Navigant Research Blog

Physical Security Threats to the Transmission and Distribution Grid, Part 1

— February 8, 2016

Idea for problem solvingWhile popular media continues to feature the ongoing cyber security threats to the electric utility transmission and distribution (T&D) grid across the globe, with recent cyber attacks in Eastern Europe, another T&D grid threat is looming on the horizon. Over the past 6 months, there have been repeated physical security attacks on utility T&D infrastructure in Eastern Europe and Southeast Asia. The unfortunate truth is that substations and power lines on the electric transmission system are particularly vulnerable to physical attacks, where large, high-voltage transformers are typically located in exposed outdoor conditions, and transmission towers can be seen stretching to the horizon.

Incidents such as the Metcalf Transmission Substation gunshot attack in 2014 and the recent transmission tower attacks in Eastern Europe have received significantly less attention in the media. However, they have been serious enough that the North American Electric Reliability Corporation (NERC) in 2014 released and revised Critical Infrastructure Protection-14 (CIP-014) regulations that require utilities to secure their infrastructure from physical and cyber security threats, as well as to identify and strengthen weaknesses in key substations.

Equipment Initiatives

In 2015, a group of eight U.S. transmission system operators (TSOs) announced a new initiative to speed their response to major physical attacks or other equipment failures on the transmission grid by establishing regional warehouses and inventories to long lead-time critical replacement technologies. Participants include American Electric Power, Berkshire Hathaway Energy, Duke Energy, Edison International, Eversource Energy, Exelon, Great Plains Energy, and Southern Company. These companies have committed to a memorandum of understanding to develop Grid Assurance, a limited liability company that will stockpile the critical equipment necessary to shield utility customers from prolonged transmission outages in multiple locations across the nation. Grid Assurance will own and provide participants and subscribers with timely access to an inventory of emergency spare transmission equipment that could otherwise take months to acquire.

Since the release of the NERC CIP-014 regulations in 2014, utilities are significantly more aware of potential threats and vulnerabilities in the grid. Aging infrastructure, natural disasters, and coordinated attacks on key substations are all major issues. Unfortunately, on the transmission grid, a single major attack or breakdown can have long-term regional or national effects on the United States. A recent 2015 industry survey looked at initiatives that over 200 TSOs have taken since the NERC ruling. Findings included:

  • 49% of utilities have identified threats and vulnerabilities to critical assets, though 28% haven’t taken further action
  • 42% of utilities surveyed have already developed physical security plans to address potential threats
  • 40% have not taken any hardening measures to limit or prevent damage to critical assets in the last 2 years

While it is clear that TSOs are vulnerable to both physical and cyber security threats, the obstacles they face in terms of timely service restoration are daunting, to say the least. I’ll discuss these obstacles in Part 2 of this blog series on physical security.


FAA Regulations Continue to Limit Drone Deployments at U.S. Utilities

— August 10, 2015

Popular media is highlighting the controversy around unmanned aerial vehicles (UAVs)/drones in public airspace, as these devices are disrupting scheduled airline flight patterns near major airports, interfering with planes in wildfire zones, and even interfering with privacy concerns. Yet, the drive to establish commercial uses for drone technology is proceeding at a rapid pace. Companies like Amazon are seeking airspace regulations that establish corridors for commercial drone-based delivery applications. At the same time, transmission and distribution (T&D) operators and utilities across the globe are beginning to look toward UAVs to reduce costs, improve safety, and increase reliability and response times across their T&D systems. These new utility solutions include major operations such as overhead visual transmission line maintenance inspections, T&D storm damage assessment and outage management/response, substation inspection, asset monitoring and condition maintenance, and vegetation management.

Limited Takeoff

While all these applications and use cases sound like ideal methods for utilities to improve their operations and reduce their costs, there are some significant issues that are bringing the adoption of new T&D procedures to a virtual crawl. The typical utility today utilizes line crews and sometimes helicopters to complete T&D line inspections and maintenance, semi-rapidly do storm damage assessments, update asset management systems, and make decisions on vegetation management. As you can imagine, these approaches are cost-intensive, with line crews heading out on search and locate assignments and helicopters being deployed at costs of up to $1,500 per hour.

Many forward-looking utilities are looking at both multi-rotor and fixed-wing UAVs to not only reduce maintenance and operations (M&O) inspection and vegetation management costs, but also improve response times during outages caused by major storms and other events. Although these savings can be significant, the Federal Aviation Administration (FAA) regulatory hurdles and permit and flight approval processes create barriers to this market literally taking off. Under current regulations, the FAA is granting limited-scale pilot project permits for a small number of U.S. utilities, including but not limited to San Diego Gas & Electric (SDG&E), ComEd, Duke, Xcel, and Florida Power & Light Company (FPL). Pilot projects are typically limited to small regions or T&D training facilities. Like Amazon’s proposal that commercial UAV flight corridors be established for delivery services, T&D utilities will need the same, allowing companies to fly drones over T&D systems for both planned M&O and storm damage assessments necessary for outage restoration. In addition, the flight approval process for UAVs must be streamlined, as flight plans currently need to be filed with the FAA 72 hours earlier, clearly precluding timely storm assessment and outage restoration responses. These hurdles must be addressed for the UAV market with T&D utilities to take off over the next 10 years.

Emerging Promise

A number of UAV companies are already positioning themselves for the expansion of this market, including startups like Google-funded Skycatch and an interesting company in Colorado, FLōT Systems. The latter has established key partnerships with both inspection services companies and analytics software providers.

I’m currently writing a report on UAVs/drones and robotics for T&D applications. While I expect the companies manufacturing UAVs and related sensor technologies to do extremely well, I also anticipate that the complex analytics software companies analyzing streaming visual and thermal data, as well as the inspection services companies, will benefit. Look for my continued discussions about emerging technologies across the global T&D landscape in upcoming blogs and reports.


National High-Voltage Transmission Interconnect Project Continues to Face Support and Financing Hurdles

— August 7, 2015

The proposed Tres Amigas interconnection has been viewed as a critical development for establishing solid superconducting high-voltage direct current (HVDC) linkages between the three primary transmission networks in the United States. These networks include the Western Electric Coordinating Council (WECC), ERCOT, and the Eastern systems.  The project is thought to be critical to maintaining reliability and connecting the tremendous wind and solar renewable energy resources in the upper Midwest and the Southwest, with the urban population centers in the Central Midwest and the East.  The project has been in planning and early development stages since 2008, and it has struggled to get approximately $1.6 billion in funding for a highly technical project that involves large scale high-voltage alternating current transmission lines (HVAC) to HVDC lines necessary for synchronization of the three systems. It also incorporates re-conversion to HVAC at the interconnect points with the other networks.

In late July, the Federal Energy Regulatory Commission (FERC) announced that it had approved a request from the Southwest Power Pool (SPP) to void an interconnection agreement between Tres Amigas and Southwestern Public Service (SPS), primarily based on Tres Amigas missing multiple payments and a number of performance milestones. While the missed payments are a small portion of the total $1.6 billion dollar project, partnerships with adjacent transmission operators are critical to the completion of the project.

In previous Navigant Research blogs, I have discussed the development of a north-south transmission highway between the northern Midwest wind farms, the utility scale solar in the Southwest, and the population centers in Nebraska, Kansas, and Texas. Interestingly, the SPP transmission plans I saw show that this conceptual idea is beginning to come to fruition as new 345 kV transmissions systems are being built and older systems are upgraded.  Many of these projects have been completed by the transmission owner/entities in the region to address congestion issues in corridors like the Omaha/Kansas City to the Texas Panhandle route.

Anticipating Coal Plant Retirements

However, coal plant retirements across the lower Midwest, East Coast, and southeastern United States will have a serious impact on electric reliability across those regions, according to the North American Electric Reliability Corporation (NERC). Forward-thinking electric transmission companies are anticipating this and are now building new West-to-East transmission to deliver wind power from the High Plains to population centers in the Midwest and Southeast that will be hit hard by the retirements.  The Tres Amigas interconnection may be a critical part of the puzzle that is the modernization of the national versus regional transmission grids.  While Navigant Research expects that it will ultimately be funded by numerous transmission utilities, the full funding for the multi-billion dollar project has yet to fall into place.

You can read more about the Tres Amigas project and HVDC transmission systems in my syndicated reports, including High-Voltage Transmission Systems  and High-Voltage Direct Current Transmission Systems.


EIA’s Assessment of Coal-Fired Generation Plant Retirements Keeps Going Up

— July 16, 2015

The U.S. Energy Information Administration (EIA) continues to track the ongoing saga of coal-fired generation plant retirements within the electric power industry.  In March, the organization forecasted that up to 13 GW of coal-fired generation would be retired this year, due to both aging infrastructure and environmental mandates.  The total of scheduled coal-fired generating capacity retirements is split between 10.2 GW of bituminous coal and 2.8 GW of subbituminous coal. Most of this retiring coal capacity is found in the Appalachian region: slightly more than 8 GW combined in Ohio, West Virginia, Kentucky, Virginia, and Indiana. There are also plants in Alabama and in Midwestern states expected to be retired.

In June, the EIA released its analysis of the Environmental Protection Agency’s (EPA’S) proposed Clean Power Plan (CPP). The report looks at both capacity additions and plant retirements over the 2010-2040 timeframe. It illustrates how renewables play a critical role with different market conditions and policy assumptions. Key differences in scenarios analyzed involve the timing and the extent that wind and solar electric generating capacity additions occur, as well as retirements of some generation capacity, mainly coal-fired units and relatively inefficient power plants that use natural gas or oil-fired boilers to run steam turbines.

Electric Capacity Additions and Retirements, United States: 2014-2040

EIA Chart

(Source: U.S. Energy Information Administration)

Interestingly enough, even without the proposed CPP, 40 GW of existing coal-fired capacity and 46 GW of existing natural gas/oil-fired capacity are expected to be retired by 2040 in the forecast reference case. Cases that implement the proposed CPP more than double these retirements, particularly for coal. In the base policy case, 90 GW of coal-fired capacity and 62 GW of natural gas/oil-fired capacity is expected to be retired by 2040. In the policy extension case, as emission rates continue declining after 2030, over 100 GW of coal-fired generating capacity and 74 GW of natural gas/oil-fired generating capacity is expected to be retired by 2040.

All About Timing

When coal retirements happen is influenced by implementation of these environmental rules that may require power plant operators to either retrofit power plants or receive less revenue because of lower levels of operation. As a result, many coal retirements are expected to occur during the implementation of the EPA’s Mercury and Air Toxics rule (in both the reference case and base policy case).

Whether one takes a conservative reference case view or an aggressive growth position, in our lifetimes, we will enjoy cleaner power provided by natural gas, wind, and solar generation, as well as blue skies. Though the U.S. Supreme Court has recently ruled against the CPP, which may throw some of the retirement schedule to the wind,  with the coal generation fleet rapidly aging, the future still looks very bright.


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