated
without subsidies
 Grid parity projected in
2015

although detractors
abound
 Depends on location;
Hawaii already at grid
parity
$0.25
Cost (cents per kWh)
 Industry consensus,
$0.30
$0.20
$0.15
$0.10
$0.05
$0.00
2005
2010
2015
2020
Source: Clean Edge Utility Solar Assessment Study, 2008
2025
Electricity is actually made up of extremely tiny particles called electrons that you cannot see
with the naked eye unless you have been drinking. - Dave Barry, humorist.
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Historically, many utility companies have
been granted “natural monopoly” status
High capital costs, low marginal revenue
 Multiple firms competing for same customers
could hurt all firms
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In return, most utilities were regulated by
public utility commissions

In the 1970s, many industries were
deregulated to some degree


Transportation, airlines, telecom, shipping,
electricity, natural gas, rail, bus, banks
Intent was to increase competition, resulting
in increased efficiency and decreased costs

Deregulation results have been mixed

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S&L scandal in late 1980s
Cheap airline tickets, but many bankruptcies from 1980scurrent
Telecom much cheaper now
In the electric utility sector, deregulation benefits
are controversial


Proponents claim lower prices in deregulated markets
Several states who deregulated reverted back to
regulated

Public Utility Commission (PUC) oversees
operations of all utilities in their territory


For NC, two main IOUs are Duke Energy and
Progress Energy
Mission statement of the NCUC

“Protect the public’s interest in receiving
adequate service at reasonable rates.”
Assure high reliability
 Generation capacity must be able to meet expected
demand
 Use least cost energy source to meet demand

LCOE 
PV (Capital Cost  O & M  ROE )
PV (Output )

NCUC fixes ROE on assets
Duke: 12.25%
 Progress: 12.75%
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Fuel and O&M costs are passed to consumers
Utility income driven by electricity sales
volume

NCUC fixes ROE on assets


Fuel costs and O&M are passed through
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More assets = more income
No incentive to manage long-term generation
portfolio in a comprehensive manner
Utility income driven by electricity sales
volume

More kWh = more income
http://www.hks.harvard.edu/hepg/Papers/EEI-NRDC%2011-18-03%20final.pdf
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IOUs have fiduciary responsibility to maximize
shareholder value
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Most large utilities are investor owned
Should not invest in negative NPV projects
Disincentive to invest in programs to reduce energy
consumption


Large investments in energy efficiency and demand side
management programs could dramatically change
industry…
But less consumption > lower sales > less money

High Reliability


Renewables and EE resources generally
intermittent, unforecastable, undispactable
Meet expected demand
Large solar installation: 10 MW
 Large coal plant: 1000 MW
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
Use least cost energy source
Coal LCOE ~ $25-$50 / mWh
 Solar LCOE ~ $150-$300 / mWh
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Renewable Portfolio Standard


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
22 states have some form of RPS
Charges customers fee to fund renewable generation
investment
First NC filing by Progress ($0.46/month fee for
residential) this summer met with complaints
Duke Energy’s Save-a-Watt program
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

Wants customers to pay Duke for not selling them
electricity
If approved, will allow Duke to pursue EE/DSM programs
and get paid for “net sales loss”
Customers charged for 90% of the cost of a new plant
 Bill goes up, but not as much as with a new plant

Enact carbon tax / cap and trade
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
Allows externality (social cost of environmental impact) to
be priced into electricity
Market signals will incent utilities to replace “dirty” plants
with cleaner technologies
Likely to happen in some form, but short-term and longterm effectiveness unknown
Decouple profits from sales
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

Shift basis for profits from sales to other metric (i.e.
customers served)
Profits “trued up” on a periodic basis based on actual
consumption
Makes utilities indifferent to selling or saving kWh

Federal RPS, carbon legislation, and revenue
decoupling all supported by Obama during
campaign
 Will they be implemented quickly?
 Tend to be longer term solutions

Electricity demand will continue to increase
 Sensitive to how fast transportation becomes electrified

Energy prices will continue to rise
 Smooth, or step change?
 When will consumer behavior change (i.e. gas prices and
driving)?

Renewables will continue to grow…
 Technology improvements drive down costs
 High carbon cost would make them more
appealing

But coal will remain largest source of
electricity generation for years to come
 Baseload generation needed, nukes take 10+
years to build

In the medium/long term, Industry will figure it out
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Current global consumption is patently unsustainable
Allowing a ROI for EE/DSM programs can be win-win
Renewables becoming increasingly viable and demanded
Carbon will be priced in
In the short term, supply/demand issues can only be
addressed by changing consumer behavior
 Can this be done without dramatic increase in prices?
Turn off lights when you leave the room!
“The Department of Energy has been charged with orchestrating the wholesale
modernization of our nation’s electric grid. While it is running. Full tilt.”
Buzzwordery: Use these to sound intelligent at cocktail parties.
Important concept that Presenter doesn’t know enough
about. Worth researching on your own.
* Important Note: Source of all info/data/facts used is Department of Energy, unless otherwise stated.
Causes:
• High Demand, near full utilization
• Human Error
• Lack of system alarm
• Cascading Failure
Results:
• Blackout Baby Boom?
Disproved by J. Richard Udry. Thanks buddy.

Problems can move too quickly for adequate
human or mechanical response.

HUGE economic cost: 2003 cost the region
$6 Billion.
Generation:
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Coal
Nuclear
Wind
Solar
Etc.
Transmission:
• Electrons sent across high voltage lines to a substation.
Distribution:
• Electrons sent from substation to
residential/commercial buildings.
Consumption:
• Electrons are used to power just
about everything.
* The Grid Makes All of This Possible*
Thomas Edison: D.C.
Nikola Tesla: A.C.
The War Of Currents!!!
• A.C. Adopted
• Industrialization and WWI Mobilization
lead to rapid expansion of the Grid
• 9200+ Generating
Units
• 1,000,000+ MW
Generating Capacity
• 300,000 Miles
Transmission Lines
• 99.97% Reliable
…But Grid is struggling to keep up, and is losing
ground
* Source: http://www.fypower.org/flexalert/demand_resp.html
The Grid was designed for centralized
distribution and one-way information flow
during a time when efficiency didn’t
matter, customer choice wasn’t a
consideration, and prior to the advent of
modern electronics.
Some Facts:
• 40% of USA’s emissions come from power
generation & transmission
• If the grid were 5% more efficient,
equivalent to taking 53 million cars off the
road
The Smart Grid is the application of modern
IT and communications technology to the
grid, greatly improving efficiency, reliability,
resiliency, and adding a suite of new
capabilities that are critical to modern
development.
AMI (Advanced Metering Infrastructure)
-Digital Meters and software that allow 2-way
communication between all parts of the grid.
 Visualization Technology
- Software & hardware that is able to translate
data from all sources and display different
views to different users.
 Integration Technology
- Software that allows real time data
capture, transfer, and analysis,
allowing interoperability
between all systems in the grid.
D.O.E. has listed 5 fundamental driving technologies:
1. Integrated Communications
2. Sensing and Measuring Technologies
3. Advanced Components
4. Advanced Control Methods
5. Advanced Interface and Decision Support
**Important Note: These technologies exist today, and are
constantly being improved!
Efficiency – Doing more with what we’ve got:
-Estimates show that an integrated smart grid could generate 50%-300% more
power using existing infrastructure.
- Given today’s demands, a smart grid alone could reduce power emissions by
close to 20%.
Reliability – High quality power to drive the electric
economy:
-Smart grid can “smooth” spikes and sags in power to ensure reliability.
Old and Busted: Traditional SCADA (Supervisory Control and Data
Acquisition)
New Hotness: Phasors, PMUs (Phasor Measurement Units)
 Currently, distributed power is a
nightmare for utilities – adds variability to
their system.
Furthermore, most clean, renewable
energy sources are intermittent –
rendering them almost useless to the
current grid.
Smart Grid is the enabling platform to
make renewable energy viable.
“Plug-and-Play”
Demand Response: Managing customer consumption in response to supply
conditions. (i.e. the “peak problem”)
Old Method: “Load Shedding”
a.k.a. Rolling Blackouts
New Methods:
•Rapid cycling of specific
buildings, or better, specific
appliances
• Real-Time-Pricing (more on
that soon)
• Intelligent use of stored
energy (more later)
Customers will have access to a vast amount of information previously impossible to
determine.
 Real time pricing
 “Prices to devices”
 Accurate, real time carbon footprint information
Smart Grid enables the Electricity Market:
• Customers choose where their power comes
from…
• …Or determine when and how it is sold
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
Centralized power is vulnerable
Human error can turn into big problems FAST
-The smart grid can immediately respond to problems with
precise solutions
-The smart grid can also respond to large scale disruptions
by “Islanding”
 PHEV’s
 Pure Electric Vehicles
 Energy Storage (battery farms)
 Distributed Storage
Utilities are building “smarter grids” and many of these technologies
have been successfully field tested with impressive results.
But…
• Cost
• Standards
• Aligning Interests
“If we did all the things we are capable of doing, we would literally
astound ourselves.” - Thomas Edison
Question: What is the smart grid’s Killer-App?
U.S. Primary Energy Consumption by Source and Sector
(Quadrillion BTUs)
Source: EIA Annual Energy Review 2007
Energy Flow, 2007
(Quadrillion BTUs)
Source: EIA Annual Energy Review, 2007
Distributed by truck, rail, or barge. Biodiesel pipeline is being considered.
•It’s all about the Feedstock
•US- Corn
•Europe- Wheat
•Brazil- Sugarcane!
•Southeast Asia- Corn, Rice, other agricultural
products
Alternative feedstocks: citrus peel, MSW
Ethanol Production Process
 1st generation: simple sugars from corn,

sugarcane, wheat
2nd generation: complex sugars in the form of
cellulose
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Energy and carbon footprint balance
Energy Content
Distribution Challenges
End use issues
Renewable Fuels Standards from Energy
Independence and Security Act of 2007
Year
Renewable
Biofuel
Advanced
Biofuel
Cellulosic
Biofuel
2008
2009
2010
9.0
10.5
12
.6
.95
.1
2015
15
5.5
2020
15
2021
2022
Biomass-based
Diesel
Undifferentiated
Advanced Biofuel
Total RFS
0.1
0.2
9.0
11.1
12.95
3
2.5
20.5
15
10.5
4.5
30
15
18
13.5
4.5
33
15
21
16
5
36
.5
.65
Ethanol Subsidy: $0.51/gal
Ethanol Tariff for imports: $0.54/gal (before earning subsidy)
INDUSTRY RESEARCH
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www.cleanedge.com
www.newenergymatters.com
(look for free research and podcast)
www.ren21.net
www.epri.com
Energy Information AdministrationEIA.gov
International Energy AgencyIEA.org
National Renewable Energy Labnrel.gov
Renewable Fuels Association
Department of Energy
NEWS
www.greentechmedia.com
 www.autobloggreen.com
 http://www.nexindex.com/
(^NEX is the leading renewable
energy stock index )
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