&EPA
Roadmap for Incorporating Energy
Efficiency/Renewable Energy
Policies and Programs into State and Tribal
Implementation Plans
Appendix B: Overview of the U.S. Electric System
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EPA-456/D-12-001C
July 2012
Roadmap for Incorporating Energy Efficiency/Renewable Energy
Policies and Programs into State and Tribal Implementation Plans
Appendix B: Overview of the U.S. Electric System
By:
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Outreach and Information Division
Research Triangle Park, North Carolina
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Outreach and Information Division
Research Triangle Park, North Carolina
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ACKNOWLEDGMENTS
We would like to acknowledge substantial contributions from members of an inter-office EPA
team that included the Office of Atmospheric Programs, the Office of Policy Analysis and
Review, the Office of General Counsel and Regions 1 and 6. This document also reflects
comments received from a number of stakeholders, including state and local air quality
agencies.
B-2
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Contents
FIGURES B-4
SECTION B.I: INTRODUCTION B-5
SECTION B.2: ABOUT THE U.S. ELECTRIC SYSTEM B-5
SECTION B.3: HOW THE ELECTRIC SYSTEM WORKS B-7
SECTION B.4: ROLES AND RESPONSIBILITIES B-9
SECTION B.5: LOCATION OF EMISSION REDUCTIONS RELATIVE TO THE SITING OF CLEAN ENERGY RESOURCES . B-10
REFERENCES B-12
B-3
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FIGURES
Figure 1: NERC Interconnections B-6
Figure 2: Flow of Electric Power B-7
Figure 3: Unit Dispatch in a Power System B-8
B-4
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SECTION B.I: INTRODUCTION
Generating electricity from fossil fuels is the single largest source of anthropogenic carbon
dioxide (C02) emissions in the United States, representing 40 percent of C02 emissions in 2009.1
It is also the largest source of criteria air pollutants that affect air quality and human health.
For these and other reasons there has been growing interest in understanding the impacts of
state-level energy efficiency and renewable energy (EE/RE) policies on emissions from power
generation. Much of this interest has come from state environmental regulators interested in
including emission reductions from EE/RE policies in their plans for improving and maintaining
air quality.
Many air agencies are already familiar with the electric system, and the roles and
responsibilities of energy agencies in their state. For those who want more information on the
topic, it is provided here in this appendix as a convenience. For these stakeholders and others
working to analyze the effects of clean energy on air pollution emissions, there is a need to:
Understand the electric system
Understand how the system is likely to respond to the introduction of clean energy
resources
Conduct analyses that credibly and accurately represent this interaction and estimates
reductions in air pollution
Appendix B is intended to address these needs, in addition to other resources.2 It highlights the
basic workings of the electric system and addresses important issues that arise in energy and
emissions planning; most notably quantification of emission benefits for incorporation in State
Implementation Plans (SIP)/Tribal Implementation Plan (TIP) (see Appendix I for details on
quantification methods). A key take-away from this Appendix is that the operation of regional
power systems is complex and dynamic, so predicting how these systems will react to new
resources - including EE/RE - is likewise a complex undertaking.
SECTION B.2: ABOUT THE U.S. ELECTRIC SYSTEM
The most common way to generate electricity is to burn fossil fuels to convert water into
steam, and to use the steam to spin a turbine that is connected to an electric generator.
Generators can also be turned by water - as is the case with hydroelectric power plants - or by
wind turbines. In all cases, the electricity generated at these facilities flows across the
transmission and distribution system to where it is needed to meet customer demand in cities
and rural areas.
1 EPA (2011).
2 EPA (2010).
B-5
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Figure 1: NERC Interconnections
NERC INTERCONNECTIONS
QUEBEC
INTERCONNECTION
The North American electric system is an interconnected network for generating, transmitting,
and delivering electricity to consumers. Over the past 100 years, the system developed around
a "central station" model that distributes power from large generating stations (often located
near a fuel source) to customers located in load centers that are hundreds of miles away. The
current electricity delivery system was designed and built in the 1950s to move large quantities
of power from generators to consumers at low cost. Despite a recent trend towards more
"distributed" power in
which small
generation facilities
such as combined heat
and power systems are
located near loads,
most electric power in
the U.S. continues to
be generated at
central-station facilities
powered by coal,
natural gas, nuclear,
and hydropower.
The North American
electric system is
divided into four
distinct North American
Electric Reliability
Corporation (NERC)
interconnection grids in
the continental United
States and Canada:
Source:
eastern grid, western http://www.nerc.com/fileUploads/File/AboutNERC/maps/NERC Interconnections color.jpg
grid, Quebec grid and
the Electric Reliability Council of Texas (ERCOT) (see Figure 1). The generators, power lines,
substations, and power distribution system are the responsibility of various utility companies
working together under regional oversight to keep each grid operational. Each grid has only
limited connections to the other three, but within them electricity is imported and exported
continuously among numerous smaller power control areas (PCA).
PCAs are managed by system operators, or transmission organizations, whose main function is
to maintain the reliability of the system in their areas (e.g., New England, New York, California).
They do this by balancing the electricity supplied by the power plants with that demanded by
customers. This happens in real-time, every day of the year. In other words, energy is
simultaneously being generated and consumed on each grid in the same quantity. There is very
little ability to store electricity, and it is difficult for the grid to accommodate large, rapid
changes in use and generation.
FRCC
EASTERN
INTERCONNECTION
ERCOT
INTERCONNECTION
B-6
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SECTION B.3: HOW THE ELECTRIC SYSTEM WORKS
Figure 2 depicts the flow of power from the generating station, or power plant, to the
transformer and transmission lines through a substation transformer (that reduces voltage) to
the distribution lines. It then flows through the pole transformer to the consumer's service
box. Electricity transmission typically refers to power flow between the generating station and
a substation, and electricity distribution most often refers to delivery from the substation to
consumers. The flow of electricity occurs in accordance with the laws of physicsalong paths
of least resistance in much the same way that water flows through a network of canals.
Over time in a given location, the consumer demand for power fluctuates significantly. For
instance, residential electricity demand typically peaks in the morning and evening when
residents are home and operating electricity-consuming products. In contrast, commercial
electricity demand typically peaks during the middle of the day while industrial demand varies
by individual firm and type of industry. System planners have to account for these variations as
well as other factors, such as weather and the availability of individual power plants, all while
keeping the system in balance. Fortunately, the aggregate demand of the many jurisdictions
across a single grid behaves in a relatively predictable manner.
Figure 2: Flow of Electric Power
CokxKey:
Blue: Transmission
Gra«n: Distribution
Black Generation
Transmission Lines
765. 500. 345. 230. and 138 kV
Generating Station
Generator Step
Up Transformer
Transmission
Customer
138kVor230kV
Subtransmission
Customer
26kV and 69kV
Primary Customer
13kVand4kV
Secondary Customer
120V and 240V
Source: https://reports.energy.gov/BlackoutFinal-Web.pdf
To meet consumer demand, the grid operators rely on a fleet of power plants with different
operational characteristics, fuels, and cost structures. Base load plants, such as nuclear and
most coal plants, operate 24 hours a day and do not readily cycle up and down. They are
meant to start up and keep running until maintenance is needed. Base load units are also
characterized by relatively high capital costs, low operating costs, and a ramp-up process that is
typically slow, expensive, and results in wear on the generating units. As power demand
increases over the course of a day, intermediate and peaking plants come on line. These plants
have the physical capability to quickly ramp up power production to meet increasing demand
B-7
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and to rapidly cycle down once that demand dissipates. These plants are often engines or
turbines that are fueled by oil or natural gas (see Figure 3).
Figure 3: Unit Dispatch in a Power System
25,000
Combustion
Turbines
D Gas/Oil Peaking
Gas
n Coal
n Nuclear
Hydro
4 5
Day of the Week
Source: http://www.svnapse-energv.com/Downloads/SvnapseReport.2005-07.PQA-EPA.Displaced-Emissions-Renewables-
and-Efficiencv-EPA.04-55.pdf
The decision of which power plants to dispatch and in what order is based in principle on
economics, with the lowest-cost resources dispatched first and the highest cost resources used
last. The last resources to be called upon are referred to as the marginal units, which are
typically the most expensive units to run. In some cases in certain parts of the country, these
plants can also be among the dirtiest and least efficient of the power plant fleet.
Renewable energy and EE can affect the
dispatch in different ways, though both
cause marginal units to run less frequently
and result in fewer air emissions. In the
case of efficiency, energy savings occur at
the point of consumption resulting in a
reduction in demand on the electric
system and a corresponding reduction in
emissions from the power plant fleet.
In contrast, RE sources reduce the output
from the marginal unit by producing
electricity for the power. Thus, a wind
farm producing electricity displaces the
need for electricity that would have
Marginal Units
The highest-cost unit dispatched at any point in time is
said to be "on the margin" and is known as the
"marginal unit."
At peak times, for example, high-cost combustion
turbines and gas/oil peaking units are frequently on
the margin.
During off-peak times, plants with lower operating
costs (e.g., combined cycle gas turbines and coal-fired
steam units) can be on the margin.
In some regions, the cost used to determine merit
order for dispatch is the variable cost of running each
plant (mainly fuel cost), but in other regions the
criterion for dispatch is a bid price submitted by the
owners of the generators.
B-8
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otherwise been produced by that marginal unit. Since wind power results in zero emissions,
overall emissions from the power plant fleet are reduced (absent a cap on emissions that
determines overall pollution levels).
This theory of "economic dispatch" predicts that any new resource will shift upward all
resources above it in the dispatch order, thereby reducing demand on the marginal unit (the
most expensive unit needed to meet demand). Actual plant dispatch, however, is frequently
more complicated than the representation in Figure 3 for three main reasons:
Transmission constraints may require system operators to dispatch certain units that
are more expensive than other available units.
It is time consuming to start and stop many types of large generating units. Limitations
on unit "ramp-up rates" also force system operators to keep some units running during
periods when they are not needed (in order to have the units available when they are
needed). These are referred to as load following, or intermediate units, and are often
running at a lower and less efficient rate while not producing any power for input into
the grid.
System operators do not treat generating units as single entities in the dispatch process.
Instead, plant owners in competitive markets typically bid the power from an individual
generating unit into a smaller number of "blocks" that are instead bid into the grid.
Because actual unit dispatch often looks very different from the ideal shown in Figure 3,
environmental regulators and others should be aware of how these electric-system realities are
represented in control-measure estimates of emission reductions.
SECTION B.4: ROLES AND RESPONSIBILITIES
In the electric system, four entities have key roles and responsibilities:
State energy offices
Public utility offices or service commissions
Vertically integrated utility companies
Regional transmission organizations and independent system operators
State energy offices perform a number of functions:
Assist in achieving state energy-related environmental goals
Ensure that the needs and issues of industry, business, and residential energy
consumers are considered during energy policy and program development
Aid businesses in using energy effectively, modernizing industry, and retaining and
creating jobs
Help residential and other low-level energy consumers meet their energy needs through
cost-effective and energy efficient solutions
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Demonstrate the application of cost-effective advanced EE/RE and other clean energy
technologies
With other state agencies, deploy technologies to reduce energy consumption and meet
energy-related environmental goals
Public utility or service commissions act as governing bodies that:
Regulate the rates and services of a public utility that provide essential services,
including energy
Oversee and evaluate EE/RE policies
Ensure reliable utility service at fair, just, and reasonable rates
Ensure that the facilities necessary to meet future growth can be financed on
reasonable and fair terms
Encourage harmony between utility companies and their customers
Foster planned growth of public utility services
Coordinate energy supply facilities with the state's development
Cooperate with other states and the federal government in providing interstate and
intrastate public utility service and reliability of energy supply
Vertically integrated utility companies:
Oversee the entire chain of power delivery
Produce electricity through the operation of power plants
Deliver power to residential, commercial, and institutional customers
Regional transmission operators and independent system operators provide several services:
Serve as grid operators, coordinating the power grid to ensure reliable delivery of two-
thirds of the electricity used in the United States to two-thirds of its population
Match generation to load instantaneously to keep supply and demand for electricity in
balance
Provide non-discriminatory transmission access, and facilitate competition among
wholesale suppliers to improve transmission service and provide fair electricity prices
Schedule the use of transmission lines
Manage the interconnection of new generation and monitor the markets to ensure
fairness and neutrality for all participants
SECTION B.5: LOCATION OF EMISSION REDUCTIONS RELATIVE TO THE
SITING OF CLEAN ENERGY RESOURCES
The goal of clean energy policies in the SIP planning context is typically to reduce emissions
within the jurisdiction where the policies are implemented. To achieve this goal, all (or a
portion of) the emission reductions from EE/RE must occur in a location that affects air quality
B-10
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in the implementing jurisdiction. The environmental regulator can take steps to ensure that the
analysis supporting such a policy accounts for the interconnected and dynamic nature of the
power system, and that it examines the possibility that the benefits of clean energy policies
may not be completely realized within the jurisdiction of interest.
This can be illustrated by the example of a state with a renewable portfolio standard requiring
utilities to buy a fixed percentage of their electricity from renewable energy facilities. If a local
utility signs an energy-purchase contract with the nearest renewable facility, the state may find
it difficult to correlate wind power produced by that wind farm to a corresponding reduction in
electric output and emissions from specific fossil-fuel generators. The implementing state
needs to ensure that the emission reductions occur at an upwind or nearby facility, which
affects the implementing state's air quality. For this reason, it is critically important to
understand and accurately predict how the regional power grid is likely to behave when
assessing the emission benefits from clean energy resources.
B-ll
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REFERENCES
EPA (2010). Assessing the Multiple Benefits of Clean Energy: A Resource for States. February 2010.
Available online at
EPA (2011). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2009. April 2011. Available
online at
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United States Office of Air Quality Planning and Standards Publication No. EPA-456/D-12-001c
Environmental Protection Outreach and Information Division July 2012
Agency Research Triangle Park, NC
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