2009 gpac seoul National University



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2009 GPAC




Seoul National University




[ SmartGrid ]

: The Benefits of a

Transformed Energy System in Korea

Jaeseung Song Hongkeun Jang

Sangbum Yoon Byunghoon Min




August 2009




Summary

The demand for electricity is expected to continue its historical growth trend far into the future and particularly over the 22-year projection period discussed in this report. To meet this growth with traditional approaches will require added generation, transmission, and distribution, costing up to ₩3,437 million/MW on the utility side of the meter. The amount of capacity needed in each of these categories must supply peak demand and provide a reserve margin to protect against outages and other contingencies. The ‘nameplate’ capacity of many power system components is typically utilized for only a few hundred hours per year. Thus, traditional approaches to maintaining the adequacy of the Nation’s power generation and delivery system are characterized by lower than desirable asset utilization, particularly for assets located near the end-user.

Other issues are beginning to affect the utility industry’s ability to supply future load growth. The disparity between current levels of investment in generation and transmission suggests a looming crisis that creates a strong element of urgency for finding alternative solutions. In addition, any solution needs to address the cycle of boom and bust that is typical of certain sectors of the electric industry and is likely to become more pronounced as deregulation takes hold across the Nation.

The increased availability of energy information technologies can play an important role in addressing these issues. Historically, power supply infrastructure has been created to serve load as a passive element of the system. Today, information technology is at the point of allowing larger portions of the demand-side infrastructure to function as an integrated system element that participates in control and protection functions as well as real-time economic interaction with the grid. The collective application of these information-based technologies to the Korea power grid is becoming known as the SmartGrid vision or concept.

This report presents a preliminary scoping assessment conducted to envision the general magnitude of several selected benefits the SmartGrid concept could offer when applied nationally. These benefits accrue in the generation, transmission, and distribution components of the power grid, as well as in the customer sector. The total potential benefit of implementing these technologies over the next 22 years is conservatively estimated to have a present value(PV) of about ₩14,711 billion.

Other benefits enabled by SmartGrid technologies were identified but not fully evaluated or claimed in this study. This was done to avoid, as much as possible, accounting more than once for the benefits implicit in other advantages offered by the SmartGrid concept. We leave these benefits for others to evaluate more thoroughly.

While implementation costs were not considered and the error band on the total benefit value is likely to be large, the major conclusion of this exercise is that the SmartGrid concept has the potential for great economic value and should make a major contribution to transforming the present electric generation and delivery infrastructure into the power grid of the future.

Figure : Estimates of the sources of SmartGrid benefits by utility sector

Despite the simple methodology used in this evaluation, the discovery of such large benefit values strongly encourages more rigorous analysis to determine the credible net benefit order-of-magnitude of the SmartGrid concept to the utility industry, end-use customers and the Nation as a whole.



Contents

Summary……………………………………………………………………………………………………………… i

1.0 Introduction………………………………………………………………………………………………………. 1

2.0 Today’s Korean Electric Power System………………………………………………………………………….. 3

2.1 Today’s Korean Electric Power Systen…………………………………………………………………. 3

2.1.1 Generation…………………………………………………………………………………… 3

2.1.2 Transmission………………………………………………………………………………… 4

2.1.3 Distribution…………………………………………………………………………………... 5

2.1.4 Customer…………………………………………………………………………………….. 6

2.2 Problems……………………………………………………………………………………................... 7

3.0 Evolution Toward the Power System of Tomorrow……………………………………………………………… 8

3.1 SmartGrid…………………………………………………………………………………….................. 8

3.2 Basic SmartGrid Benefits …………………………………………………………………………….… 9

3.3 Just-the-Right-Size System Capacity………………………………………………………………..… 10

4.0 Present Value of SmartGrid Benefits…………………………………………………………………………… 12

4.1 Power Generation Benefits…………………………………………………………………………………….... 12

4.1.1 Generation Deferral Benefits………………………………………………………………………… 13

4.1.2 Avoided Capital Risk Benefits………………………………………………………………….…… 13

4.1.3 Generation Capacity Factor……………………………………………………………………..…… 14

4.2 Power Delivery System Benefits…………………………………………………………………….… 15

4.2.1 T&D Outage Reduction Benefits…………………………………………………………... 15

4.2.2 T&D Capacity Deferral Benefits…………………………………………………...………. 16

4.2.3 Ancillary Services Benefits………………………………………………………………… 16

4.3 Customer and Other Benefits………………………………………………………………………...… 17

4.3.1 Price-Demand Response…………………………………………………………………… 17

4.3.2 Price Volatility Impact………………………………………………………………...…… 18

4.3.3 Enhanced Reliability and Security………………………………………………….……… 20

4.3.4 Customer Energy Efficiency Benefits……………………………………………………… 21

4.3.5 Customer Outage Benefits…………………………………………………………….…… 22

5.0 Conclusions and Recommendations…………………………………………………………………………..… 23

6.0 References……………………………………………………………………………………………………….. 24

Appendix…………………………………………….…………………………………………………………… A.1

Glossary…………………………………………………………………………………………………………..… G.1

Figures

1: Estimates of the sources of SmartGrid benefits by utility sector………………………………………………………………... ii

2: the maximum generation capacity from 1999 to 2008…………………………………………………………………………... 5

3: the length of transmission lines………………………………………………………………………………………………….. 6

4: End-use electricity consumption…………………………………………………………………………………………………. 7

5: potential values of reshaping Califonia's Year 2000 load duration curve……………………………………………………… 10
6: the ability of demand elasticity to control high prices is greatly enhanced when supply becomes highly constrained………... 19

7: With in a single unit (a), the aggregate reliability is the reliability of that one unit, but with 100 units (b) the aggregate is the same when the unit reliability is 10 times less…………………………………………………… 21



G1: ERCOT (Texas) daily system load curve on August 27, 1990………………………………………………… G1

G2: PG&E load duration curves for 1993 illustrate decreased utilization of assets closer to the customer……….. G2

Tables

1: avoided capital risk benefit……………………………………………………………………………………………………... 14

2: SmartGrid Benefits……………………………………………………………………………………………………………... 24

A1: Generation Scenario Assumptions and Sources……………………………………………………………………………... A.1

A2: power plants under construction in Korea…………………………………………………………………………………... A.2

A3: average cost of new generation…………………………………………………………………………………................... A.3

A4: cost of ancillary service in 2008………………………………………………………………………………….................. A.6

A5: energy savings in 2030…………………………………………………………………………………................................. A.7
1.0 Introduction

The Nation’s prosperity and the Korea way of life depend upon efficient and affordable energy. However, the electric power system contains many expensive and under-utilized capital assets that saddle ratepayers with a burdensome mortgage. Without a major shift in the way the energy system is planned, built and operated, the Korea will invest hundreds of billions of dollars in conventional electric infrastructure until 2030 to meet expected load growth. Minimizing the cost of new electric infrastructure could be a key to strengthening the Korea economy. The SmartGrid concept for the power system of the future suggests that information technology can revolutionize electric power generation and delivery, as it has other aspects of Korea business Bringing the electric power system into the information age would allow the Nation to realize the benefits already achieved by leading-edge industries that use real-time information, distributed e-business systems, and market efficiencies to minimize the need for inventory and infrastructure, and to maximize productivity, efficiency, and reliability. In addition, Korea has all of conditions about SmartGrid like internet infrastructure. The SmartGrid concept is a vision for transforming the Nation’s electric system—from central generation down to customer appliances and equipment—into a collaborative network filled with information and abundant market-based opportunities. It would weave together the traditional elements of supply and demand, transmission and distribution with new “plug-and-play” technologies such as superconductors, energy storage, customer load management, and distributed generation, using information to make them function as a complex, integrated system. With the help of information technologies and the creation of a distributed, yet integrated system, the SmartGrid concept would empower consumers to participate in energy markets—the key to stabilizing prices. At the same time, this transformation of the energy system responds to the urgent need to enhance national security. A distributed, network-based electric system could reduce single-point vulnerabilities. It also allows the grid to become “self-healing,” by incorporating autonomic system reconfiguration in response to man-made or natural disruptions. Implementing a SmartGrid infrastructure in the Korea is expected to be a challenging endeavor requiring substantial resources to accomplish. Even the investment required for necessary analysis to assess the concept’s potential value is large enough to justify a step-wise approach. The study documented in this report was undertaken as an initial step in this process and represents a high-level overview of the potential benefits the SmartGrid concept could offer if applied incrementally to the Nation’s electric power system over the next 22 years. This study is based on the premise that incorporating SmartGrid technologies would have the primary effect of increasing utility asset utilization. This, in turn, would accrue benefits from deferral and reduced rates of new construction needed to meet anticipated load growth and from improvements in system efficiency, capitalization and energy price stability.

2.0 Today’s Korean Electric Power System

2.1 The Korean Present State

Electric power generation, transmission and distribution are essential parts of fundamentally a very large, just-in-time energy delivery system. At any instant, system operators attempt to control generation and the functioning of the transmission and distribution grid so that they exactly supply the total end-use load and reduce any system losses that occur.

In 2008, the South Korea power system included over 900 generating stations of varying sizes. The corresponding total net generation was 401,726,293 MWh. Dividing this number by the number of hours in a year (8760) indicates a year-round equivalent capacity of 46 average GW. The total book (not replacement) value of the South Korea generation plants exceeded \50,900 billion in 2001 and was estimated at \66,868 billion in 2008.

The transmission system comprises over 1,004,475m of high voltage lines operating at 66 kV, of which 185,303,816m are at 154kV or greater. The capacity factor of the transmission and sub-transmission system is not precisely known but believed to about 0.5. The total book value exceeded $56 billion in 2001 and was expected to be $64 billion in 2008.

Distribution systems are total 1,145,541,809m of lines in 2008 (over and under 600V). The capacity factor of this network is not precisely known, but believed to be 0.3 or less on average. The total asset value exceeded $140 billion in 2001 and was expected to approach $160 billion in 2008.

The above infrastructure supplies energy to all the electrical loads on the system. Until recently, the end-use sector has generally been considered as the “passive” (i.e., demand to be served) component of the electric power system. About 18,419,048 Households(consumers) consumed about 105,912,757kWh annually. The total asset value of end-use electric distribution exceeds $1 trillion and typically operates at a capacity factor of less than 0.1.

The above summary illustrates the essentially monotonic falloff in asset utilization with distance into the grid, as measured from the generator to end-user. This is a natural artifact of requiring every link and node in the grid being sized to accommodate the anticipated peak load at that location regardless of its duration. In the SmartGrid concept, it will be shown that the customer side of the meter becomes an active system component that creates opportunities for better asset utilization, system management and control solutions that would not otherwise be available.

2.1.1 Generation

Generation assets in a variety of types including coal-, oil-, gas- and nuclear-fueled steam turbines, oil- and gas-fueled combustion turbines, combined cycle units and hydropower provide most of the Nation’s electric power. Other sources utilized are power imports and a small but growing contribution from renewable sources such as solar, wind and biomass energy. With the exception of a few battery stations, the grid has no significant means of storing energy electrically. Historically, the majority of electric utilities were vertically integrated businesses in which huge public enterprise owned and operated all aspects of power generation and delivery. In this mode of ownership, generation resources were operated primarily to serve the reliability requirements associated with the utilities’ obligation to serve loads on the system. However, in recent years, industry deregulation (and re-regulation) has started the dismantling of the traditional utility business structure so that generation, transmission and distribution are becoming owned and operated by different entities. In a situation of SOUTH KOREA, POSCO POWER which is POSCO’s subsidiary company are supplying a electricity at KWANGYANG ironwork. As a result, electricity is now sold as a market commodity and the focus of generation operations has shifted much more toward achieving the maximum economic efficiency. There has been a steady decline in generation capacity margins since 1980. So reaching in 2008, the KOREA. power system operated with a summer reserve margin of 9.1%. Figure 2 shows increase of the maximum electric generation capacity from 1999 to 2008. In despite of this sharp increase, generation capacity would be estimated not to fulfill the increase of electricity demand.



Figure 2: the maximum generation capacity from 1999 to 2008

2.1.2 Transmission

Power from generating plants is delivered to transmission substations, where it is transformed to high-voltage electricity for transmission over long distances. Typical transmission voltages in SOUTH KOREA include the extra-high voltage of 765 kV, and the 345 kV, 154 kV and 66 kV voltages of the most common long-distance transmission lines. Other common transmission voltages include 154 kV, 66 kV. Of these, the lower voltages, 154 kV and 69 kV, are sometimes called sub-transmission voltages. Sub-transmission refers to a lower level in the grid hierarchy that typically interfaces the long distance bulk transmission backbone with the distribution network supplying end-use customers. From electric system starting, transmission capacity grew at rates commensurate with the growth of generating capacity and summer peak demand. Since then, transmission system expansion has lagged behind demand growth rate and is expected to continue to do so into the future. The percentage growth rates of electric power transmission and summer peak demand that occurred in the U. S. between 1998 and 2009 are illustrated in Figure 3. According to electricity demand increasing, length of transmission lines wil increase like a Figure 3 tendency



Figure 3: the length of transmission lines

2.1.3 Distribution

The distribution system is the infrastructure that delivers power to end-users from substations supplied by the transmission system. At these substations, power delivery is reduced from the high-voltage levels suitable for long-distance transmission to lower voltages appropriate for local distribution. Typical distribution systems operate at 765 kV, 345 kV, 154 kV, 66 kV, 22kV, and sometimes lower voltages. With only a few exceptions, distribution systems are designed using a unidirectional radial power-flow topology composed of feeders and laterals. Radial feeder lines typically fan out from each substation and, in turn, supply power to lateral lines that feed end-use service transformers. Except in very high population density areas, there is generally little redundant network structure at the feeder level because of the prohibitive cost (i.e., there is seldom a redundant supply path to most end-use loads).

The distribution system is designed to maintain feeder voltages in conformity with the standard ranges defined by KEPCO when supplying the maximum connected load. Thus, distribution infrastructure, including substations; feeders and laterals; service transformers; connections and meters, must be continuously expanded to keep up with end-use load growth. Service transformers, connections and meters constitute approximately 50% of total distribution system cost.

2.1.4 Customer

Service transformers reduce distribution voltage to the final customer supply level. The secondary windings of service transformers connect directly to customer facilities, completing the power flow path from generating plant to the customer. The electric power grid typically operates as a three-phase network down to the level of the service transformer. Some industrial and commercial customers are supplied with three-phase power, while residences are generally supplied by single-phase connections. Service transformers feeding single-phase loads are connected in a manner that is designed to balance the total load on each phase of the three-phase distribution system.

In 2000, electric retail sales amounted to 385,070,137 MWh and produced revenues of approximately ₩30,328,758,201,000. End-use electricity consumption was split in roughly equal proportions between industrial (203,474,609 MWh), Public & Service (86,827,003 MWh), Educational (5,783,324 MWh), Agricultural (8,869,459 MWh) and residential (77,268,502 MWh) customers. (STATISTICS OF ELECTRIC POWER IN KOREA, KEPCO 2008)

Figure 4: End-use electricity consumption

3.0 Evolution Toward the Power System of Tomorrow

3.1 SmartGrid

An "electricity grid" is not a single entity but an aggregate of multiple networks and multiple power generation companies with multiple operators employing varying levels of communication and coordination, most of which is manually controlled. Smart grid increases the connectivity, automation and coordination between these suppliers, consumers and networks that perform either long distance transmission or local distribution tasks.

Smart grid suggests that information technology can revolutionize electric power generation and delivery. It is a vision for transforming the electric system—from central generation down to customer appliances and equipment—into a collaborative network filled with information and abundant market-based opportunities. It would weave together the traditional elements of supply and demand, transmission and distribution with new plug-and-play technologies such as superconductors, energy storage, customer load management, and distributed generation, using information to make them function as a complex, integrated system.

Information technologies and the creation of a distributed, yet integrated system would help Smart grid empower consumers to participate in energy markets by stabilizing prices. At the same time, it responds to the urgent need to enhance national security. A distributed, network-based electric system could reduce single-point vulnerabilities. It also allows the grid to become self-healing, by incorporating autonomic system reconfiguration in response to man-made or natural disruptions

In Korea, SmartGrid has been progressed with the object of creating mid-low tension voltage based network of distribution until 2030. On condition that participating the construction of SmartGrid, firms that have competitive power to its sphere and potential to enlarge latter product line-up because of operation territory spreading out from transmission to distribution would have a bright prospect. In Korea, excepting KEPCO that has an exclusive right to generate and transmit and distribute electricity, LS industrial systems, LS cable, Iljin electronics are enterprise which is influential about SmartGrid. According to Roadmap presented by Korea government, SmartGrid that is established by 2030 in Korea is estimated to cause energy reduction effect about 6% and reduce electric charges by ₩12 billion annually. So an object increasing the rate of average technology development was decided to achieve 95% by 2010. In addition, cooperation plan that shares tactical point with the U.S which nation that already achieve many technical advances has promoted in both technology and political measure.

3.2 Basic SmartGrid Benefits

There are four main benefits expected from a transformed energy system:



  1. Existing assets can better perform their current functions, e.g., generating plants meet load more efficiently.

  2. Existing assets can perform new functions, e.g., backup and on-site generation serve feeder loads or provide services such as transmission reliability functions.

  3. Existing assets can be deployed to provide existing functions, e.g., load provides ancillary services.

  4. New assets can perform new functions, e.g., load function arbitrage and balancing can be performed at the customer or feeder level.

The above benefits would derive from a variety of GridWise attributes and values. These include:

  • higher asset utilization permitting system operators to provide more services with the same installed capacity and install less new equipment to meet the same growth

  • increased efficiency provided primarily by a flatter load duration curve, increased investment opportunities in end-use efficiency improvements, and increased use of combined heating and power (CHP) systems

  • improved system operations through more effective sources of ancillary services, improved energy security and higher quality power

  • avoided costs realized through lower cost of capital resulting from lower risk economics, reduced maintenance costs and shorter outages

  • energy price stability and predictability achieved by increase demand elasticity

  • intangible social benefits such as decreased customer discontent, greater personal and economic security, and greater confidence in public governance.



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