Evaluating Economic and Evaluating Economic and Institutional Issues and Institutional Issues and
Opportunities in Commercializing Opportunities in Commercializing Super Conducting TechnologiesSuper Conducting Technologies
Center for Advanced Power Systems (CAPS) Center for Advanced Power Systems (CAPS) ConferenceConference
July 29-30, 2001July 29-30, 2001National High Magnetic Field LabNational High Magnetic Field Lab
Tim Lynch, Ph.D..Tim Lynch, Ph.D..DirectorDirector
Center for Economic Forecasting and AnalysisCenter for Economic Forecasting and Analysis
Florida State UniversityFlorida State University
Tallahassee, FloridaTallahassee, Florida
DEFINING THE INSTITUTIONAL DEFINING THE INSTITUTIONAL NEEDS FOR ELECTRICAL NEEDS FOR ELECTRICAL GENERATION AND CAPS GENERATION AND CAPS RELATED TECHNOLOGYRELATED TECHNOLOGY
CAPS
TECHNOLOGY
SPINNOFF
URBAN USESHIGHER DENSITY TRANSMISSION USES HIGHER ECONOMIC PRODUCTIVITY
NEW TECHNOLOGICAL EXPANSIONS
REDUCED ENVIRONMENTAL IMPACT`
INDUSTRIAL USES ELECTRICAL / MANUFACTURE
PRODUCTION - STORAGE - TRANSMISSION EXPANSIONS
TRANSPORTATION USESSTORAGE AND TRANSMISSION GAINS LEAD TO:
RAPID GAINS IN VIABILITY OF MAGLEV TECHNOLOGY
ADVANCES IN ELECTRIC CAR \ BUS
From: Electricity Technology Roadmap: 1999 Summary and Synthesis, (1999).
Value of Electrical Energy in the US Economy Increases
•In the last decade, there has been a four-fold increase in the value of bulk power transactions in the U.S.
•Electricity is sold in wholesale markets and transported over increasingly larger distances.
•Growth in bulk power transactions is continuing while the North American transmission system is already at full capacity and taxed to its limits.
From: Electricity Technology Roadmap: 1999 Summary and Synthesis, (1999).
Projected Energy NeedsProjected Energy Needs
0
10
20
30
40
50
60
70
1950 2000 2020 2050
Population
ElectricityConsumption(trillion kWh)
YearsFrom: Electricity Technology Roadmap: 1999 Summary and Synthesis, (1999).
Percent (%)
Economic Costs Due to Breakdowns Economic Costs Due to Breakdowns in Electric Transmissionin Electric Transmission
• August 10, 1996 power outage in August 10, 1996 power outage in California resulted in an estimated loss of California resulted in an estimated loss of $1 billion$1 billion
• Nigeria loses $1 billion annually due to Nigeria loses $1 billion annually due to poor-quality electric services.poor-quality electric services.**
• Latin American power shortages result in a Latin American power shortages result in a $10-15 billion annual loss$10-15 billion annual loss**
*World Bank, 2000
Measuring the Economic Measuring the Economic Value of Super Conducting Value of Super Conducting
and Other Advancedand Other Advanced
Technologies to the Technologies to the US EconomyUS Economy
The Good News from a The Good News from a Technology PerspectiveTechnology Perspective
The transition to a more efficient economy The transition to a more efficient economy on both the demand and supply sides is not on both the demand and supply sides is not about ratcheting down the economy; about ratcheting down the economy; rather, it is aboutrather, it is about Investing in new technologies;Investing in new technologies; Putting America’s technological leadership to Putting America’s technological leadership to
competitive advantage; andcompetitive advantage; and Developing new ways to make things, and new Developing new ways to make things, and new
ways to get where we want to go, where we ways to get where we want to go, where we want to work, and where we want to play. want to work, and where we want to play.
Opportunities for Efficiency Opportunities for Efficiency Improvements in the U.S. Improvements in the U.S.
Production and Use of ElectricityProduction and Use of Electricity
• U.S. wastes in the production of electricity (~24 U.S. wastes in the production of electricity (~24 quads annually) is more energy than is used by quads annually) is more energy than is used by the entire Japanese economy for all end uses.the entire Japanese economy for all end uses.
• According to the study, According to the study, Scenarios for a Clean Scenarios for a Clean Energy FutureEnergy Future, cost effective end-use , cost effective end-use technologies might reduced electricity technologies might reduced electricity consumption by ~1,000 billion kWh by 2020. consumption by ~1,000 billion kWh by 2020. This level of savings is more than Japan now This level of savings is more than Japan now uses for its entire economy. uses for its entire economy.
• For more background, and a full copy of this study, visit the For more background, and a full copy of this study, visit the CEF website at http://www.ornl.gov/ORNL/Energy_Eff/CEF.htm.CEF website at http://www.ornl.gov/ORNL/Energy_Eff/CEF.htm.
The Case of the Information The Case of the Information EconomyEconomy
• Many different information and communication Many different information and communication technologies contribute to increasing opportunities for technologies contribute to increasing opportunities for energy savings and large productivity gains in business. energy savings and large productivity gains in business.
• The Lawrence Berkeley National Laboratory indicates The Lawrence Berkeley National Laboratory indicates that the Internet and all electronic equipment only that the Internet and all electronic equipment only consumes 1 and 3 percent, respectively of the nation’s consumes 1 and 3 percent, respectively of the nation’s electricity. electricity.
• Yet, further efficiency gains are emerging. LCD screens Yet, further efficiency gains are emerging. LCD screens consume one-half to two-thirds less energy than CRT consume one-half to two-thirds less energy than CRT devices. And new server technology may reduce the devices. And new server technology may reduce the energy needed to move data bits by one-half or more.energy needed to move data bits by one-half or more.
Historical Trend in U.S. and Florida Historical Trend in U.S. and Florida Electric Grid EfficiencyElectric Grid Efficiency
20%
22%
24%
26%
28%
30%
32%
34%
1950 1960 1970 1980 1990 2000Con
vers
ion
Rat
e of
Pri
mar
y E
nerg
y to
E
lect
rici
ty
Years
Comparing U.S. Trends in Overall Comparing U.S. Trends in Overall Energy Efficiency with Electric Energy Efficiency with Electric
Generating EfficiencyGenerating Efficiency
0.90
1.10
1.30
1.50
1950 1960 1970 1980 1990 2000
Log
arith
mic
Inde
x (1
950
= 1.
00) Nation’s Overall Energy Efficiency
Electric Generating Efficiency
Fuel Mix Use in U.S. and Fuel Mix Use in U.S. and FloridaFlorida
15
25
50
60
28
10
0
10
20
30
40
50
60
Electricity Oil Natural Gas
U.S.
Florida
Percent (%)
Electricity Generation in U.S. Electricity Generation in U.S. and Floridaand Florida
66
80
23 2011
00
10
20
30
40
50
60
70
80
Fossil Nuc lear Hydroel.
U.S.
Florida
Percent (%)
The Value of the Florida The Value of the Florida Electric Industry to the Electric Industry to the
Economy & The Potential Economy & The Potential Impact of Deregulation Impact of Deregulation
Florida’s Largest UtilitiesFlorida’s Largest Utilities
Source: Energy Information Administration/State Electricity Profiles
Electricity Prices in Florida $/1000 Electricity Prices in Florida $/1000 KwhKwh
(1978 – 2000)(1978 – 2000)
$0
$20
$40
$60
$80
$100
Year
$/1
00
0 K
WH
Source: Florida Public Service Commission
Nominal Price
Real Price
Florida Revenue From Sales To Florida Revenue From Sales To Consumers by Sector Consumers by Sector
(Thousands 1999$)(Thousands 1999$)
$7,253,310$4,297,425
$885,802
$382,866
Residential
Commercial
Industrial
Other
TOTAL REVENUE: $12.8 BillionTOTAL REVENUE: $12.8 Billion
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
1995 1996 1997 1998 1999 2000 2010(EST)
$-
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
TRANSMISSION LINE MILES
TRANSMISSION LINE COST
MILES COST
EXISTING NUMBER OF MILES AND COST OF EXISTING
FLORIDA ELECTRIC TRANSMISSION LINES
-
100
200
300
400
500
600
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
MILES ACRES
NEW ACRES OF LAND REQUIRED
NUMBER OF MILES OF NEW TRANSMISSION LINES NEEDED
NUMBER OF NEW TRANSMISSION LINE MILES AND ACRES OF LAND NEEDED IN FLORIDA (2000-2009)*
*FLORIDA PSC, DEP, 2001
Florida Summer and Winter Peak Florida Summer and Winter Peak Demand by YearDemand by Year
(1999)(1999)
0
10,000
20,000
30,000
40,000
50,000P
ea
k M
W
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008 Year
Summer Peak Winter Peak
Florida Energy Use By Customer Florida Energy Use By Customer Type Type (1999)(1999)
0
20,000
40,000
60,000
80,000
100,000
120,000
GW
H
Year
Rural & Residential Commercial Industrial Other
REMI Inputs For Ten Percent Price Shock Analysis
COST POLICY VARIABLE CATEGORIES
DETAIL SELECTION
Electrical Utilities Sales (In State)
Output BlockDetailed Industry OutputTransportation and Other Public UtilitiesPublic Utilities
Electrical Utilities
Annual Fuel Cost to Commercial and Industrial
Wage, Price and Profit BlockElectricity Fuel Costs (Share)
Commercial and Industrial
Annual Fuel Cost to Residential
Wage, Price and Profit BlockPrices (housing and consumer)
Household Operation
Government Spending (or more state taxes collected)
Output BlockGovernment Spending (amount)
State
Summary of the Results of a Ten Summary of the Results of a Ten Percent Increase in Florida Percent Increase in Florida
Electricity PricesElectricity Prices
• A loss of employment of 27,740 for 2001. A loss of employment of 27,740 for 2001. This corresponds to a reduction of This corresponds to a reduction of approximately half-percent of Florida’s approximately half-percent of Florida’s total current employment levels.total current employment levels.
• A decrease in GRP ($1.5 Billion) and real A decrease in GRP ($1.5 Billion) and real disposable income ($1.6 Billion) for 2001. disposable income ($1.6 Billion) for 2001.
. Both of these levels drop to statewide . Both of these levels drop to statewide losses of ($2.6 Billion) by 2021.losses of ($2.6 Billion) by 2021.
DROP IN FLORIDA EMPLOYMENT RESULTING FROM A TEN PERCENT INCREASE IN ELECTRICITY PRICES
(31,000)
(30,500)
(30,000)
(29,500)
(29,000)
(28,500)
(28,000)
(27,500)
(27,000)
(26,500)
(26,000)
DROP IN FLORIDA PRODUCTIVITY AND INCOME RESULTING FROM A TEN PERCENT
INCREASE IN ELECTRIC RATES
$(3,000,000,000)
$(2,500,000,000)
$(2,000,000,000)
$(1,500,000,000)
$(1,000,000,000)
$(500,000,000)
$-
FLORIDA DISPOSABLE INCOME
FLORIDA GROSS STATE PRODUCT
Measuring the Potential Measuring the Potential Economic Impact of Economic Impact of
DeregulationDeregulation
Summary Chart of Emissions Results Summary Chart of Emissions Results
(for Texas, Massachusetts and (for Texas, Massachusetts and Differences in 2001 Dollars)Differences in 2001 Dollars)
Expected Expected ResultResult TexasTexas Mass.Mass. DifferenceDifference
NOx Reductions NOx Reductions (TPY)(TPY) 20,94020,940 77,99477,994 57,05457,054
SO2 reductions SO2 reductions (TPY)(TPY) 53,98553,985 291,426291,426 237,441237,441
Capital Outlay Capital Outlay (million dollars)(million dollars) 397397 2,3732,373 1,9761,976
Fixed O & M Fixed O & M (million dollars/yr)(million dollars/yr) 3030 185185 155155
Variable O & M Variable O & M (million dollars/yr)(million dollars/yr) 2121 101101 8080
The Potential Market for The Potential Market for and Value of HTS and Value of HTS
Technologies to the US Technologies to the US and Florida Economyand Florida Economy
GDP = Investment + Personal Consumption + Government Spending + Net Exports
Recalling a Basic Economic Relationship
Hence, a “technology-based” energy efficiency strategy could lead to: (1) greater investment in energy efficient/ highly reliable reduced emission low-carbon technologies; (2) increased spending as a result of energy bill savings; (3) R&D, incentives, and market development programs; and (4) reduced oil imports
Therefore, an investment-led innovative high tech investment strategy can lead to a net positive gain for the economy
Price/Performance Ratio:Price/Performance Ratio: First First
Generation HTS Cable*Generation HTS Cable*
$/kA-m
0
200
400
600
800
1000
1200
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
P
ric
e/P
erf
orm
an
ce R
ati
o $
/kA
-m
Source: Modification of American Superconductor Inc, 2001
US Military SMES/Motors-Generators/Cable
Applications
Commercial SMES/Motors-Generators/Cable Applications
Residential SMES/Motors-Generators/Cable Applications
Economic Analysis of HTS Economic Analysis of HTS TechnologiesTechnologies
• One recently study of HTS technology in the One recently study of HTS technology in the electrical utilities industry was completed by electrical utilities industry was completed by L.R. Lawrence and Craig Cox, examine L.R. Lawrence and Craig Cox, examine currently available HTS products and benefits.* currently available HTS products and benefits.*
• The authors attempted to quantify market The authors attempted to quantify market entry dates and total annual savings HTS entry dates and total annual savings HTS annual benefits, to 2020annual benefits, to 2020– Electric motorsElectric motors– TransformersTransformers– GeneratorsGenerators– Underground cableUnderground cable– Fault current limiters and, among other variables. Fault current limiters and, among other variables.
Equiptment Motors Transformers Generators Under
GroundYear 50% of Cable
Market Achieved 2016 2015 2021 2013Source: Lawrence Study, 2000
The Projected Entry Dates The Projected Entry Dates where HTS is Expected to Capture 50% of the where HTS is Expected to Capture 50% of the
Potential Market Potential Market
Total Annual Benefits for Motors based on Total Annual Benefits for Motors based on 2.5% Annual Growth in Capacity and 2.5% Annual Growth in Capacity and
Generation (Billions $)Generation (Billions $)
$0
$5
$10
$15
Bill
ions
2001 2004 2007 2010 2013 2016 2019
YearsSource: Lawrence Study, 2000
Total Annual Benefits for Transformers Total Annual Benefits for Transformers based on 2.5% Annual Growth in Capacity based on 2.5% Annual Growth in Capacity
and Generation (Millions $)and Generation (Millions $)
$0
$50
$100
$150
$200
Mill
ions
2001 2004 2007 2010 2013 2016 2019 2022
YearsSource: Lawrence Study, 2000
Value of Annual Benefits of Saved Value of Annual Benefits of Saved Energy from Installing HTS Energy from Installing HTS
Generators based on 2.5% Annual Generators based on 2.5% Annual Growth in Demand (Millions $)Growth in Demand (Millions $)
$0
$50
$100
$150$200
$250
$300
$3502001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Years
Millio
ns
Source: Lawrence Study, 2000
Value of Annual Benefits of Saved Energy Value of Annual Benefits of Saved Energy from Installing HTS Underground Cable from Installing HTS Underground Cable
based on Annual Growth in Capacity and based on Annual Growth in Capacity and Generation Generation (Millions $)(Millions $)
$0
$2
$4
$6
$8
$10
$12
$14
$16
Mil
lio
ns
2001 2004 2007 2010 2013 2016 2019 2022
YearsSource: Lawrence Study, 2000
Total Value of Annual Benefits of Saved Total Value of Annual Benefits of Saved Energy from Installing HTS Motors, Energy from Installing HTS Motors,
Transformers, Generators, and Transformers, Generators, and Underground Cables based on 2.5% Annual Underground Cables based on 2.5% Annual
Growth in Capacity Growth in Capacity (Billions $)(Billions $)
By the end of 2010, benefits accrue totaling $1.086 Billion. By the end of 2020, the accrued benefit is $61.2 Billion
$0
$5
$10
$15
$20
Years
Bill
ions
Source: Lawrence Study, 2000
Using Regional Economic Using Regional Economic Models (REMI) to Measure Models (REMI) to Measure The Potential Value of HTS The Potential Value of HTS Technologies to the Florida Technologies to the Florida
EconomyEconomy
GDP = Investment + Personal Consumption + Government Spending + Net Exports
Recalling a Basic Economic Relationship
Hence, a “technology-based” energy efficiency strategy could lead to: (1) greater investment in efficient/ (environmentally desirable choices such as HTS and low-carbon technologies; (2) increased spending as a result of energy bill savings; (3) R&D, incentives, and market development programs; and (4) reduced emissions, energy consumption and foreign oil importsTherefore, an high tech investment strategy can lead to a net positive gain for the economy
HTS Model Framework HTS Model Framework (Basic Assumptions)(Basic Assumptions)
• Two scenarios were developed that simulated the Lawrence study Two scenarios were developed that simulated the Lawrence study benefits applied to the State of Florida.benefits applied to the State of Florida.
• One model simulated the 2.54% growth rate and the other model One model simulated the 2.54% growth rate and the other model represented the 1.4% growth rate in demand for the electrical represented the 1.4% growth rate in demand for the electrical industry. industry.
• Additional assumptions used for both REMI models included for Additional assumptions used for both REMI models included for HTS technologies: a decrease in the price of electricity of HTS technologies: a decrease in the price of electricity of 0.9%/year in the commercial and industrial sectors (from the 0.9%/year in the commercial and industrial sectors (from the Lawrence study), and a decrease in household consumer Lawrence study), and a decrease in household consumer expenditure price index of 0.03% (household savings/household expenditure price index of 0.03% (household savings/household consumption). consumption).
• The HTS technologies are assumed to save the U.S $18.24 Billion The HTS technologies are assumed to save the U.S $18.24 Billion per year in presently envisioned equipment (10% market per year in presently envisioned equipment (10% market penetration is assumed within the first five years, and 50% market penetration is assumed within the first five years, and 50% market penetration is assumed after five years. These assumptions are penetration is assumed after five years. These assumptions are incorporated into the $18.24 Billion annual benefits). incorporated into the $18.24 Billion annual benefits).
REMI Inputs for HTS Technologies Analysis
COST POLICY VARIABLE CATEGORIESDETAIL SELECTION
Electrical Utilities Sales (In State)
Output BlockIndustry OutputSales Public Utilities
Sales Share (Electrical Utilities)
Annual Fuel Cost to Commerc-ial and Industrial
Wage, Price and Profit BlockElectricity Fuel Costs (Share)
Commercial and Industrial
Prices (housing and consumer)
Wage, Price and Profit BlockPrices (housing and consumer) CEPI
All personal household consumption expenditures
Implementing HTS technologies across the Florida commercial, industrial and residential sectors would result in:
At the 2.5% growth rate initial new net employment increase of 9,889, for 2001 – This new net employment continue to decrease through the forecasted years, ending with an additional
thousand employed in 2021. • At the 1.4% growth rate additional employment of 8,557 jobs for 2001 and 300 by 2021 would result.
*This analysis assumed both a 2.5% and 1.4% future annual growth rate of demand for electricity in Florida.
Source: CEFA/FSU
Results of Growth in Economic Results of Growth in Economic Productivity from Use of HTS Productivity from Use of HTS
Technologies in the State of Florida*Technologies in the State of Florida*
•GRP for both models for the State of Florida would be approximately $500 million for 2001 and decline incrementally throughout the forecast period.
•Likewise, the real disposable income for both models would be approximately $300 million for 2001, and decline incrementally throughout the forecasted period.
Results of Growth in Economic Results of Growth in Economic Productivity from Use of HTS Productivity from Use of HTS
Technologies in the State of FloridaTechnologies in the State of Florida(Continued)(Continued)
GROWTH IN FLORIDA ANNUAL EMPLOYMENT WITH INTRODUCTION OF SUPER CONDUCTING TECHNOLOGIES
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
GROWTH IN FLORIDA INCOME AND REGIONAL PRODUCT WITH INTRODUCTION OF SUPER CONDUCTING TECHNOLOGIES
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
SUPER CONDUCTING TECHNOLOGIES INDUCED DISPOSABLE INCOME
SUPER CONDUCTING TECHNOLOGIES INDUCED GROSS STATE PRODUCT
HTS Technologies Have the Potential to Provide Significant Future
Additional Benefits to the State of Florida.
The higher efficiency of electric generation, transmission, distribution and utilization results in reduced emissions of:
•Localized pollutants•Long distance transport pollutants •Greenhouse gas emissions and•Associated environmental and Socio economic effects
Examples of How Air Examples of How Air Pollution Environmental Pollution Environmental Economic Impacts Are Economic Impacts Are Modeled in Regulatory Modeled in Regulatory
SettingsSettings
Hagler Bailly Section Name 50
Applying the Damage Function ApproachApplying the Damage Function Approach
Impa
ct
Concentration
Dose-ResponseFunction
Emissions and Resource Use(e.g., Changes in SO2, NOX Emissions)
Changes in Environmental Quality(e.g., Changes in PM2.5, Ozone, . . . .)
Environmental and Social Impacts(e.g., on human health, visibility,
materials)
Changes in Well-Being or Damages
(measured by willingness to pay)
Aggregation of Impacts Across
Effects, Individuals, and Time
$50 Billion in Health Benefits from Title IV SO2 Reductions
Annual Health Benefits of A Multi-pollutant Annual Health Benefits of A Multi-pollutant
Strategy’s Fine Particle Reductions in 2010Strategy’s Fine Particle Reductions in 2010 • 10,600 cases of premature mortality avoided10,600 cases of premature mortality avoided• 5,400 new cases of chronic bronchitis 5,400 new cases of chronic bronchitis
avoidedavoided• 3,100 cardiovascular and respiratory hospital 3,100 cardiovascular and respiratory hospital
admissions avoidedadmissions avoided• 2,000 asthma emergency room visits avoided2,000 asthma emergency room visits avoided• 17,600 cases of acute bronchitis avoided17,600 cases of acute bronchitis avoided• 8.5 million respiratory symptom days 8.5 million respiratory symptom days
avoidedavoided• 1.5 million work-loss days avoided1.5 million work-loss days avoided
Monetary Value of Selected Health Monetary Value of Selected Health Events (in 1997$)Events (in 1997$)
• Mortality Mortality $5.4 million$5.4 million• Chronic BronchitisChronic Bronchitis $319,000$319,000• Hospital AdmissionHospital Admission $10,600 to $10,600 to
$13,600$13,600• Emergency Room VisitEmergency Room Visit $280$280• Respiratory SymptomsRespiratory Symptoms $7 to $47 per day$7 to $47 per day• Acute BronchitisAcute Bronchitis $55$55• Work Loss DayWork Loss Day $102$102
Florida Economic Impacts from Florida Economic Impacts from Achieving the U.S. Global Warming Achieving the U.S. Global Warming
Solutions Would Solutions Would
Result Result in the following:in the following:
• Reduce carbon emissions by 36 percent Reduce carbon emissions by 36 percent in 2010 (back to 1990 levels)in 2010 (back to 1990 levels)
• Increased annual savings, Increased annual savings, $300/household by 2010$300/household by 2010
• An additional 27,000 jobs would be An additional 27,000 jobs would be created in Florida by 2010created in Florida by 2010
Source: The Impacts in Florida of a U.S. Climate Change Strategy, by Tellus Institute
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