Energy Systems, Uptime and the Digital Economy Chicago EDA Conference June 23, 2020 Andrew R. Thomas Mark Henning Energy Policy Center Levin College of Urban Affairs Cleveland State University 1
En Ener ergy Syst stem em Implica cations s fo for IT T and IoT o Po Power o out utages a are # #1 c caus use o of I f IT d T downt ntime. o Industries lose upwards of $709,000 per IT outage caused by power supply failure (Ponemon Institute). o Se Sector ors se sensi sitive to to po power er rel eliability have e the e highe hi hest empl employmen ment growth. o Highest Value of Lost Load (VOLL): Health Care, Finance & Insurance • Will add around 40% of the non-agricultural employment growth nationally by 2026. Bureau of Labor Statistics • These sectors expected to be major drivers of demand for UPS systems as they increasingly incorporate the internet-of-things (IoT). 2
What is a Microgrid? A microgrid is a contained energy system capable of balancing captive supply and demand resources to maintain reliability • Defined by function, not size • Incorporates multiple distributed technologies • Maximizes reliability and efficiency • Can include other utilities – steam, hot water, chilled water, network connectivity • May function in “islanded mode” disconnected from larger utility grid
No No Po Power t to t the he Pe People So So Why the Poor oor Na Nationa nal A Academy o of f Unders Un rsta tandin ing? g? Science Re Sc Repor ort on on Nation on’s El Elect ectrici city System em o Complexity of o “R “Recommendation 1 to to Electricity Pricing. DOE: DO E: Im Improve o Lack of Uniformity in understand und nding ng o of f Regulation or Industry cu customer mer and d soci ciet ety Terminology. value assoc va ociated with o Value of Resiliency incre in reas ased re resilie ilience….” .” Highly Dependent upon September 2017 Se 2017 . Circumstances. 4
How How Ca Can We Va Value Re Resiliency? 1. Avoided Co Costs : Maintaining Back Up and Standby Power Systems o Diesel Generation o Batteries and Uninterruptible Power Supply (UPS) systems 2. Va Value e of Lost Oppo pportunity o Value of Lost Load Calculation: GDP (or Output) for Industry ($) 𝑊𝑃𝑀𝑀 = Electricity Consumption for Industry (kWh) 3. Su Surve vey: What Are Commercial End Users Willing to Pay for Enhanced Uptime? 5
Va Value Bas Based Upon Avoided Co Costs
Value Based Upon Lost Production Highest Values of Lost Load for All Industry Groups Computer systems design and related services - (541 5) Management, scientific, and technical consulting services - (541 6) Industry Group Description and NAICS L egal services - (541 1 ) Insurance Carriers and Related Activities - (524) Accounting, tax preparation, bookkeeping, and payroll services - (541 2) Home health care services - (621 6) Cable and other subscription programming - (51 52) Air transportation - (481 ) Administrative and Support Services - (561 ) Advertising, public relations, and related services - (541 8) Software publishers - (51 1 2) Water transportation - (483) Securities, commodity contracts, & other fin. investments/ activities - (523) Transit and ground passenger transportation - (485) Other transportation equipment manufacturing - (3369) Household appliance manufacturing - (3352) Audio and video equipment manufacturing - (3343) Offices of physicians - (621 1 ) Truck transportation - (484) Other professional, scientific, and technical services - (541 9) Specialized design services - (541 4) Rental and L easing Services - (532) Newspaper, periodical, book, and directory publishers - (51 1 1 ) Offices of other health practitioners - (621 3) 0 20 40 60 80 >1 00 VOLL (Value Added/kWh) Data Sources: Bureau of Labor Statistics; U.S. Census Bureau 1 hour outage for 1 MW facility would cost “Securities and Financial Investment” company $50,000
Value Based Upon National Survey of End Users "Which of the following average "all in" prices per-kWh for electricity that included 99.999% availability would provide a significant inducement for you to locate your business within a microgrid?" 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 10 cents 11 cents 12 cents 13 cents 14 cents 15 cents 16 cents 17 cents 18 cents or more or more or more or more or more or more or more or more or more 8
Who Might Be Interested in Grid Resiliency? o Universities o Data and Financial Centers o Law, Accounting, Consulting Firms o Hospitals o Emergency Services o Food Services o R&D Companies Rol Role of of Uptime in the new econ onom omy: 40% of of non on-ag agricu cultural al eco economic c growth th projected ected to to be e in heal ealth th, , finan ance ce an and insurance servic in ices 9
Proposed Downtown Cleveland Microgrid District • Potential anchor end users • Ability to leverage existing infrastructure • Ability to grow both loads and infrastructure • Economic relevance of areas • Available land for new infrastructure and end users • Regulatory compatibility µGrid Cle
Sensitivity Analysis For Three Tier Customer Rate Structure $25,000,000 $20,000,000 $15,000,000 Tier 1 $10,000,000 MIcrogrid NPV Tier 2 $5,000,000 Tier 3 $- $(5,000,000) $(10,000,000) $(15,000,000) $(20,000,000) $80 $90 $100 $110 $120 $130 $140 $150 Customer Rate ($ / MWh) 11
Economic Impact of Microgrid in Downtown Cleveland Assumptions: Direct New Employment Among Selected • Direct jobs only Subsectors that Value High-Quality Power • 20% of 48 MW grid with Microgrid Development 1,200 reserved for new development 1,000 • Growth in high VOLL 800 subsectors increases from 10 year city 600 average to national 400 average • Jobs created based 200 upon average per kW 0 per employee for each 2022 2023 2024 2025 2026 industry (Census Cumulative Job Growth from Prior Years Bureau) Associated additional earnings of $91 million within the μ Grid by 2026. 12
Energy Policy Center Andrew R. Thomas a.r.thomas99@csuohio.edu Mark Henning m.d.henning@csuohio.edu "The Economic and Fiscal Impact of a Microgrid in Downtown Cleveland, Ohio" (2018). Urban Publications . https://engagedscholarship.csuohio.edu/urban_facpub/1560 13
Total Savings Due to Deregulation of Electricity in Ohio 2011-2018 (millions of dollars) Year Shopping SSO Auction Total 2011 $496.70 $2,395.00 $2,891.70 2012 $443.29 $2,366.00 $2,809.29 2013 $744.11 $2,342.00 $3,086.11 2014 $824.21 $2,380.00 $3,204.21 2015 $645.19 $2,339.00 $2,984.19 2016 $540.77 $2553.90 $3,094.67 2017 $403.59 $2,502.10 $2,905.69 2018 $353.40 $2,612.60 $2,966.05 $4,451.11 $19,490.60 $23,941.71 2011-2018 "Customer Competition Continues to Outperform Traditional Monopoly Regulation" (2019). https://engagedscholarship.csuohio.edu/urban_facpub/1618 14
Cumulative Cu e Shale e Rel elated ed Inves estmen ent In Ohio 2011 2011-2019 2019 $90 $80 $70 $60 (Billions of Dollars) $50 $40 $30 $20 $10 $0 2011 - Q2 2016 Q3/Q4 2016 Q1/Q2 2017 Q3/Q4 2017 Q1/Q2 2018 Q3/Q4 2018 Q1/Q2 2019 upstream midstream downstream Shale Investment Dashboard in Ohio Q1 and Q2 2019" (2020). https://engagedscholarship.csuohio.edu/urban_facpub/1659 15
Po Potent ntial D Demande nders a and Nuc nd Nuclear F Fleet S Suppl uppliers o of Hy Hydrogen i n in t n the he M Midwest "How the Midwest Can Lead the Hydrogen Economy” (2020). htps://engagedscholarship.csuohio.edu/urban_facpub/1656 16
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