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