Navigant Research Blog

Salt River Project, Others, Buying 700 MHz Spectrum for Smart Grid Applications

— July 2, 2015

Utilities have long bemoaned their lack of access to appropriate, affordable wireless spectrum for their smart grid communications networks.  But this year, a handful of utilities have taken the plunge, acquiring 2 MHz of licensed 700 MHz band spectrum from private investors.

Salt River Project (SRP), based in Phoenix, Arizona, has made one of the largest purchases to date in terms of population covered. Earlier this year, SRP acquired the Phoenix-Mesa economic area (EA) license #158, which covers an estimated 4.3 million people (pop) in central Arizona.

The license includes two 1 MHz swaths of spectrum at 757 MHz to 758 MHz and 787 MHz to 788 MHz. Access Spectrum was the seller; the company, along with Columbia Capital and Beach Point Capital, is marketing similar licenses nationwide for $0.75/MHz pop (pops x MHz).  This implies a price tag in the $6.45 million range for the SRP transaction.

I spoke with Ron Taylor, senior principal engineer for SRP, about the purchase and what still needs to happen for this spectrum band to meet utilities’ needs.

“We have to find the right vendors; we’re working with standards bodies right now,” he said, to develop a standard protocol.  “We’re not interested in a proprietary solution; we don’t want a single point of failure.”  Taylor added, “We took a bit of a risk [buying the spectrum].  Others were waiting for someone to put a foot in the water.”

As of April 2015, two other utilities—NorthWestern Energy and Great River Energy—had also contracted to acquire spectrum in this band.

Distribution Automation Is the Goal

SRP intends to use the private network to fill the connectivity gap between its substations, which are all connected by fiber, and its advanced metering infrastructure (AMI) networks.  Taylor noted that they are interested in distribution automation applications like voltage control and fault location, isolation, and service restoration (FLISR), adding that it is also looking at smart inverters for solar installations and monitoring of distribution transformers and dynamic line rating applications.

When asked if 2 MHz of spectrum is enough to do it all, Taylor admitted that SRP won’t be able to do it all.  “We did the math.  What is smart grid?  We had to trim our list,” he said.  But he added, “Everything that’s critical, and even nice to have, should be accommodated for 10 years.  It all fits except meter reading; that would overload our network.”

Prior to the acquisition, SRP leased the license and tested for interference with Verizon Wireless’ adjacent licenses and network.  The field test validated the license for SRP’s planned purposes.

Just a Start

SRP and other utility buyers of this slim license band are hoping the vendor community can standardize around a single technology, yielding economies of scale for utilities still seeking an efficient communications strategy for high-performance-need applications in the distribution network.

But as SRP’s chief engineer pointed out, just 2 MHz really does limit the options for longer-term smart grid goals—but with no sign the Federal Communications Commission (FCC) is  considering dedicated spectrum for power utilities in the near term, the availability of this contiguous, nationwide set of licenses is a start.


Submarine Cable Project to Link Canada, New York

— May 26, 2015

The Champlain Hudson Power Express Project is an epic example of the creative solutions that major transmission utilities and third parties are undertaking to interconnect adjacent markets across borders. This hybrid 337-mile project will carry more than 1,000 MW of renewable power from Canada to the New York metropolitan areas. The project includes sections of high-voltage direct current (HVDC) submarine power cables running through Lake Champlain, the Hudson, East, and Harlem Rivers, with other sections using HVDC underground with the existing Delaware & Hudson Railroad and CSX Transportation railroad right of ways.

The $2.2 billion dollar project is expected to be completed and commissioned in 2017, linking the Montreal area to the New York City neighborhood of Astoria, Queens.  The transmission link between Canada and New York is being developed by Transmission Developers Inc. (TDI), a Blackstone Group, L.P, and is designed to transport electricity from hydropower and wind resources in eastern Canada and feed it directly into the New York City electricity market. The Quebec section of the line and high-voltage alternating current (HVAC) to HVDC converter station is being built and will be operated by TransÉnergie, the transmission division of Hydro-Québec, one of the largest Canadian utilities.

The following graphic shows the scope of the project, starting out at the Hertel converter station in Quebec, where HVAC is converted to HVDC.  The HVDC line runs under Lake Champlain for over 100 miles and then through railroad right of ways for 126 miles.  It then runs under the Hudson River to New York City over about 100 miles, with a few underground transitions in New York City.

Champlain Hudson Power Express

Champlain Hudson Power Express

(Source: Transmission Developers, Inc.)

It’s clear that these HVDC submarine and underground systems are complex solutions that have less environmental impact than overhead transmission lines with associated right of way and eminent domain issues.

The majority of HVDC submarine electric transmission projects are being planned and completed in the European market, where tremendous off-shore wind resources in the Nordic countries, Germany, and the United Kingdom are coming online. It’s great to see that creative projects such as the Champlain Hudson Power Express transmission system are also happening in North America. Over the next 5 to 10 years, this type of interconnection/intertie between independent system operator/regional transmission organization (ISO/RTO) regions and countries will be critical to delivering adequate and increasingly renewable power resources. For more information, look for my upcoming report (expected to publish in 2Q 2015) on submarine electric transmission, which will include regional and global forecasts for capacity and revenue through 2024.



Major Shifts Ahead for European Power Generation

— May 4, 2015

Across Europe, major changes in the power generation sector are driving the development, expansion, and deployment of new and reconfigured electric transmission and distribution systems. The forces driving these changes include the retirement of much of the existing coal and nuclear generation fleet, the European Union’s energy policy goals, concerns over security of supply, climate change mitigation efforts, and the ongoing integration of distributed energy resources (DER) across the region. Power peak load is expected to grow between 8% and 28% by 2030, according to the Ten-Year Network Development Plan produced by the European Network of Transmission System Operators for Electricity, or ENTSO-E.

The net generation capacity of the European power sector must grow from about 1,000 GW today to between 1,200 GW and 1,700 GW by 2030 in order to keep up with demand, according to the Plan. To accomplish this massive increase, the generation fleet must not only add new capacity, but also replace present units that will be retired in the next 15 years. This represents a 3%4.6%  expansion per year across all potential resources.

Age of Wind

Looking to 2030, the generation fleet in Europe will morph in a number of significant ways, including:

  • Major nuclear generation plant retirements will happen across the region, including those in Germany, Belgium, and Switzerland. All present nuclear units in the United Kingdom are scheduled to be shut down, and France plans to reduce the share of nuclear to 50% of the country’s power supply by 2025. This adds up to a net 30 GW and 45 GW of nuclear capacity being shut down. At the same time, 20–30 GW of new nuclear capacity is expected to be added. New plants may be added in the United Kingdom, Finland, and Central Europe.
  • New generation additions will occur in new locations. Wind farm development will be located where wind speeds are optimal; a significant share of the new generation fleet in Western Europe is being built on new sites, mostly in harbors.
  • The shutdown of nuclear and fossil-fired units across Germany will require additional grid investment necessary to transport remote power to population centers.
  • New generation capacity will primarily be made up of distributed wind and solar systems. The generation capacity of wind, solar, and biomass is expected to reach at least 405 GW and could triple, reaching more than 870 GW by 2030.
  • DER will be located in Germany and in countries with favorable wind conditions, such as the Iberian and Italian peninsulas and Nordic countries bordering the North Sea.
  • New hydropower capacity is expected to increase from 198 GW to between 220 GW and 240 GW, with most new development in the Alps, the Iberian Peninsula, and Norway.

These major generation shifts will be the primary drivers for investments in high-voltage transmission systems across the region. Navigant Research’s forthcoming report, Submarine Cable and High Voltage DC, will detail many of these changes and additions, which promise to transform Europe’s power sector.



In Europe, Renewables Drive Big Transmission Projects

— May 4, 2015

The European Network of Transmission System Operators for Electricity, or ENTSO-E, has released its Ten-Year Network Development Plan (TYNDP 2014) on the state of the European transmission system. The report details a huge number of new projects to be completed between 2015 and 2030, driven by large-scale wind power developments in the Nordic countries and the North Sea, along with the reconfiguration of the existing high-voltage alternating current (HVAC) transmission system required to address the problems caused by the large-scale retirement of nuclear plants across Northern Europe in the coming years. This year’s report describes a number of new projects that were not part of the TYNDP 2012, including large high-voltage direct current (HVDC) and submarine cable projects linking Northern Europe with the Nordic countries.

Data from ENTSO-E illustrates the spread of HVDC and submarine cable DC and AC deployments, which are now on parity or are moving ahead of traditional overhead HVAC transmission systems. Planned HVDC cable and submarine HVAC cable projects each represent almost 18,000 kilometers of new line over the next 15 years.

Super Connector

ABB’s recently announced $900 million HVDC and submarine cable project, called NordLink, will be Europe’s longest HVDC power grid interconnection. Enabling the transmission of 1,400 MW of renewable energy, NordLink will represent the first interconnection between the Norwegian and German power grids and will bring together a consortium of major utilities in each country, including Statnett and TenneT supplying onshore HVDC converter stations. Nexans will supply the submarine cable. The epic nature of this project is illustrated by its size: it will be 387 miles long, making it the longest HVDC and submarine cable connection in Europe. It is scheduled to go into commercial operation in 2020.

NordLink will be key to creating an integrated European Union energy market, increasing energy security in the region, and supporting the integration of renewable energy into national grids. The project facilitates the transmission of surplus wind and solar power produced in Germany to Norway and hydroelectric power to be moved in the opposite direction. The link will transmit enough electricity to supply 3.6 million German households.

Navigant Research’s forthcoming report, Submarine Cable and High Voltage DC, will include 10-year market forecasts and summaries of major planned submarine projects across North America, Europe, Asia Pacific, and the rest of the world. ENTSO-E’s TYNDP demonstrates that this market is about to expand rapidly, driven by utility-scale renewable power projects and the retirements of aging coal and nuclear power plants.


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