WEBVTT 00:00:00.000 --> 00:00:04.364 align:middle line:84% [SQUEAKING] [RUSTLING] [CLICKING] 00:00:04.364 --> 00:00:09.680 align:middle line:90% 00:00:09.680 --> 00:00:14.080 align:middle line:84% SCOTT KEMP: I just wanted to do a little review. 00:00:14.080 --> 00:00:19.020 align:middle line:84% In the last class, I had mentioned the Westinghouse 00:00:19.020 --> 00:00:21.900 align:middle line:84% eVinci kind of nuclear battery concept, 00:00:21.900 --> 00:00:26.140 align:middle line:84% and I hadn't looked back at this in a while. 00:00:26.140 --> 00:00:28.440 align:middle line:84% And Emil, who's walking through the door, 00:00:28.440 --> 00:00:33.400 align:middle line:84% had informed me that they had made progress on this. 00:00:33.400 --> 00:00:35.840 align:middle line:84% So I just wanted to show you the progress, 00:00:35.840 --> 00:00:37.340 align:middle line:90% apparently, care of Emil. 00:00:37.340 --> 00:00:40.600 align:middle line:84% This is the reactor has gone from this concept, which 00:00:40.600 --> 00:00:43.120 align:middle line:90% was very rough, to this. 00:00:43.120 --> 00:00:47.080 align:middle line:84% So it's now, I guess, five modules-- 00:00:47.080 --> 00:00:50.800 align:middle line:84% reactor module, power conversion module, and then at least three 00:00:50.800 --> 00:00:55.560 align:middle line:90% of these control modules. 00:00:55.560 --> 00:00:58.320 align:middle line:84% You can see here that it looked like originally the reactor was 00:00:58.320 --> 00:01:01.380 align:middle line:84% like 12 to 15 feet high based on this fence. 00:01:01.380 --> 00:01:03.620 align:middle line:84% And you can see here there's a person. 00:01:03.620 --> 00:01:06.980 align:middle line:84% So it looks like it got a lot bigger, which 00:01:06.980 --> 00:01:10.280 align:middle line:84% I think it looks like details are still being worked out. 00:01:10.280 --> 00:01:14.060 align:middle line:84% But that's kind of illustrative of why the costs escalate. 00:01:14.060 --> 00:01:17.420 align:middle line:84% You have this idea, and then you have to actually engineer it. 00:01:17.420 --> 00:01:19.380 align:middle line:90% And reality sets in. 00:01:19.380 --> 00:01:21.820 align:middle line:90% That explains what's going on. 00:01:21.820 --> 00:01:25.240 align:middle line:84% I also said that for the first time, 00:01:25.240 --> 00:01:29.100 align:middle line:84% I had tried to get you some numbers about how cost had come 00:01:29.100 --> 00:01:31.900 align:middle line:84% down, not depending on the number of reactors 00:01:31.900 --> 00:01:35.420 align:middle line:84% that were produced, but actually on the rate of production, which 00:01:35.420 --> 00:01:39.180 align:middle line:84% seemed to be actually where the real benefits of factory 00:01:39.180 --> 00:01:41.140 align:middle line:90% fabrication lie. 00:01:41.140 --> 00:01:44.040 align:middle line:90% And I found this. 00:01:44.040 --> 00:01:48.580 align:middle line:84% I was looking for a comparable study, 00:01:48.580 --> 00:01:51.860 align:middle line:84% and I found this study on rates of production 00:01:51.860 --> 00:01:57.280 align:middle line:84% for fixed fuel cells, stationary fuel cells, 00:01:57.280 --> 00:01:58.790 align:middle line:84% which are kind of like a battery, 00:01:58.790 --> 00:02:00.250 align:middle line:90% but a little bit more complex. 00:02:00.250 --> 00:02:02.850 align:middle line:84% And they found a 30% cost reduction 00:02:02.850 --> 00:02:07.010 align:middle line:84% for every factor of 10 kind of, at least at the beginning, 00:02:07.010 --> 00:02:09.250 align:middle line:84% factor of 10 increase in production rate. 00:02:09.250 --> 00:02:14.330 align:middle line:84% Emil also told me that there's a study looking at this 00:02:14.330 --> 00:02:17.130 align:middle line:90% in nuclear for microreactors. 00:02:17.130 --> 00:02:20.770 align:middle line:84% So I thought this is a better example, maybe. 00:02:20.770 --> 00:02:23.070 align:middle line:90% So here's the study. 00:02:23.070 --> 00:02:26.450 align:middle line:84% And here's their kind of final bottom line-- 00:02:26.450 --> 00:02:31.340 align:middle line:84% 20% when the cost increases by a factor of 100, 00:02:31.340 --> 00:02:33.610 align:middle line:90% or two tenfoldings. 00:02:33.610 --> 00:02:36.790 align:middle line:84% So that's instead of a 30% per tenfolding. 00:02:36.790 --> 00:02:42.170 align:middle line:84% If you back out, it's about 9% per tenfolding. 00:02:42.170 --> 00:02:47.050 align:middle line:84% So I guess my calculation was overoptimistic. 00:02:47.050 --> 00:02:51.410 align:middle line:84% But you can see there there are people looking at this. 00:02:51.410 --> 00:02:55.010 align:middle line:84% It doesn't move in a good direction. 00:02:55.010 --> 00:03:00.230 align:middle line:84% I guess if I revise my slide, then it would look like this. 00:03:00.230 --> 00:03:03.150 align:middle line:84% I was suggesting that maybe at 50 units per year, which 00:03:03.150 --> 00:03:05.770 align:middle line:84% is like all the nonwind and solar online, 00:03:05.770 --> 00:03:09.150 align:middle line:84% we could bring the cost down 45%. 00:03:09.150 --> 00:03:14.630 align:middle line:84% But the revised numbers are not as good. 00:03:14.630 --> 00:03:18.850 align:middle line:90% So sorry for being optimistic. 00:03:18.850 --> 00:03:21.910 align:middle line:90% I have a habit of that. 00:03:21.910 --> 00:03:22.410 align:middle line:90% OK. 00:03:22.410 --> 00:03:27.550 align:middle line:84% So today, we're going to talk about the electric grid. 00:03:27.550 --> 00:03:32.230 align:middle line:84% So in the beginning, there really wasn't a grid. 00:03:32.230 --> 00:03:35.710 align:middle line:84% And let's do some history because it's fun. 00:03:35.710 --> 00:03:39.510 align:middle line:84% So the first electric distribution 00:03:39.510 --> 00:03:42.430 align:middle line:84% of any kind with a central generator 00:03:42.430 --> 00:03:46.750 align:middle line:84% was in Wall Street in New York in 1882. 00:03:46.750 --> 00:03:49.270 align:middle line:84% And the price of electricity, if we inflate it 00:03:49.270 --> 00:03:53.430 align:middle line:84% to today's dollars, was about 100 times more expensive 00:03:53.430 --> 00:03:54.850 align:middle line:90% than it is today. 00:03:54.850 --> 00:03:58.210 align:middle line:90% It was a real luxury item. 00:03:58.210 --> 00:04:02.770 align:middle line:84% And today, we have this enormous grid that actually is not just 00:04:02.770 --> 00:04:03.630 align:middle line:90% an American grid. 00:04:03.630 --> 00:04:08.530 align:middle line:84% It goes up into Canada, and it's shared. 00:04:08.530 --> 00:04:12.290 align:middle line:84% It's split into three synchronous zones. 00:04:12.290 --> 00:04:19.290 align:middle line:84% And Texas has its own grid, as does Alaska. 00:04:19.290 --> 00:04:21.370 align:middle line:84% Texas likes this because it insulates them 00:04:21.370 --> 00:04:23.530 align:middle line:84% from federal oversight, because anytime 00:04:23.530 --> 00:04:25.968 align:middle line:84% you sell electricity across borders, 00:04:25.968 --> 00:04:27.510 align:middle line:84% the federal government gets involved. 00:04:27.510 --> 00:04:31.330 align:middle line:90% But Texas avoids that. 00:04:31.330 --> 00:04:33.850 align:middle line:84% And so this creates a political structure 00:04:33.850 --> 00:04:35.750 align:middle line:84% that we're going to talk more about in class 00:04:35.750 --> 00:04:38.610 align:middle line:84% that has really shaped the history of how 00:04:38.610 --> 00:04:40.830 align:middle line:90% this grid operates. 00:04:40.830 --> 00:04:44.210 align:middle line:84% And there are various councils and political entities that 00:04:44.210 --> 00:04:47.330 align:middle line:90% are important in this story. 00:04:47.330 --> 00:04:50.530 align:middle line:84% The grid, in case you are not electrically 00:04:50.530 --> 00:04:53.090 align:middle line:84% engineering inclined, is something 00:04:53.090 --> 00:04:58.040 align:middle line:84% that was really made possible by the emergence of AC 00:04:58.040 --> 00:04:59.140 align:middle line:90% transformers. 00:04:59.140 --> 00:05:03.720 align:middle line:84% And before that, electricity distribution 00:05:03.720 --> 00:05:05.680 align:middle line:90% was done with direct current. 00:05:05.680 --> 00:05:09.760 align:middle line:84% But the problem with direct current is as follows. 00:05:09.760 --> 00:05:12.280 align:middle line:84% Let's say that I have a house that 00:05:12.280 --> 00:05:18.160 align:middle line:84% wants to consume a kilowatt of power at 100 volts. 00:05:18.160 --> 00:05:23.700 align:middle line:84% And so that's something like 10 to 20 incandescent light bulbs-- 00:05:23.700 --> 00:05:26.280 align:middle line:90% not a huge amount of power. 00:05:26.280 --> 00:05:31.400 align:middle line:84% So by Ohm's law, we can calculate the current required. 00:05:31.400 --> 00:05:35.340 align:middle line:90% And we would get 10 amps. 00:05:35.340 --> 00:05:38.220 align:middle line:84% 1,000 watts divided by 100 volts is 10 amps. 00:05:38.220 --> 00:05:39.680 align:middle line:90% OK, very simple. 00:05:39.680 --> 00:05:43.580 align:middle line:84% Now let's imagine that house is a mile away from the generator, 00:05:43.580 --> 00:05:45.320 align:middle line:90% which is not that far. 00:05:45.320 --> 00:05:47.680 align:middle line:90% Walk across campus. 00:05:47.680 --> 00:05:51.320 align:middle line:84% And so there's going to be some ohmic losses on this line. 00:05:51.320 --> 00:05:54.400 align:middle line:84% And if you look up the resistance of copper wire-- 00:05:54.400 --> 00:05:57.780 align:middle line:84% this is a 10 AWG is American Wire Gauge. 00:05:57.780 --> 00:05:59.720 align:middle line:84% I don't know if you know your wire gauges, 00:05:59.720 --> 00:06:02.500 align:middle line:84% but this is much fatter, a little bit fatter than what you 00:06:02.500 --> 00:06:05.700 align:middle line:84% have in your house, which is typically around 14 for 15-amp 00:06:05.700 --> 00:06:10.820 align:middle line:84% service or 12 for 20-amp service. 00:06:10.820 --> 00:06:17.000 align:middle line:84% And so this is not a shoddy, thin wire. 00:06:17.000 --> 00:06:24.380 align:middle line:84% And it has a loss of 1 ohm per thousand feet. 00:06:24.380 --> 00:06:27.980 align:middle line:84% For 5,000 feet, which is one mile, we would have-- 00:06:27.980 --> 00:06:31.060 align:middle line:84% well, I guess I did my math wrong. 00:06:31.060 --> 00:06:33.920 align:middle line:84% I said, oh, round trip, yes, 10 ohms round trip. 00:06:33.920 --> 00:06:36.260 align:middle line:84% Because you've got to send the current there and back. 00:06:36.260 --> 00:06:38.300 align:middle line:90% Yes, so 10 ohms round trip. 00:06:38.300 --> 00:06:42.100 align:middle line:84% And so we need to figure out how much energy is lost here. 00:06:42.100 --> 00:06:42.600 align:middle line:90% All right. 00:06:42.600 --> 00:06:48.020 align:middle line:84% So again, we use Ohm's law, and we say with 10 amps running 00:06:48.020 --> 00:06:52.880 align:middle line:84% through 10-ohm resistor is a 100-volt graph. 00:06:52.880 --> 00:06:56.900 align:middle line:84% So in order to provide the 100 volts at the house, 00:06:56.900 --> 00:07:00.760 align:middle line:84% the generator needs to put 200 volts on the line. 00:07:00.760 --> 00:07:03.840 align:middle line:84% And that means 50% of the energy is 00:07:03.840 --> 00:07:06.080 align:middle line:90% being lost in this power line. 00:07:06.080 --> 00:07:10.800 align:middle line:84% And that's why the small DC Edison-style 00:07:10.800 --> 00:07:16.280 align:middle line:84% grids were very tiny with just very local customers. 00:07:16.280 --> 00:07:20.740 align:middle line:84% But once you can fix this problem, 00:07:20.740 --> 00:07:23.020 align:middle line:84% well, there is the original Edison plant. 00:07:23.020 --> 00:07:25.400 align:middle line:84% There's the service area in orange. 00:07:25.400 --> 00:07:28.400 align:middle line:84% You can fix this problem if you can change the voltage. 00:07:28.400 --> 00:07:34.240 align:middle line:84% So transformers preserve power by changing current 00:07:34.240 --> 00:07:36.780 align:middle line:90% for voltage, potential energy. 00:07:36.780 --> 00:07:38.660 align:middle line:90% And so let's just do that. 00:07:38.660 --> 00:07:42.280 align:middle line:84% Let's say we'll have power transformers at each end. 00:07:42.280 --> 00:07:45.640 align:middle line:84% And instead of sending 100 volts down that mile of wire, 00:07:45.640 --> 00:07:48.200 align:middle line:84% we're going to send 100 kilovolts. 00:07:48.200 --> 00:07:51.430 align:middle line:84% Now I send 10 milliamps of current 00:07:51.430 --> 00:07:53.230 align:middle line:84% through the line at 100 kilovolts, 00:07:53.230 --> 00:07:55.070 align:middle line:90% the same amount of power. 00:07:55.070 --> 00:07:58.210 align:middle line:84% And if I do the same loss calculation, 00:07:58.210 --> 00:08:00.090 align:middle line:84% here's my 10 milliamps times 10 ohms. 00:08:00.090 --> 00:08:02.550 align:middle line:84% I'm going to lose 100 millivolts. 00:08:02.550 --> 00:08:08.730 align:middle line:84% So the amount of power I lose is 0.1% as opposed to 50%. 00:08:08.730 --> 00:08:13.110 align:middle line:84% That was the magic-- the invention of the transformer. 00:08:13.110 --> 00:08:18.390 align:middle line:84% And so that enabled suddenly long-distance transmission 00:08:18.390 --> 00:08:21.670 align:middle line:84% and as a result, large-scale power stations that 00:08:21.670 --> 00:08:24.670 align:middle line:90% could then power large regions. 00:08:24.670 --> 00:08:28.510 align:middle line:84% So this is the first of those stations in Schoellkopf Mills 00:08:28.510 --> 00:08:30.310 align:middle line:90% outside of Niagara Falls. 00:08:30.310 --> 00:08:31.770 align:middle line:90% And this is a hydro station. 00:08:31.770 --> 00:08:36.630 align:middle line:84% And just lots of early makeshift generators running 00:08:36.630 --> 00:08:39.030 align:middle line:90% turbines powered by this thing. 00:08:39.030 --> 00:08:42.350 align:middle line:84% So this thing sent power to Buffalo, New York. 00:08:42.350 --> 00:08:43.690 align:middle line:90% It was 20 miles away. 00:08:43.690 --> 00:08:46.430 align:middle line:84% And it was all possible because of these transformers. 00:08:46.430 --> 00:08:49.690 align:middle line:84% So early electric grid started out 00:08:49.690 --> 00:08:52.630 align:middle line:84% by sending power at 66 kilovolts, 00:08:52.630 --> 00:08:55.390 align:middle line:84% and then it went from there 150 kilovolts, 00:08:55.390 --> 00:08:58.330 align:middle line:90% 245 kilovolts, 375 kilovolts. 00:08:58.330 --> 00:09:00.930 align:middle line:84% Now we talk about long-distance transmission, 00:09:00.930 --> 00:09:05.910 align:middle line:84% high-voltage transmission at 765 kilovolts, I think. 00:09:05.910 --> 00:09:08.210 align:middle line:84% And people are even talking about going 00:09:08.210 --> 00:09:11.130 align:middle line:90% to higher numbers than that. 00:09:11.130 --> 00:09:17.690 align:middle line:84% So the high voltage and distances 00:09:17.690 --> 00:09:19.270 align:middle line:90% then became the standard. 00:09:19.270 --> 00:09:23.330 align:middle line:84% And the reason was because of economies of scale. 00:09:23.330 --> 00:09:27.170 align:middle line:84% So just like building a larger nuclear power 00:09:27.170 --> 00:09:31.130 align:middle line:84% plant is more economic than building a microreactor, 00:09:31.130 --> 00:09:34.250 align:middle line:84% that is also true for a natural gas plant and a coal plant. 00:09:34.250 --> 00:09:38.010 align:middle line:84% And so it was more economic to build these large plants 00:09:38.010 --> 00:09:41.930 align:middle line:84% and run transmission to customers over long distances 00:09:41.930 --> 00:09:46.250 align:middle line:84% than to have a bunch of smaller regional plants. 00:09:46.250 --> 00:09:49.240 align:middle line:84% And so this led to of hub-and-spoke architecture 00:09:49.240 --> 00:09:52.280 align:middle line:84% that we see and that has dominated the world today. 00:09:52.280 --> 00:09:55.600 align:middle line:84% And also, as a result of this, the companies that 00:09:55.600 --> 00:09:57.480 align:middle line:84% were interested in building these plants 00:09:57.480 --> 00:10:01.920 align:middle line:84% became large, vertically integrated monopolies that 00:10:01.920 --> 00:10:05.060 align:middle line:84% built plants, built transmission lines, built distribution, 00:10:05.060 --> 00:10:08.880 align:middle line:84% built transformers, and they owned everything. 00:10:08.880 --> 00:10:12.520 align:middle line:84% And so you had these regions that run company-operated. 00:10:12.520 --> 00:10:16.560 align:middle line:84% Something-something Edison Company operated in this region, 00:10:16.560 --> 00:10:18.820 align:middle line:84% and Edison Company operated in that region. 00:10:18.820 --> 00:10:22.400 align:middle line:84% And they had total control of what was going on. 00:10:22.400 --> 00:10:26.760 align:middle line:84% Another couple of consequences to this history-- 00:10:26.760 --> 00:10:30.120 align:middle line:84% so one is that this architecture is 00:10:30.120 --> 00:10:33.760 align:middle line:84% more vulnerable to single points of failure. 00:10:33.760 --> 00:10:38.040 align:middle line:84% If this plant goes down, you've got issues. 00:10:38.040 --> 00:10:40.020 align:middle line:84% These transmission lines are fragile. 00:10:40.020 --> 00:10:44.160 align:middle line:84% They can be taken out by natural events-- lightning, 00:10:44.160 --> 00:10:48.500 align:middle line:84% someone drives their car into the power pole. 00:10:48.500 --> 00:10:51.020 align:middle line:90% It's not great. 00:10:51.020 --> 00:10:53.900 align:middle line:84% Another thing is because of vertically integrated monopoly, 00:10:53.900 --> 00:10:57.660 align:middle line:84% you had potential opportunities for price fixing, 00:10:57.660 --> 00:11:01.160 align:middle line:84% and there was no competitor nearby to go to. 00:11:01.160 --> 00:11:04.180 align:middle line:84% And so you had problems with pricing. 00:11:04.180 --> 00:11:08.620 align:middle line:84% And finally, this architecture in today's world 00:11:08.620 --> 00:11:12.360 align:middle line:84% becomes unfriendly towards things like wind and solar, 00:11:12.360 --> 00:11:14.980 align:middle line:84% which are distributed generation because these power lines are 00:11:14.980 --> 00:11:16.720 align:middle line:90% all going back to one point. 00:11:16.720 --> 00:11:18.760 align:middle line:84% And unless this is where your solar farm is, 00:11:18.760 --> 00:11:19.920 align:middle line:90% it's not helping you. 00:11:19.920 --> 00:11:23.380 align:middle line:84% If you're trying to move power from different distributed 00:11:23.380 --> 00:11:26.340 align:middle line:84% solar, distributed wind generation, 00:11:26.340 --> 00:11:29.260 align:middle line:84% this architecture works against you. 00:11:29.260 --> 00:11:33.340 align:middle line:84% And so that is a situation that we're still dealing with today. 00:11:33.340 --> 00:11:35.900 align:middle line:84% So let me just talk a little bit about this price fixing 00:11:35.900 --> 00:11:37.180 align:middle line:90% situation. 00:11:37.180 --> 00:11:41.260 align:middle line:90% So this was pretty real. 00:11:41.260 --> 00:11:44.880 align:middle line:84% The price of electricity in 1900, 00:11:44.880 --> 00:11:50.360 align:middle line:84% inflated to today's dollars, was $6 per kilowatt, 00:11:50.360 --> 00:11:56.920 align:middle line:84% which is at least a factor of 10 higher than retail price 00:11:56.920 --> 00:12:05.120 align:middle line:84% and a factor of 100 higher than wholesale price for electricity. 00:12:05.120 --> 00:12:09.760 align:middle line:84% And this was basically holding back expansion. 00:12:09.760 --> 00:12:12.560 align:middle line:84% During the Great Depression, the US government 00:12:12.560 --> 00:12:16.000 align:middle line:84% intervened and created a regulator 00:12:16.000 --> 00:12:18.960 align:middle line:84% to prevent this monopoly pricing of electricity, 00:12:18.960 --> 00:12:26.680 align:middle line:84% and prices dropped from $6 per kilowatt to $0.88 in 1932. 00:12:26.680 --> 00:12:30.080 align:middle line:84% And of course, that meant more access to electricity 00:12:30.080 --> 00:12:32.600 align:middle line:84% for more people, which helped pull the country out 00:12:32.600 --> 00:12:34.120 align:middle line:90% of the Great Depression. 00:12:34.120 --> 00:12:35.540 align:middle line:90% And it was a great thing. 00:12:35.540 --> 00:12:40.200 align:middle line:84% And of course, we built Hoover Dam and electrified society. 00:12:40.200 --> 00:12:42.710 align:middle line:84% So the kind of bottom line is regulation 00:12:42.710 --> 00:12:46.750 align:middle line:84% is important to prevent monopoly pricing and issues, 00:12:46.750 --> 00:12:51.250 align:middle line:84% and also that cheap power is also very important. 00:12:51.250 --> 00:12:55.790 align:middle line:84% And it's what keeps the middle class growing 00:12:55.790 --> 00:12:58.110 align:middle line:90% and the economy ticking along. 00:12:58.110 --> 00:13:03.270 align:middle line:84% So between 1920 and 1960, the grid 00:13:03.270 --> 00:13:07.190 align:middle line:84% just blew up, expanded by enormous amounts. 00:13:07.190 --> 00:13:09.830 align:middle line:84% And here's essentially the architecture 00:13:09.830 --> 00:13:12.630 align:middle line:84% of the transmission system in the United States today. 00:13:12.630 --> 00:13:17.750 align:middle line:84% The major generation is shown as these dots. 00:13:17.750 --> 00:13:19.630 align:middle line:90% Coal is gray. 00:13:19.630 --> 00:13:23.530 align:middle line:84% Nuclear is yellow, and hydro is blue. 00:13:23.530 --> 00:13:28.630 align:middle line:84% I don't show the natural gas because this is too much of it. 00:13:28.630 --> 00:13:31.670 align:middle line:84% And this has basically kind of worked. 00:13:31.670 --> 00:13:37.190 align:middle line:84% Regions that were owned by different companies 00:13:37.190 --> 00:13:39.650 align:middle line:84% expanded, connected to other regions, 00:13:39.650 --> 00:13:41.370 align:middle line:84% and then they could share power and deal 00:13:41.370 --> 00:13:44.030 align:middle line:84% with power plants going out or refueling in service. 00:13:44.030 --> 00:13:47.650 align:middle line:84% And that was all well and good until 1965. 00:13:47.650 --> 00:13:52.730 align:middle line:84% So what happened in 1965 is there was an enormous blackout. 00:13:52.730 --> 00:13:56.690 align:middle line:84% And the result is they realized that having everyone 00:13:56.690 --> 00:13:59.070 align:middle line:84% operating their grid laissez-faire 00:13:59.070 --> 00:14:06.770 align:middle line:84% and pushing power onto the grid was not a stable situation. 00:14:06.770 --> 00:14:10.410 align:middle line:84% It's kind of a miracle that this thing works. 00:14:10.410 --> 00:14:15.930 align:middle line:84% And it was basically you create instabilities. 00:14:15.930 --> 00:14:18.450 align:middle line:84% If you push power onto the grid, you 00:14:18.450 --> 00:14:21.810 align:middle line:84% energize the lines, which then store energy 00:14:21.810 --> 00:14:23.190 align:middle line:90% as a magnetic field. 00:14:23.190 --> 00:14:24.470 align:middle line:90% So you have reactive power. 00:14:24.470 --> 00:14:28.410 align:middle line:84% So you have this sloshing of energy around 00:14:28.410 --> 00:14:30.830 align:middle line:84% between mines and transformers and generators. 00:14:30.830 --> 00:14:32.630 align:middle line:84% And you can cause generators to oscillate. 00:14:32.630 --> 00:14:35.570 align:middle line:84% And you can do all kinds of problematic things 00:14:35.570 --> 00:14:38.530 align:middle line:84% if you're not careful with how you control 00:14:38.530 --> 00:14:40.310 align:middle line:90% power flows on the grid. 00:14:40.310 --> 00:14:47.670 align:middle line:84% And so in '65, a non-profit was created called-- 00:14:47.670 --> 00:14:50.590 align:middle line:84% oh, so I should have said that the nonprofit, the organization 00:14:50.590 --> 00:14:53.070 align:middle line:84% created to do this regulation, is 00:14:53.070 --> 00:14:59.530 align:middle line:84% FERC, which is the Federal Energy Regulation, something, 00:14:59.530 --> 00:15:00.030 align:middle line:90% something. 00:15:00.030 --> 00:15:01.490 align:middle line:90% I don't know. 00:15:01.490 --> 00:15:02.830 align:middle line:90% We have to look it up. 00:15:02.830 --> 00:15:04.910 align:middle line:90% I really should know that. 00:15:04.910 --> 00:15:06.830 align:middle line:84% And it's a government entity, and it basically 00:15:06.830 --> 00:15:16.510 align:middle line:84% just sets rules for how you compete and price electricity. 00:15:16.510 --> 00:15:20.790 align:middle line:84% In 1965, following the blackout, a nonprofit organization 00:15:20.790 --> 00:15:25.670 align:middle line:84% called NERC, which is the National Energy Reliability 00:15:25.670 --> 00:15:30.150 align:middle line:84% Corporation, was created to set rules 00:15:30.150 --> 00:15:33.390 align:middle line:84% for not economic competitiveness, 00:15:33.390 --> 00:15:36.470 align:middle line:84% but how you actually dump the power 00:15:36.470 --> 00:15:39.280 align:middle line:84% on the grid, how you maintain the grid in a reliable state, 00:15:39.280 --> 00:15:43.240 align:middle line:84% how you can communicate power between entities, and so on. 00:15:43.240 --> 00:15:46.820 align:middle line:90% 00:15:46.820 --> 00:15:48.120 align:middle line:90% FERC is a federal entity. 00:15:48.120 --> 00:15:49.940 align:middle line:90% NERC is a non-profit. 00:15:49.940 --> 00:15:51.040 align:middle line:90% Those are the differences. 00:15:51.040 --> 00:15:53.380 align:middle line:90% N-E-R-C is NERC. 00:15:53.380 --> 00:15:58.040 align:middle line:84% So NERC's rules are essentially voluntary. 00:15:58.040 --> 00:16:01.400 align:middle line:84% But because everyone wants their grids to operate 00:16:01.400 --> 00:16:04.460 align:middle line:84% and so they can make money, people follow the rules. 00:16:04.460 --> 00:16:11.300 align:middle line:84% And so following this time in the '60s, what emerged was 00:16:11.300 --> 00:16:16.260 align:middle line:84% a structure that was kind of a private cloud. 00:16:16.260 --> 00:16:19.220 align:middle line:84% You had a handful of major generators 00:16:19.220 --> 00:16:22.940 align:middle line:84% that operated their local regional monopoly, 00:16:22.940 --> 00:16:25.060 align:middle line:84% and each company would individually 00:16:25.060 --> 00:16:27.640 align:middle line:84% make decisions about what generation 00:16:27.640 --> 00:16:29.800 align:middle line:84% it was going to build, what transmission 00:16:29.800 --> 00:16:31.900 align:middle line:84% it was going to build, where it was 00:16:31.900 --> 00:16:33.540 align:middle line:90% going to put the power lines. 00:16:33.540 --> 00:16:38.040 align:middle line:84% And then you had essentially state regulators 00:16:38.040 --> 00:16:40.990 align:middle line:84% and FERC working together to say, look, 00:16:40.990 --> 00:16:44.120 align:middle line:84% you can't rip off the consumer, so we're going to regulate 00:16:44.120 --> 00:16:45.800 align:middle line:90% the prices you charge. 00:16:45.800 --> 00:16:48.420 align:middle line:90% And everyone worked things out. 00:16:48.420 --> 00:16:52.640 align:middle line:90% 00:16:52.640 --> 00:16:58.080 align:middle line:84% It may seem counterintuitive, but these regulations, 00:16:58.080 --> 00:17:02.200 align:middle line:84% both the FERC and the NERC regulations, 00:17:02.200 --> 00:17:04.920 align:middle line:84% basically cemented this system in place. 00:17:04.920 --> 00:17:08.319 align:middle line:84% It prevented, to a large extent, the emergence 00:17:08.319 --> 00:17:10.400 align:middle line:90% of independent generators. 00:17:10.400 --> 00:17:15.960 align:middle line:84% And you may say, well, why would regulation essentially create 00:17:15.960 --> 00:17:19.823 align:middle line:84% a monopoly when it's trying to prevent a monopoly, if you will? 00:17:19.823 --> 00:17:21.740 align:middle line:84% Well, it's trying to prevent monopoly pricing, 00:17:21.740 --> 00:17:24.839 align:middle line:84% but it's not trying to prevent monopoly per se. 00:17:24.839 --> 00:17:28.440 align:middle line:84% And indeed, the electric grid is an example 00:17:28.440 --> 00:17:30.580 align:middle line:84% of what we might call a natural monopoly. 00:17:30.580 --> 00:17:32.080 align:middle line:84% It doesn't really make sense to have 00:17:32.080 --> 00:17:35.060 align:middle line:84% different outlets for different companies' power 00:17:35.060 --> 00:17:35.800 align:middle line:90% coming out of it. 00:17:35.800 --> 00:17:39.140 align:middle line:84% Is it an inefficient use of resources? 00:17:39.140 --> 00:17:42.540 align:middle line:84% So the phenomenon was first articulated 00:17:42.540 --> 00:17:44.800 align:middle line:84% by the famous economist George Stigler, 00:17:44.800 --> 00:17:48.040 align:middle line:84% and the regulation of competition by other means. 00:17:48.040 --> 00:17:49.580 align:middle line:90% It's a famous quote. 00:17:49.580 --> 00:17:52.940 align:middle line:84% And so let me explain what he's talking about here. 00:17:52.940 --> 00:17:58.260 align:middle line:84% Essentially, if regulations are onerous, no one likes them. 00:17:58.260 --> 00:18:01.660 align:middle line:84% But the more onerous they are, the harder 00:18:01.660 --> 00:18:05.700 align:middle line:84% it is for small startups to deal with them. 00:18:05.700 --> 00:18:08.580 align:middle line:90% So imagine you're the FDA. 00:18:08.580 --> 00:18:11.708 align:middle line:84% You're creating regulations for the safe use of a drug. 00:18:11.708 --> 00:18:14.000 align:middle line:84% You say, look, you have to run this big clinical trial. 00:18:14.000 --> 00:18:15.400 align:middle line:90% You need 10,000 people. 00:18:15.400 --> 00:18:18.140 align:middle line:84% You need all this, all these independent auditors 00:18:18.140 --> 00:18:18.880 align:middle line:90% and everything. 00:18:18.880 --> 00:18:22.740 align:middle line:84% And it's going to cost you a billion dollars 00:18:22.740 --> 00:18:24.580 align:middle line:90% to put your drug on the market. 00:18:24.580 --> 00:18:30.172 align:middle line:84% So Pfizer and Merck assemble all this regulatory apparatus. 00:18:30.172 --> 00:18:32.380 align:middle line:84% And they hate it because they don't like to pay that. 00:18:32.380 --> 00:18:35.410 align:middle line:84% But at some small startup down the street on Albany Street 00:18:35.410 --> 00:18:37.150 align:middle line:84% that is trying to invent a new drug, 00:18:37.150 --> 00:18:41.950 align:middle line:84% those guys have no hope at all going through that process. 00:18:41.950 --> 00:18:43.890 align:middle line:84% So their best hope is basically to sell out 00:18:43.890 --> 00:18:45.210 align:middle line:90% to the big companies. 00:18:45.210 --> 00:18:46.930 align:middle line:84% And so essentially, this is what was 00:18:46.930 --> 00:18:51.130 align:middle line:84% happening that the regulatory apparatus cemented 00:18:51.130 --> 00:18:52.890 align:middle line:90% this private cloud. 00:18:52.890 --> 00:18:56.290 align:middle line:84% And the private cloud worked on a one-on-one basis 00:18:56.290 --> 00:18:57.550 align:middle line:90% with the state regulators. 00:18:57.550 --> 00:19:00.020 align:middle line:84% And they said, look, this is the amount we want to charge. 00:19:00.020 --> 00:19:01.770 align:middle line:84% And the regulators basically say, well, it 00:19:01.770 --> 00:19:02.750 align:middle line:90% seems reasonable to us. 00:19:02.750 --> 00:19:05.210 align:middle line:84% And that's how electricity prices were set. 00:19:05.210 --> 00:19:07.330 align:middle line:90% And that was it. 00:19:07.330 --> 00:19:12.010 align:middle line:84% The consequence of that is, well, it worked. 00:19:12.010 --> 00:19:15.330 align:middle line:84% There wasn't a lot of pressure for more efficient generation 00:19:15.330 --> 00:19:20.290 align:middle line:84% or cleaner generation, like less polluting, greener, less CO2. 00:19:20.290 --> 00:19:22.170 align:middle line:84% Because there weren't market forces in 00:19:22.170 --> 00:19:25.810 align:middle line:84% play to essentially deliver those incentives 00:19:25.810 --> 00:19:27.190 align:middle line:90% to the corporations. 00:19:27.190 --> 00:19:32.150 align:middle line:84% Then came a bunch of academics who thought they knew better. 00:19:32.150 --> 00:19:35.470 align:middle line:84% And they started writing studies arguing 00:19:35.470 --> 00:19:39.790 align:middle line:84% that what if the electric power system were a free market, 00:19:39.790 --> 00:19:42.270 align:middle line:84% and instead of having these vertically 00:19:42.270 --> 00:19:45.830 align:middle line:84% integrated monopolies, everyone would compete and sell 00:19:45.830 --> 00:19:47.370 align:middle line:90% their electricity onto the grid? 00:19:47.370 --> 00:19:49.970 align:middle line:84% And the grid would operate in a non-discriminatory way, 00:19:49.970 --> 00:19:52.250 align:middle line:84% and they would buy power from the cheapest producers. 00:19:52.250 --> 00:19:54.105 align:middle line:84% And inefficient, expensive producers 00:19:54.105 --> 00:19:56.230 align:middle line:84% would go out of business, and prices of electricity 00:19:56.230 --> 00:19:57.050 align:middle line:90% would come down. 00:19:57.050 --> 00:19:59.030 align:middle line:84% And all of this would be fantastic. 00:19:59.030 --> 00:20:02.710 align:middle line:84% And so this idea was largely accepted 00:20:02.710 --> 00:20:05.550 align:middle line:90% as a valid theoretical basis. 00:20:05.550 --> 00:20:09.950 align:middle line:90% And FERC issued order 888. 00:20:09.950 --> 00:20:12.830 align:middle line:84% And that required these private monopolies 00:20:12.830 --> 00:20:16.830 align:middle line:84% to establish independent system operators that would 00:20:16.830 --> 00:20:19.070 align:middle line:90% operate their electric grids. 00:20:19.070 --> 00:20:21.510 align:middle line:84% So they still own the power plants, 00:20:21.510 --> 00:20:23.910 align:middle line:84% and they still own the grid hardware. 00:20:23.910 --> 00:20:29.130 align:middle line:84% But they could not decide who put the electricity on the grid. 00:20:29.130 --> 00:20:31.850 align:middle line:84% They had to make the grid available 00:20:31.850 --> 00:20:34.010 align:middle line:90% to any independent company. 00:20:34.010 --> 00:20:37.110 align:middle line:84% And so what emerged was a lot of what we call merchant plants, 00:20:37.110 --> 00:20:39.570 align:middle line:84% including merchant nuclear plants that 00:20:39.570 --> 00:20:44.770 align:middle line:90% decide to try to sell power. 00:20:44.770 --> 00:20:52.510 align:middle line:84% So this is what the ISOs, Independent System Operators. 00:20:52.510 --> 00:20:55.770 align:middle line:84% There's also something called RTOs, which are essentially 00:20:55.770 --> 00:20:57.570 align:middle line:90% the same thing. 00:20:57.570 --> 00:21:02.650 align:middle line:84% And so these are where the ISOs and RTOs are located. 00:21:02.650 --> 00:21:06.050 align:middle line:84% These ISOs and RTOs do the following things. 00:21:06.050 --> 00:21:09.970 align:middle line:84% They operate a market where you can bid and sell 00:21:09.970 --> 00:21:11.070 align:middle line:90% your electricity. 00:21:11.070 --> 00:21:15.010 align:middle line:84% We talked about bidding earlier in the class. 00:21:15.010 --> 00:21:17.430 align:middle line:84% They dispatch the generators into the market. 00:21:17.430 --> 00:21:19.130 align:middle line:84% They say, OK, you, you, you, we want 00:21:19.130 --> 00:21:20.887 align:middle line:84% you to come online for the next hour, 00:21:20.887 --> 00:21:22.470 align:middle line:84% and we're going to pay you your money. 00:21:22.470 --> 00:21:24.228 align:middle line:84% So they decide who gets dispatched. 00:21:24.228 --> 00:21:25.770 align:middle line:84% We talked a little bit about dispatch 00:21:25.770 --> 00:21:28.230 align:middle line:84% and why nuclear plants always bid close to 0, 00:21:28.230 --> 00:21:31.320 align:middle line:84% because they always want to be dispatched. 00:21:31.320 --> 00:21:34.640 align:middle line:84% And then they take whatever revenues they can get. 00:21:34.640 --> 00:21:37.440 align:middle line:84% They oversee operations on the transmission lines. 00:21:37.440 --> 00:21:40.760 align:middle line:84% They enforce the reliability standards from NERC. 00:21:40.760 --> 00:21:45.420 align:middle line:84% So NERC says, look, you need to have this much spinning reserve. 00:21:45.420 --> 00:21:48.140 align:middle line:84% You need to have this much voltage control. 00:21:48.140 --> 00:21:49.980 align:middle line:84% If your frequency goes out by this much, 00:21:49.980 --> 00:21:52.840 align:middle line:84% you need to sever the link between here and here. 00:21:52.840 --> 00:21:56.480 align:middle line:84% And so all these rules, they enforce them. 00:21:56.480 --> 00:22:01.400 align:middle line:84% And in principle, they can require the transmission line 00:22:01.400 --> 00:22:03.915 align:middle line:84% owners, which are still to a large extent 00:22:03.915 --> 00:22:05.540 align:middle line:84% those vertically integrated monopolies, 00:22:05.540 --> 00:22:09.000 align:middle line:84% but could, in principle, be private transmission line 00:22:09.000 --> 00:22:10.000 align:middle line:90% companies. 00:22:10.000 --> 00:22:12.820 align:middle line:84% They can in principle require them to make upgrades, 00:22:12.820 --> 00:22:17.360 align:middle line:84% though as far as I know, not a lot of that goes on. 00:22:17.360 --> 00:22:21.400 align:middle line:84% There are, however, some places in the United States 00:22:21.400 --> 00:22:23.940 align:middle line:84% where this system does not exist, 00:22:23.940 --> 00:22:26.040 align:middle line:90% and that's these gray areas. 00:22:26.040 --> 00:22:29.920 align:middle line:84% And so in these regions, you still have, to a large extent, 00:22:29.920 --> 00:22:32.980 align:middle line:84% these vertically integrated monopolies, 00:22:32.980 --> 00:22:36.620 align:middle line:84% and they still talk to regional state regulators 00:22:36.620 --> 00:22:38.500 align:middle line:84% and decide what the price of power will be 00:22:38.500 --> 00:22:40.580 align:middle line:90% and do whatever they want to do. 00:22:40.580 --> 00:22:43.140 align:middle line:90% It's not a competitive market. 00:22:43.140 --> 00:22:46.650 align:middle line:90% And this is actually why. 00:22:46.650 --> 00:22:48.340 align:middle line:84% AUDIENCE: You can finish your point. 00:22:48.340 --> 00:22:49.200 align:middle line:90% SCOTT KEMP: Oh, no. 00:22:49.200 --> 00:22:50.140 align:middle line:90% Go ahead. 00:22:50.140 --> 00:22:53.340 align:middle line:84% AUDIENCE: I'm just wondering, in California specifically, what is 00:22:53.340 --> 00:22:55.000 align:middle line:90% happening with those little-- 00:22:55.000 --> 00:22:56.300 align:middle line:90% SCOTT KEMP: Patches? 00:22:56.300 --> 00:22:59.980 align:middle line:84% I actually don't know why Kaiser doesn't. 00:22:59.980 --> 00:23:02.260 align:middle line:84% Yeah, I'm not exactly sure what explains 00:23:02.260 --> 00:23:04.660 align:middle line:90% those patches on this map. 00:23:04.660 --> 00:23:06.940 align:middle line:90% So yeah. 00:23:06.940 --> 00:23:09.620 align:middle line:84% AUDIENCE: On the orange, what does PJM mean? 00:23:09.620 --> 00:23:12.040 align:middle line:90% SCOTT KEMP: Oh, I forget. 00:23:12.040 --> 00:23:12.540 align:middle line:90% I forget. 00:23:12.540 --> 00:23:17.700 align:middle line:90% It's the name of the region. 00:23:17.700 --> 00:23:18.560 align:middle line:90% Let's look it up. 00:23:18.560 --> 00:23:23.660 align:middle line:90% 00:23:23.660 --> 00:23:26.000 align:middle line:84% AUDIENCE: Something junction manager, maybe? 00:23:26.000 --> 00:23:30.480 align:middle line:90% 00:23:30.480 --> 00:23:34.000 align:middle line:84% SCOTT KEMP: Pennsylvania, New Jersey, Maryland-- 00:23:34.000 --> 00:23:34.720 align:middle line:90% there you go. 00:23:34.720 --> 00:23:37.540 align:middle line:84% Pennsylvania, New Jersey, Maryland interconnecting. 00:23:37.540 --> 00:23:42.280 align:middle line:90% 00:23:42.280 --> 00:23:47.960 align:middle line:84% So these regions, which are still regulated because these 00:23:47.960 --> 00:23:49.180 align:middle line:90% are deregulated. 00:23:49.180 --> 00:23:51.240 align:middle line:84% And you hear about people talking about when 00:23:51.240 --> 00:23:52.880 align:middle line:90% we deregulated power. 00:23:52.880 --> 00:23:55.680 align:middle line:84% That means creation of all these ISOs and so on. 00:23:55.680 --> 00:23:58.180 align:middle line:84% These areas are still regulated markets, 00:23:58.180 --> 00:24:00.840 align:middle line:84% which means there's a government regulator that sets the price. 00:24:00.840 --> 00:24:03.200 align:middle line:84% And in those markets are actually 00:24:03.200 --> 00:24:07.040 align:middle line:84% where you see nuclear power being built because they can 00:24:07.040 --> 00:24:10.720 align:middle line:90% say, oh, we want nuclear power. 00:24:10.720 --> 00:24:14.800 align:middle line:84% And yeah, OK, it costs more, but we don't care. 00:24:14.800 --> 00:24:16.760 align:middle line:84% And then they just go to the regulator 00:24:16.760 --> 00:24:19.560 align:middle line:84% and say, well, we need to charge this much. 00:24:19.560 --> 00:24:21.880 align:middle line:90% And they will say, OK. 00:24:21.880 --> 00:24:22.760 align:middle line:90% Yep. 00:24:22.760 --> 00:24:24.135 align:middle line:84% AUDIENCE: What's the relationship 00:24:24.135 --> 00:24:27.010 align:middle line:84% between the ISOs or non-ISO regions, 00:24:27.010 --> 00:24:29.590 align:middle line:84% and in the broader interconnection 00:24:29.590 --> 00:24:30.682 align:middle line:90% SCOTT KEMP: The broader-- 00:24:30.682 --> 00:24:32.390 align:middle line:84% AUDIENCE: It was one of the first slides. 00:24:32.390 --> 00:24:35.510 align:middle line:84% SCOTT KEMP: Oh, the synchronous regions. 00:24:35.510 --> 00:24:36.010 align:middle line:90% Yeah. 00:24:36.010 --> 00:24:38.135 align:middle line:84% So the synchronous regions are literally just that. 00:24:38.135 --> 00:24:41.870 align:middle line:84% That's like the AC waveform is going up and down together. 00:24:41.870 --> 00:24:48.270 align:middle line:84% And so you can have independent system operators 00:24:48.270 --> 00:24:53.290 align:middle line:84% transmit to other operators as long as they are synced up. 00:24:53.290 --> 00:24:58.230 align:middle line:84% And so they'll adjust the generation on their grid. 00:24:58.230 --> 00:25:00.255 align:middle line:84% They can control demand not easily, 00:25:00.255 --> 00:25:01.630 align:middle line:84% but they'll adjust the generation 00:25:01.630 --> 00:25:05.070 align:middle line:84% on the grid to lag the phase or advance the phase. 00:25:05.070 --> 00:25:09.950 align:middle line:84% And then they can sync up with other ISOs 00:25:09.950 --> 00:25:14.190 align:middle line:90% or with other non-ISO markets. 00:25:14.190 --> 00:25:16.150 align:middle line:84% And so you can still sell electricity 00:25:16.150 --> 00:25:18.830 align:middle line:84% across these boundaries even though they are 00:25:18.830 --> 00:25:20.610 align:middle line:90% operated by different entities. 00:25:20.610 --> 00:25:24.230 align:middle line:84% And this is like hinting at how complex this thing is. 00:25:24.230 --> 00:25:27.370 align:middle line:84% There are like 2,000 legal entities involved in this 00:25:27.370 --> 00:25:28.410 align:middle line:90% system. 00:25:28.410 --> 00:25:31.890 align:middle line:84% And on top of all these regional issues, 00:25:31.890 --> 00:25:34.130 align:middle line:84% you have tiny little power companies 00:25:34.130 --> 00:25:36.810 align:middle line:84% in here, which are doing end user distribution, which are all 00:25:36.810 --> 00:25:38.730 align:middle line:84% independent of what we call transmission 00:25:38.730 --> 00:25:42.170 align:middle line:84% distribution, a whole bunch of other little tiny companies who 00:25:42.170 --> 00:25:44.770 align:middle line:84% are involved with this stuff, on the power poles. 00:25:44.770 --> 00:25:49.530 align:middle line:84% So just enormous quantities of interdependency and changing 00:25:49.530 --> 00:25:52.150 align:middle line:84% things is very hard because of that. 00:25:52.150 --> 00:25:56.370 align:middle line:90% It's a very [INAUDIBLE]. 00:25:56.370 --> 00:26:01.467 align:middle line:84% So what happened when the power system was deregulated? 00:26:01.467 --> 00:26:03.050 align:middle line:84% It was supposed to save consumers lots 00:26:03.050 --> 00:26:05.830 align:middle line:84% of money and in all kinds of great things, 00:26:05.830 --> 00:26:07.850 align:middle line:90% and actually, it didn't happen. 00:26:07.850 --> 00:26:10.270 align:middle line:84% The price of electricity was basically unchanged. 00:26:10.270 --> 00:26:12.370 align:middle line:84% And it's kind of like a big economics mystery 00:26:12.370 --> 00:26:14.210 align:middle line:84% that, as far as I know, is still not really 00:26:14.210 --> 00:26:16.890 align:middle line:90% been answered as to why. 00:26:16.890 --> 00:26:20.810 align:middle line:84% Why is it that essentially a monopoly and a monopsony 00:26:20.810 --> 00:26:23.488 align:middle line:84% independently negotiating electricity prices 00:26:23.488 --> 00:26:25.030 align:middle line:84% come up for something that is roughly 00:26:25.030 --> 00:26:29.350 align:middle line:84% the same as a complex market in which everyone is just bidding 00:26:29.350 --> 00:26:33.030 align:middle line:90% in the lowest generator rates? 00:26:33.030 --> 00:26:35.950 align:middle line:84% You can hypothesize various theories 00:26:35.950 --> 00:26:38.090 align:middle line:84% as to why this might be the case, 00:26:38.090 --> 00:26:41.870 align:middle line:84% but that's what the data seems to show 00:26:41.870 --> 00:26:43.710 align:middle line:84% is that over the long run, deregulation 00:26:43.710 --> 00:26:46.310 align:middle line:90% didn't reduce prices. 00:26:46.310 --> 00:26:50.950 align:middle line:84% It did, however, allow for more competitive generators 00:26:50.950 --> 00:26:52.830 align:middle line:90% to enter the market. 00:26:52.830 --> 00:26:58.510 align:middle line:84% So in these regions, in deregulated regions, 00:26:58.510 --> 00:27:02.510 align:middle line:84% you will see a lot more wind and solar in these markets 00:27:02.510 --> 00:27:06.310 align:middle line:84% because they have very low marginal costs, essentially 00:27:06.310 --> 00:27:07.010 align:middle line:90% zero. 00:27:07.010 --> 00:27:09.570 align:middle line:90% They get sunlight for free. 00:27:09.570 --> 00:27:14.470 align:middle line:84% And then they can bid into the market and get dispatched. 00:27:14.470 --> 00:27:17.550 align:middle line:84% And so this is where you see these things popping up. 00:27:17.550 --> 00:27:21.720 align:middle line:84% Whereas in these regions, there is no solar being built, 00:27:21.720 --> 00:27:25.140 align:middle line:84% but it has to be built by corporate decision. 00:27:25.140 --> 00:27:27.560 align:middle line:84% The monopoly that all these enterprises will say, 00:27:27.560 --> 00:27:29.320 align:middle line:84% well, we'll build wind because it's cheap, 00:27:29.320 --> 00:27:34.783 align:middle line:84% but maybe we'll build it when a coal plant finally shuts down. 00:27:34.783 --> 00:27:36.700 align:middle line:84% Whereas in these regions, they're building it, 00:27:36.700 --> 00:27:38.780 align:middle line:84% and the coal plant gets shut down 00:27:38.780 --> 00:27:40.580 align:middle line:84% because they can no longer compete. 00:27:40.580 --> 00:27:45.860 align:middle line:84% So you see the movement to more efficient and greener 00:27:45.860 --> 00:27:52.480 align:middle line:84% technologies happen more rapidly in these deregulated markets. 00:27:52.480 --> 00:27:56.820 align:middle line:90% 00:27:56.820 --> 00:28:00.020 align:middle line:84% So the bidding system that is operated by the ISO 00:28:00.020 --> 00:28:04.200 align:middle line:84% is supposed to be non-discriminatory. 00:28:04.200 --> 00:28:08.180 align:middle line:84% It says we look at the price of electricity that you offer us. 00:28:08.180 --> 00:28:11.400 align:middle line:84% And it doesn't matter if you're making that with wind, solar, 00:28:11.400 --> 00:28:12.360 align:middle line:90% nuclear, hamsters. 00:28:12.360 --> 00:28:14.380 align:middle line:90% We don't care. 00:28:14.380 --> 00:28:17.720 align:middle line:90% And that sounds great. 00:28:17.720 --> 00:28:21.680 align:middle line:84% But in fact, it is discriminatory. 00:28:21.680 --> 00:28:24.000 align:middle line:84% And the reason it's discriminatory 00:28:24.000 --> 00:28:32.000 align:middle line:84% is because there's a interaction between the NERC rules about how 00:28:32.000 --> 00:28:35.960 align:middle line:84% the grid must be operated to stay reliable 00:28:35.960 --> 00:28:39.400 align:middle line:84% and the shape of the grid and the other generators 00:28:39.400 --> 00:28:41.280 align:middle line:90% that are on the grid. 00:28:41.280 --> 00:28:46.840 align:middle line:84% So if the capacity of the grid as close to its max, 00:28:46.840 --> 00:28:51.160 align:middle line:84% and most of the generators are natural gas plants 00:28:51.160 --> 00:28:55.720 align:middle line:84% and is a hub-spoke kind of grid architecture, 00:28:55.720 --> 00:29:00.480 align:middle line:84% it's really hard for a wind or solar farm 00:29:00.480 --> 00:29:05.000 align:middle line:84% to go online and maintain the reliability standard 00:29:05.000 --> 00:29:08.000 align:middle line:90% that the grid operator demands. 00:29:08.000 --> 00:29:12.320 align:middle line:84% Because maybe their power is fluctuating, 00:29:12.320 --> 00:29:14.853 align:middle line:84% and they can't necessarily promise that it will 00:29:14.853 --> 00:29:16.020 align:middle line:90% be operate in a certain way. 00:29:16.020 --> 00:29:19.950 align:middle line:84% If the grid doesn't have margin, then they don't get dispatched. 00:29:19.950 --> 00:29:23.250 align:middle line:84% And so this actually, this reality, 00:29:23.250 --> 00:29:26.210 align:middle line:84% this history of the hub-and-spoke architecture 00:29:26.210 --> 00:29:29.070 align:middle line:84% and these NERC regulations are what 00:29:29.070 --> 00:29:32.050 align:middle line:84% slows down the deployment of wind and solar today. 00:29:32.050 --> 00:29:35.870 align:middle line:84% If it were not for that, we would have enormous quantities 00:29:35.870 --> 00:29:37.470 align:middle line:90% of wind and solar. 00:29:37.470 --> 00:29:42.390 align:middle line:84% So everything will boil down to how hard is this to change. 00:29:42.390 --> 00:29:46.210 align:middle line:84% And that is going to control the speed of deregulation. 00:29:46.210 --> 00:29:51.470 align:middle line:90% 00:29:51.470 --> 00:29:56.030 align:middle line:84% I think I basically mentioned all these things. 00:29:56.030 --> 00:29:58.010 align:middle line:84% Yeah, so if you have variable generation, 00:29:58.010 --> 00:30:00.030 align:middle line:84% you need to move electricity around more. 00:30:00.030 --> 00:30:01.870 align:middle line:84% That requires more line capacity. 00:30:01.870 --> 00:30:09.070 align:middle line:90% 00:30:09.070 --> 00:30:11.390 align:middle line:84% And we are already, I hope, convinced 00:30:11.390 --> 00:30:13.267 align:middle line:84% that wind and solar has a major role 00:30:13.267 --> 00:30:15.850 align:middle line:84% to play according to the various economic models we looked at. 00:30:15.850 --> 00:30:16.683 align:middle line:90% We looked at Shaner. 00:30:16.683 --> 00:30:19.690 align:middle line:84% We looked at the future of MIT nuclear power 00:30:19.690 --> 00:30:22.810 align:middle line:84% study, which showed a large component of wind and solar. 00:30:22.810 --> 00:30:27.130 align:middle line:84% I think there was a question a couple of sessions 00:30:27.130 --> 00:30:30.730 align:middle line:84% ago about the cost of storage and whether the cost of storage 00:30:30.730 --> 00:30:32.930 align:middle line:90% would be a limiting factor. 00:30:32.930 --> 00:30:35.990 align:middle line:84% In the Shaner model, they assume. 00:30:35.990 --> 00:30:38.930 align:middle line:84% And remember, the Shaner model is not an optimal model. 00:30:38.930 --> 00:30:42.970 align:middle line:84% The Shaner model is just there to illustrate whether or not 00:30:42.970 --> 00:30:48.010 align:middle line:84% a full renewables grid is possible. 00:30:48.010 --> 00:30:50.890 align:middle line:84% The MIT Future of Nuclear Power model 00:30:50.890 --> 00:30:53.250 align:middle line:84% is more like a cost-optimal model. 00:30:53.250 --> 00:30:54.970 align:middle line:84% Shaner model is only looking at can 00:30:54.970 --> 00:30:58.690 align:middle line:84% you actually do it with wind and solar given the weather? 00:30:58.690 --> 00:31:02.370 align:middle line:84% And the Shaner model, we looked at various solutions, 00:31:02.370 --> 00:31:05.610 align:middle line:84% and we found a solution at 12 hours of storage, 00:31:05.610 --> 00:31:08.210 align:middle line:84% produced a cost of something like $150 00:31:08.210 --> 00:31:11.730 align:middle line:84% per megawatt-hour, which was a reasonable cost, something 00:31:11.730 --> 00:31:12.230 align:middle line:90% like that. 00:31:12.230 --> 00:31:13.410 align:middle line:90% Remember that? 00:31:13.410 --> 00:31:17.190 align:middle line:84% And someone raised a question about whether the 12 00:31:17.190 --> 00:31:21.110 align:middle line:84% hours of storage was at all attainable. 00:31:21.110 --> 00:31:22.902 align:middle line:84% Could we build all of that storage? 00:31:22.902 --> 00:31:24.610 align:middle line:84% Now there's lots of storage technologies, 00:31:24.610 --> 00:31:26.068 align:middle line:84% but then the standard Shaner model, 00:31:26.068 --> 00:31:27.870 align:middle line:84% they kind of just assumed lithium ion. 00:31:27.870 --> 00:31:31.008 align:middle line:84% So I went into the calculation because you probably 00:31:31.008 --> 00:31:31.550 align:middle line:90% want to know. 00:31:31.550 --> 00:31:38.710 align:middle line:84% 12 hours of storage will cost at current lithium-ion cost 00:31:38.710 --> 00:31:41.550 align:middle line:90% $1 trillion. 00:31:41.550 --> 00:31:43.950 align:middle line:84% Sounds like a lot but don't forget the whole electricity 00:31:43.950 --> 00:31:45.790 align:middle line:90% system is very expensive. 00:31:45.790 --> 00:31:47.790 align:middle line:84% And that is also the amount of money we're going 00:31:47.790 --> 00:31:49.832 align:middle line:84% to-- it's actually about half the amount of money 00:31:49.832 --> 00:31:54.670 align:middle line:84% we're planning to spend on maintaining and upgrading 00:31:54.670 --> 00:32:00.670 align:middle line:84% our 1,550 nuclear weapons over the next 10 years. 00:32:00.670 --> 00:32:05.190 align:middle line:84% So it's within the scope of budgetary probability. 00:32:05.190 --> 00:32:07.590 align:middle line:84% And as far as production rates go, 00:32:07.590 --> 00:32:10.070 align:middle line:84% I looked at the current factories that 00:32:10.070 --> 00:32:12.922 align:middle line:84% are coming online, and we would be 00:32:12.922 --> 00:32:14.380 align:middle line:84% able to produce all of that storage 00:32:14.380 --> 00:32:17.620 align:middle line:84% within five years at current production rates. 00:32:17.620 --> 00:32:21.500 align:middle line:90% So it's within feasible. 00:32:21.500 --> 00:32:23.720 align:middle line:90% This is not beyond the pale. 00:32:23.720 --> 00:32:26.500 align:middle line:84% That's something that will take 900 years or something. 00:32:26.500 --> 00:32:32.700 align:middle line:84% OK, so we get to these questions. 00:32:32.700 --> 00:32:35.900 align:middle line:84% Who will pay for this grid expansion? 00:32:35.900 --> 00:32:38.060 align:middle line:84% Who should pay for this grid expansion, 00:32:38.060 --> 00:32:40.580 align:middle line:90% and how much will this cost? 00:32:40.580 --> 00:32:42.940 align:middle line:84% And the current situation in the United States 00:32:42.940 --> 00:32:47.980 align:middle line:84% is that if you want to have a wind and solar farm, 00:32:47.980 --> 00:32:50.780 align:middle line:90% you get saddled with that cost. 00:32:50.780 --> 00:32:54.820 align:middle line:84% And a lot of people are interested in building 00:32:54.820 --> 00:32:58.580 align:middle line:84% these Renaissance farms just can't afford or are not 00:32:58.580 --> 00:33:03.460 align:middle line:90% interested in paying that cost. 00:33:03.460 --> 00:33:08.820 align:middle line:84% Now the existing utilities who operate 00:33:08.820 --> 00:33:13.200 align:middle line:84% large natural gas, coal, and hydro plants, 00:33:13.200 --> 00:33:17.400 align:middle line:84% do they want to see the grid expanded? 00:33:17.400 --> 00:33:18.460 align:middle line:90% Not really. 00:33:18.460 --> 00:33:21.620 align:middle line:84% If they see this grid expansion, their businesses, 00:33:21.620 --> 00:33:25.160 align:middle line:84% their generators are going to go out of business, 00:33:25.160 --> 00:33:28.280 align:middle line:84% at least in the competitive markets, 00:33:28.280 --> 00:33:31.760 align:middle line:84% because their electricity is more expensive. 00:33:31.760 --> 00:33:35.280 align:middle line:84% And if wind and solar shows up and starts to undercut them, 00:33:35.280 --> 00:33:37.840 align:middle line:84% they're going to have to shut down their plants. 00:33:37.840 --> 00:33:41.920 align:middle line:84% That means the vertically integrated monopoly 00:33:41.920 --> 00:33:46.720 align:middle line:84% that own coal plants, that own historical transmission lines, 00:33:46.720 --> 00:33:48.800 align:middle line:84% are going to do everything in their power 00:33:48.800 --> 00:33:51.160 align:middle line:90% to prevent this from happening. 00:33:51.160 --> 00:33:53.000 align:middle line:84% And that is what is happening now. 00:33:53.000 --> 00:33:57.000 align:middle line:84% They are keeping the grid right at the edge of the NERC 00:33:57.000 --> 00:33:59.880 align:middle line:84% stability requirement, so that if you 00:33:59.880 --> 00:34:03.320 align:middle line:84% are a wind and solar generator, you 00:34:03.320 --> 00:34:06.720 align:middle line:84% can't connect without paying enormous amount of money 00:34:06.720 --> 00:34:10.460 align:middle line:84% to fix the grid, which looks like it 00:34:10.460 --> 00:34:11.980 align:middle line:90% is for historical reasons. 00:34:11.980 --> 00:34:13.060 align:middle line:90% Yeah? 00:34:13.060 --> 00:34:15.540 align:middle line:84% AUDIENCE: What kinds of margins do coal and natural gas 00:34:15.540 --> 00:34:18.460 align:middle line:84% companies make for per kilowatt hour? 00:34:18.460 --> 00:34:22.360 align:middle line:90% SCOTT KEMP: Oh, I don't know. 00:34:22.360 --> 00:34:22.860 align:middle line:90% Yeah. 00:34:22.860 --> 00:34:26.420 align:middle line:90% 00:34:26.420 --> 00:34:28.620 align:middle line:84% I mean, it probably depends a lot 00:34:28.620 --> 00:34:33.100 align:middle line:84% on how old the plant is and questions like this. 00:34:33.100 --> 00:34:36.460 align:middle line:84% Yeah, so coal today, no one is building new coal 00:34:36.460 --> 00:34:41.060 align:middle line:84% because it's already not cost competitive with natural gas 00:34:41.060 --> 00:34:43.580 align:middle line:90% and what renewables there are. 00:34:43.580 --> 00:34:45.780 align:middle line:90% So they don't make any margins. 00:34:45.780 --> 00:34:49.980 align:middle line:84% But as far as historical plants, the plants that are sunk 00:34:49.980 --> 00:34:52.460 align:middle line:84% cost, and they're only looking at the marginal cost 00:34:52.460 --> 00:34:54.260 align:middle line:90% of electricity. 00:34:54.260 --> 00:34:56.273 align:middle line:90% I would have to work it out. 00:34:56.273 --> 00:34:57.940 align:middle line:84% But you should be able to if you go back 00:34:57.940 --> 00:35:00.145 align:middle line:84% and look at these charts, these data tables, 00:35:00.145 --> 00:35:02.020 align:middle line:84% you should be able to figure it out yourself, 00:35:02.020 --> 00:35:03.160 align:middle line:90% or at least approximate it. 00:35:03.160 --> 00:35:03.840 align:middle line:90% Yeah. 00:35:03.840 --> 00:35:04.960 align:middle line:84% AUDIENCE: Just going back to clarify, 00:35:04.960 --> 00:35:06.840 align:middle line:84% you mentioned the hub-and-spoke architecture 00:35:06.840 --> 00:35:07.548 align:middle line:90% SCOTT KEMP: Yeah. 00:35:07.548 --> 00:35:10.230 align:middle line:90% That's a rough-- yeah. 00:35:10.230 --> 00:35:13.590 align:middle line:84% AUDIENCE: Would the alternative be just a web? 00:35:13.590 --> 00:35:16.530 align:middle line:84% SCOTT KEMP: Well, it is a web, but it's 00:35:16.530 --> 00:35:19.770 align:middle line:84% just that you get these centralized generators. 00:35:19.770 --> 00:35:22.510 align:middle line:84% And most of the capacity comes out, and then the capacity, 00:35:22.510 --> 00:35:25.050 align:middle line:84% the lines get smaller and smaller as you get further away 00:35:25.050 --> 00:35:26.530 align:middle line:90% from the generators. 00:35:26.530 --> 00:35:28.850 align:middle line:84% And the other architecture would be 00:35:28.850 --> 00:35:32.610 align:middle line:84% a web where all the lines are kind of the same size. 00:35:32.610 --> 00:35:35.990 align:middle line:84% And that would kind be the differentiator. 00:35:35.990 --> 00:35:36.490 align:middle line:90% Yeah. 00:35:36.490 --> 00:35:37.650 align:middle line:90% Yeah. 00:35:37.650 --> 00:35:39.410 align:middle line:84% AUDIENCE: So the electricity market 00:35:39.410 --> 00:35:43.130 align:middle line:84% is kind of notorious for the amount of foul play, et cetera. 00:35:43.130 --> 00:35:45.450 align:middle line:84% So I definitely believe that the incumbents 00:35:45.450 --> 00:35:51.690 align:middle line:84% are kind of keeping the grid not very friendly to new players. 00:35:51.690 --> 00:35:55.250 align:middle line:84% Isn't there also something to be said for just NIMBYism 00:35:55.250 --> 00:35:56.282 align:middle line:90% against new [INAUDIBLE]? 00:35:56.282 --> 00:35:56.990 align:middle line:90% SCOTT KEMP: Yeah. 00:35:56.990 --> 00:35:58.350 align:middle line:90% No, no, we'll get there. 00:35:58.350 --> 00:35:58.850 align:middle line:90% Yeah. 00:35:58.850 --> 00:35:59.890 align:middle line:90% Yeah. 00:35:59.890 --> 00:36:03.890 align:middle line:84% There's all kinds of problems that prevent expansion. 00:36:03.890 --> 00:36:09.990 align:middle line:84% But there are some remarkable stories. 00:36:09.990 --> 00:36:11.970 align:middle line:90% Oh, I forget the name of it. 00:36:11.970 --> 00:36:14.190 align:middle line:84% So a big part of it in the NIMBYism situation 00:36:14.190 --> 00:36:15.810 align:middle line:90% is we don't want power lines. 00:36:15.810 --> 00:36:17.710 align:middle line:84% We don't want to look at them, or we're not 00:36:17.710 --> 00:36:21.550 align:middle line:84% going to give you right away to put a power 00:36:21.550 --> 00:36:24.870 align:middle line:84% line across my property, things like that. 00:36:24.870 --> 00:36:33.550 align:middle line:84% There was a plan to put a buried power line along a railroad 00:36:33.550 --> 00:36:38.230 align:middle line:84% track, and they had secured the right of way. 00:36:38.230 --> 00:36:39.250 align:middle line:90% And it can be buried. 00:36:39.250 --> 00:36:41.430 align:middle line:84% So no one was really opposed to it. 00:36:41.430 --> 00:36:45.930 align:middle line:84% And they needed to connect that line. 00:36:45.930 --> 00:36:48.430 align:middle line:90% I think it was actually PJM. 00:36:48.430 --> 00:36:53.590 align:middle line:84% They want to deliver a wind from the Midwest into PJM's grid, 00:36:53.590 --> 00:36:57.390 align:middle line:84% and PJM basically told them, go fly a kite. 00:36:57.390 --> 00:37:00.690 align:middle line:84% And the reason was because they said, 00:37:00.690 --> 00:37:06.530 align:middle line:84% and the claim was that it would destabilize our grid. 00:37:06.530 --> 00:37:10.610 align:middle line:84% And the wind and solar people said we're sending you. 00:37:10.610 --> 00:37:13.730 align:middle line:84% We're building a DC line, which means 00:37:13.730 --> 00:37:18.370 align:middle line:84% that we have a lot of power electronics to convert it to AC, 00:37:18.370 --> 00:37:21.710 align:middle line:84% and we can give you as much or as little power as you require. 00:37:21.710 --> 00:37:24.410 align:middle line:84% It's not like you're on a synchronous system, 00:37:24.410 --> 00:37:27.970 align:middle line:84% and we're forcing the power down the throat of the grid. 00:37:27.970 --> 00:37:30.890 align:middle line:84% And PJM said, no, no, it doesn't matter. 00:37:30.890 --> 00:37:33.390 align:middle line:90% And then went to court. 00:37:33.390 --> 00:37:39.930 align:middle line:84% And so yeah, there's all kinds of dirty stories like this. 00:37:39.930 --> 00:37:46.570 align:middle line:90% So here's a challenge. 00:37:46.570 --> 00:37:52.130 align:middle line:84% Is it fair to ask the wind and solar companies 00:37:52.130 --> 00:37:55.370 align:middle line:84% to pay for this generation expansion? 00:37:55.370 --> 00:38:01.770 align:middle line:84% So on the one hand, the fact that wind and solar is variable 00:38:01.770 --> 00:38:05.640 align:middle line:84% is an externality associated with that generation. 00:38:05.640 --> 00:38:10.100 align:middle line:84% It's a flaw in the quality of the power, 00:38:10.100 --> 00:38:12.240 align:middle line:84% and they have to pay for that flaw. 00:38:12.240 --> 00:38:17.720 align:middle line:84% And that flaw requires more grid capacity. 00:38:17.720 --> 00:38:20.240 align:middle line:84% Fixing that problem should be rolled into the price 00:38:20.240 --> 00:38:21.520 align:middle line:90% of wind and solar. 00:38:21.520 --> 00:38:25.400 align:middle line:84% So that is the argument for them paying. 00:38:25.400 --> 00:38:28.080 align:middle line:84% On the other hand, everyone else just 00:38:28.080 --> 00:38:30.920 align:middle line:84% gets access to the grid for free, 00:38:30.920 --> 00:38:35.000 align:middle line:84% and new natural gas players are just using it. 00:38:35.000 --> 00:38:37.280 align:middle line:84% And they didn't have to pay for anything. 00:38:37.280 --> 00:38:39.480 align:middle line:84% It's not that they're paying less. 00:38:39.480 --> 00:38:46.680 align:middle line:84% They just get it for free under the order 888. 00:38:46.680 --> 00:38:49.960 align:middle line:84% And so it's kind of like saying, I 00:38:49.960 --> 00:38:52.640 align:middle line:84% want to drive down to Florida for winter vacation. 00:38:52.640 --> 00:38:54.900 align:middle line:84% And someone saying, OK, you can drive down there, 00:38:54.900 --> 00:38:58.880 align:middle line:84% but the roads are congested, so you need to build a road. 00:38:58.880 --> 00:39:00.860 align:middle line:84% And it's like, OK, but it's just me. 00:39:00.860 --> 00:39:03.407 align:middle line:90% Well, too bad. 00:39:03.407 --> 00:39:04.240 align:middle line:90% You want to go down. 00:39:04.240 --> 00:39:05.620 align:middle line:90% You pay for the road. 00:39:05.620 --> 00:39:10.900 align:middle line:84% And that's kind of the problem with this. 00:39:10.900 --> 00:39:21.060 align:middle line:84% So one of the challenges is trying 00:39:21.060 --> 00:39:22.677 align:middle line:90% to balance these two things. 00:39:22.677 --> 00:39:24.260 align:middle line:84% And then there are other externalities 00:39:24.260 --> 00:39:25.400 align:middle line:90% that we should think about. 00:39:25.400 --> 00:39:30.340 align:middle line:84% So if you have a grid that is operating really close to margin 00:39:30.340 --> 00:39:36.060 align:middle line:84% and you have an event, like a hurricane or something. 00:39:36.060 --> 00:39:40.160 align:middle line:84% Now that grid, it has a more likely chance of going down. 00:39:40.160 --> 00:39:43.120 align:middle line:84% It's harder to recover, et cetera, et cetera. 00:39:43.120 --> 00:39:46.860 align:middle line:84% So there are reliability and national security considerations 00:39:46.860 --> 00:39:51.060 align:middle line:84% associated with operating the grid in of traditional fashion. 00:39:51.060 --> 00:39:53.660 align:middle line:84% So especially as you see the rise of wildfires 00:39:53.660 --> 00:39:56.860 align:middle line:84% and other things in high temperatures 00:39:56.860 --> 00:39:59.980 align:middle line:84% from climate change that require the grid operators to de-rate 00:39:59.980 --> 00:40:03.000 align:middle line:84% the lines, we're seeing more and more instability and more 00:40:03.000 --> 00:40:04.600 align:middle line:90% brownouts and blackouts. 00:40:04.600 --> 00:40:09.600 align:middle line:84% And so society is paying too for this reticence 00:40:09.600 --> 00:40:13.640 align:middle line:84% to expand the grid to allow for distributed generation and more 00:40:13.640 --> 00:40:14.540 align:middle line:90% capacity. 00:40:14.540 --> 00:40:17.880 align:middle line:90% 00:40:17.880 --> 00:40:19.860 align:middle line:84% We basically have a moral dilemma. 00:40:19.860 --> 00:40:22.040 align:middle line:90% There's no clear answer. 00:40:22.040 --> 00:40:24.480 align:middle line:84% So let's just look at what other countries have done. 00:40:24.480 --> 00:40:29.020 align:middle line:84% So the UK, EU, most EU countries, Australia, Canada, 00:40:29.020 --> 00:40:31.880 align:middle line:90% and Korea basically say this. 00:40:31.880 --> 00:40:36.160 align:middle line:84% You need to pay for whatever local lines have 00:40:36.160 --> 00:40:40.800 align:middle line:84% to be built to connect your new plant, your wind farm, 00:40:40.800 --> 00:40:43.400 align:middle line:90% to the major transmission lines. 00:40:43.400 --> 00:40:46.520 align:middle line:84% And you're going to have to build a substation 00:40:46.520 --> 00:40:50.240 align:middle line:84% to raise the voltage and put that power. 00:40:50.240 --> 00:40:54.080 align:middle line:84% But as for the major transmission system, 00:40:54.080 --> 00:40:59.160 align:middle line:84% those costs will be paid by a regulated tariff that 00:40:59.160 --> 00:41:02.550 align:middle line:84% is socialized across all the generators. 00:41:02.550 --> 00:41:05.510 align:middle line:90% And this is socialism. 00:41:05.510 --> 00:41:10.670 align:middle line:84% In Japan, they used to have a different system. 00:41:10.670 --> 00:41:15.270 align:middle line:84% Sorry, they used to have a system in which it was all 00:41:15.270 --> 00:41:20.390 align:middle line:84% socialized by generators, but they now have a little extra, 00:41:20.390 --> 00:41:23.230 align:middle line:90% they call a reeling tariff. 00:41:23.230 --> 00:41:27.870 align:middle line:84% That is an extra charge that they assign to the new generator 00:41:27.870 --> 00:41:31.710 align:middle line:90% to balance the two things. 00:41:31.710 --> 00:41:35.470 align:middle line:84% So you can see how the US is kind of an outlier 00:41:35.470 --> 00:41:37.790 align:middle line:90% here with this approach. 00:41:37.790 --> 00:41:43.350 align:middle line:84% And that may also explain why deployment of renewables 00:41:43.350 --> 00:41:47.050 align:middle line:84% is probably progressing maybe more slowly here, 00:41:47.050 --> 00:41:50.968 align:middle line:84% despite the fact that we have a really optimal country 00:41:50.968 --> 00:41:53.510 align:middle line:84% for renewable generation, with lots of wind and lots of solar 00:41:53.510 --> 00:41:56.390 align:middle line:90% and lots of space. 00:41:56.390 --> 00:41:59.830 align:middle line:84% There is a new FERC order issued last year, 00:41:59.830 --> 00:42:03.770 align:middle line:84% called 1920, that is attempting to basically make us 00:42:03.770 --> 00:42:05.530 align:middle line:90% like the rest of the world. 00:42:05.530 --> 00:42:07.690 align:middle line:84% They say in the FERC order, requires 00:42:07.690 --> 00:42:10.290 align:middle line:84% long-term regional transmission planning 00:42:10.290 --> 00:42:14.350 align:middle line:84% and cost allocation to be done through cost allocation, 00:42:14.350 --> 00:42:17.130 align:middle line:84% that is, for those planning lines. 00:42:17.130 --> 00:42:20.170 align:middle line:84% It doesn't say exactly how that cost allocation will work out 00:42:20.170 --> 00:42:23.070 align:middle line:84% if it's a tariff that is applied to everyone or so on. 00:42:23.070 --> 00:42:25.450 align:middle line:84% But basically, they're saying you can't just put it 00:42:25.450 --> 00:42:27.190 align:middle line:90% all on the new generator. 00:42:27.190 --> 00:42:30.650 align:middle line:90% 00:42:30.650 --> 00:42:34.570 align:middle line:84% New people will still have to pay for the interconnect, which 00:42:34.570 --> 00:42:37.090 align:middle line:90% is like every other country. 00:42:37.090 --> 00:42:43.290 align:middle line:84% So predictably, this new order is now 00:42:43.290 --> 00:42:49.370 align:middle line:84% suspended and being challenged in court by a bunch of lawsuits. 00:42:49.370 --> 00:42:52.610 align:middle line:84% The principal one is a coalition of 19 states being 00:42:52.610 --> 00:42:54.610 align:middle line:90% led by the state of Texas. 00:42:54.610 --> 00:42:57.910 align:middle line:84% 100% of these states who oppose this order 00:42:57.910 --> 00:43:01.230 align:middle line:84% are Republican legislature states. 00:43:01.230 --> 00:43:05.910 align:middle line:84% You can probably guess that there's probably 00:43:05.910 --> 00:43:09.630 align:middle line:84% some money behind this, getting these guys to put up 00:43:09.630 --> 00:43:15.150 align:middle line:84% this lawsuit by established corporations who own old coal 00:43:15.150 --> 00:43:17.590 align:middle line:90% and natural gas plants. 00:43:17.590 --> 00:43:19.110 align:middle line:84% When you read the legal filing, it's 00:43:19.110 --> 00:43:22.070 align:middle line:84% pretty clear that they want to just block wind and solar. 00:43:22.070 --> 00:43:26.050 align:middle line:84% They're like, we have the right to choose our generator mix. 00:43:26.050 --> 00:43:30.390 align:middle line:84% And upstart generators should be kept off our system. 00:43:30.390 --> 00:43:35.910 align:middle line:90% And so it's unfortunate. 00:43:35.910 --> 00:43:38.460 align:middle line:90% Earlier, I showed you this plot. 00:43:38.460 --> 00:43:40.710 align:middle line:84% And one of the things that emerged in the conversation 00:43:40.710 --> 00:43:43.790 align:middle line:84% is that, well, OK, so this plot is 00:43:43.790 --> 00:43:48.790 align:middle line:84% the amount of nameplate capacity in the queue waiting 00:43:48.790 --> 00:43:50.830 align:middle line:90% to connect to the grid. 00:43:50.830 --> 00:43:54.790 align:middle line:84% And this is wind and solar capacity. 00:43:54.790 --> 00:43:59.020 align:middle line:84% And this line is current generation. 00:43:59.020 --> 00:44:02.900 align:middle line:84% And it just shows how many wind and solar projects 00:44:02.900 --> 00:44:06.300 align:middle line:90% are just waiting to connect. 00:44:06.300 --> 00:44:11.700 align:middle line:84% Now, it was pointed out that many of these disappear. 00:44:11.700 --> 00:44:18.220 align:middle line:84% And I got the statistics for you. 00:44:18.220 --> 00:44:21.580 align:middle line:84% Depending on if you count by the number of requests or count 00:44:21.580 --> 00:44:29.620 align:middle line:84% by the fraction of total power, something like 75%, roughly 3/4, 00:44:29.620 --> 00:44:33.940 align:middle line:84% of these projects are basically withdrawn. 00:44:33.940 --> 00:44:36.432 align:middle line:84% Now there's a question as to whether these-- yeah. 00:44:36.432 --> 00:44:38.640 align:middle line:84% AUDIENCE: So when you say they're waiting to connect, 00:44:38.640 --> 00:44:40.848 align:middle line:84% you mean they're literally just sitting there and not 00:44:40.848 --> 00:44:41.640 align:middle line:90% doing anything? 00:44:41.640 --> 00:44:42.860 align:middle line:90% SCOTT KEMP: Yes. 00:44:42.860 --> 00:44:44.500 align:middle line:84% Usually, I don't think they really 00:44:44.500 --> 00:44:47.700 align:middle line:84% build the capacity until they get authorization for it. 00:44:47.700 --> 00:44:49.960 align:middle line:84% But yeah, they're basically we have a project. 00:44:49.960 --> 00:44:52.620 align:middle line:84% We have an idea, or we're going to build this farm. 00:44:52.620 --> 00:44:54.400 align:middle line:90% We have a legal entity. 00:44:54.400 --> 00:44:55.680 align:middle line:90% We're ready to go. 00:44:55.680 --> 00:44:57.520 align:middle line:90% And then they're waiting. 00:44:57.520 --> 00:45:03.900 align:middle line:84% And the grid operator says, we have to make expansion, 00:45:03.900 --> 00:45:05.040 align:middle line:90% or you have to pay. 00:45:05.040 --> 00:45:07.760 align:middle line:84% And you have to wait in this queue. 00:45:07.760 --> 00:45:12.280 align:middle line:84% And the average time from the queue is 13 years. 00:45:12.280 --> 00:45:16.080 align:middle line:84% So if you are an investor and you're 00:45:16.080 --> 00:45:18.600 align:middle line:84% planning to do something with your money, 00:45:18.600 --> 00:45:21.920 align:middle line:84% you want to build a wind farm, and you make money. 00:45:21.920 --> 00:45:23.480 align:middle line:84% And they said, well yeah, but you 00:45:23.480 --> 00:45:28.053 align:middle line:84% won't get your first dollar of return for the next 15 years 00:45:28.053 --> 00:45:29.220 align:middle line:90% while you wait in the queue. 00:45:29.220 --> 00:45:31.000 align:middle line:84% And then we have to build the farm. 00:45:31.000 --> 00:45:33.480 align:middle line:90% This is the problem. 00:45:33.480 --> 00:45:36.680 align:middle line:84% So it's not really a surprise that 3/4 of these things are 00:45:36.680 --> 00:45:40.280 align:middle line:90% withdrawn and never succeed. 00:45:40.280 --> 00:45:44.840 align:middle line:84% There was some suggestion that some of these might not be real. 00:45:44.840 --> 00:45:47.880 align:middle line:84% We have no way of actually knowing that, 00:45:47.880 --> 00:45:51.480 align:middle line:84% whether these projects are real or not. 00:45:51.480 --> 00:45:55.880 align:middle line:90% But yeah, this is the situation. 00:45:55.880 --> 00:46:02.340 align:middle line:90% 00:46:02.340 --> 00:46:07.980 align:middle line:84% I mean, this basically shows how much it is slowing things down. 00:46:07.980 --> 00:46:12.740 align:middle line:84% In case you're wondering how expensive this is, typically 00:46:12.740 --> 00:46:16.140 align:middle line:84% the point of interconnection charge 00:46:16.140 --> 00:46:19.340 align:middle line:84% is something less than $50 per kilowatt in terms 00:46:19.340 --> 00:46:22.780 align:middle line:90% of capital expenditure. 00:46:22.780 --> 00:46:25.320 align:middle line:84% And I'll have a plot at the end where we can. 00:46:25.320 --> 00:46:26.780 align:middle line:90% So just remember that. 00:46:26.780 --> 00:46:31.820 align:middle line:84% Whereas a network upgrade would be something like $200 or $300 00:46:31.820 --> 00:46:34.740 align:middle line:90% per kilowatt of capacity. 00:46:34.740 --> 00:46:40.780 align:middle line:84% So it depends on the project, but it's somewhat 00:46:40.780 --> 00:46:43.700 align:middle line:84% of an addition to the cost of these things. 00:46:43.700 --> 00:46:45.920 align:middle line:84% I think the killer is not really the cost. 00:46:45.920 --> 00:46:49.620 align:middle line:84% The killer really is the queue, the wait time. 00:46:49.620 --> 00:46:55.490 align:middle line:90% 00:46:55.490 --> 00:46:58.570 align:middle line:84% If you're a new project and you want to connect to the grid, 00:46:58.570 --> 00:47:01.170 align:middle line:90% how much does it cost? 00:47:01.170 --> 00:47:04.690 align:middle line:84% So it turns out that the permitting and right of way 00:47:04.690 --> 00:47:08.370 align:middle line:84% costs, as I mentioned a moment ago, which turns out 00:47:08.370 --> 00:47:15.250 align:middle line:84% to be something like 25% to 30% of the total cost 00:47:15.250 --> 00:47:16.490 align:middle line:90% of the project-- 00:47:16.490 --> 00:47:21.130 align:middle line:84% an amazing amount of money being spent 00:47:21.130 --> 00:47:24.550 align:middle line:84% negotiating legal agreements with various entities. 00:47:24.550 --> 00:47:28.270 align:middle line:90% 00:47:28.270 --> 00:47:31.210 align:middle line:84% Sorry, this is for transmission, not for wind and solar. 00:47:31.210 --> 00:47:35.050 align:middle line:84% The towers are something like half the cost 00:47:35.050 --> 00:47:37.410 align:middle line:84% to put up these large transmission towers. 00:47:37.410 --> 00:47:39.990 align:middle line:84% The conductors and wire are about 10%. 00:47:39.990 --> 00:47:45.210 align:middle line:84% Substation is about 15%, 20%, and it's a contingency. 00:47:45.210 --> 00:47:53.390 align:middle line:84% What is interesting is that the towers determine the voltage. 00:47:53.390 --> 00:47:57.390 align:middle line:84% The voltage determines how far apart the lines have to be, 00:47:57.390 --> 00:48:00.110 align:middle line:84% how far apart they have to be off the ground. 00:48:00.110 --> 00:48:04.150 align:middle line:84% And that is the most expensive part. 00:48:04.150 --> 00:48:07.550 align:middle line:84% The number of conductors that you run on the tower 00:48:07.550 --> 00:48:11.030 align:middle line:84% determines the ampacity of the circuit, 00:48:11.030 --> 00:48:12.910 align:middle line:90% how much current you can send. 00:48:12.910 --> 00:48:16.270 align:middle line:84% So you can triple the amount of power 00:48:16.270 --> 00:48:18.430 align:middle line:84% by tripling the amount of wires as long as you 00:48:18.430 --> 00:48:20.610 align:middle line:84% have room on your towers to put more wires. 00:48:20.610 --> 00:48:23.950 align:middle line:84% So sometimes you'll see all these wires hanging in a row. 00:48:23.950 --> 00:48:25.870 align:middle line:90% And that's why. 00:48:25.870 --> 00:48:29.890 align:middle line:84% And that doesn't cost very much to increase the ampacity, 00:48:29.890 --> 00:48:34.510 align:middle line:84% but it does cost if you want to change the voltage. 00:48:34.510 --> 00:48:37.310 align:middle line:84% So you have this weird phenomenon 00:48:37.310 --> 00:48:41.830 align:middle line:84% where the voltage is actually the determining factor 00:48:41.830 --> 00:48:46.750 align:middle line:84% in the cost of transmission, not the power that you're sending, 00:48:46.750 --> 00:48:51.000 align:middle line:84% where power is, obviously the thing that you're using. 00:48:51.000 --> 00:48:54.020 align:middle line:90% 00:48:54.020 --> 00:49:05.060 align:middle line:84% So it's notable that since 2010, we have installed-- 00:49:05.060 --> 00:49:06.900 align:middle line:90% I think it's 70. 00:49:06.900 --> 00:49:09.660 align:middle line:84% Yeah, I think I have this on another slide-- 00:49:09.660 --> 00:49:14.260 align:middle line:90% 70 miles of 765-kilovolt lines. 00:49:14.260 --> 00:49:17.780 align:middle line:90% 00:49:17.780 --> 00:49:21.700 align:middle line:84% And the average time for one of these projects 00:49:21.700 --> 00:49:24.420 align:middle line:90% is something like 13 years. 00:49:24.420 --> 00:49:28.260 align:middle line:84% We've installed in the same time 100,000 miles of natural gas 00:49:28.260 --> 00:49:29.900 align:middle line:90% pipelines. 00:49:29.900 --> 00:49:39.660 align:middle line:84% And one reason might be that for power lines, 00:49:39.660 --> 00:49:41.780 align:middle line:84% the company that is trying to build the line 00:49:41.780 --> 00:49:47.520 align:middle line:84% has to go out and negotiate with each federal entity, state 00:49:47.520 --> 00:49:52.000 align:middle line:84% entity, local government, landowner, et cetera 00:49:52.000 --> 00:49:54.820 align:middle line:84% and secure all these rights themselves. 00:49:54.820 --> 00:49:58.640 align:middle line:84% And it takes a long time to do that. 00:49:58.640 --> 00:50:01.440 align:middle line:84% For going across federal lands, and there 00:50:01.440 --> 00:50:03.560 align:middle line:84% are lots of federal lands, they still 00:50:03.560 --> 00:50:06.880 align:middle line:84% have to deal with the EPA and FERC 00:50:06.880 --> 00:50:10.620 align:middle line:84% and the Department of Energy and the Bureau of Land Management, 00:50:10.620 --> 00:50:13.160 align:middle line:84% or a bunch of different entities have 00:50:13.160 --> 00:50:15.815 align:middle line:90% to have a licensing process. 00:50:15.815 --> 00:50:17.440 align:middle line:84% And they have to go through all of this 00:50:17.440 --> 00:50:20.080 align:middle line:84% with all these different federal entities. 00:50:20.080 --> 00:50:22.040 align:middle line:84% For natural gas pipelines, there's 00:50:22.040 --> 00:50:24.920 align:middle line:84% a law on the books that says, when 00:50:24.920 --> 00:50:26.700 align:middle line:84% dealing with the federal government, 00:50:26.700 --> 00:50:28.680 align:middle line:84% there's a single point of contact that 00:50:28.680 --> 00:50:30.180 align:middle line:90% authorizes the transmission. 00:50:30.180 --> 00:50:32.513 align:middle line:84% And you don't have to go to all these different agencies 00:50:32.513 --> 00:50:34.020 align:middle line:90% and do all of this permitting. 00:50:34.020 --> 00:50:37.400 align:middle line:90% 00:50:37.400 --> 00:50:40.080 align:middle line:84% As a result, the average time to get a natural gas 00:50:40.080 --> 00:50:45.620 align:middle line:84% pipeline permitted in the US is two years, instead of 13. 00:50:45.620 --> 00:50:50.580 align:middle line:84% And you can understand why 100,000 miles of gas pipelines 00:50:50.580 --> 00:50:51.480 align:middle line:90% have been installed. 00:50:51.480 --> 00:50:53.940 align:middle line:84% It's just much, much easier to do. 00:50:53.940 --> 00:50:57.140 align:middle line:84% So of course, there is a proposal 00:50:57.140 --> 00:51:02.380 align:middle line:84% for a law to revise permitting on federal lands of transmission 00:51:02.380 --> 00:51:06.340 align:middle line:84% lines and make it identical to that of a natural gas system. 00:51:06.340 --> 00:51:09.980 align:middle line:84% But predictably, the Republican Congress 00:51:09.980 --> 00:51:11.280 align:middle line:90% is not interested in that law. 00:51:11.280 --> 00:51:13.180 align:middle line:84% And it has just sat there, and no one 00:51:13.180 --> 00:51:15.100 align:middle line:90% has ever put it up for a vote. 00:51:15.100 --> 00:51:18.620 align:middle line:84% So you can see how these politics 00:51:18.620 --> 00:51:22.200 align:middle line:84% are kind of holding back decarbonization. 00:51:22.200 --> 00:51:24.980 align:middle line:90% 00:51:24.980 --> 00:51:29.660 align:middle line:84% So is this expansion that is required 00:51:29.660 --> 00:51:32.700 align:middle line:84% to enable all of these wind and solar projects 00:51:32.700 --> 00:51:34.700 align:middle line:90% that are waiting in the queue? 00:51:34.700 --> 00:51:38.580 align:middle line:84% Is this thing going to be expensive? 00:51:38.580 --> 00:51:44.530 align:middle line:84% So I did some statistics on the 13 most recently completed 00:51:44.530 --> 00:51:49.890 align:middle line:84% construction costs, and I developed this little regression 00:51:49.890 --> 00:51:52.650 align:middle line:84% formula-- some fixed costs associated with running 00:51:52.650 --> 00:51:56.350 align:middle line:84% your operations and then $100,000 per mile, 00:51:56.350 --> 00:51:59.930 align:middle line:84% plus $8,000 per kilovolt per mile. 00:51:59.930 --> 00:52:03.830 align:middle line:84% Remember, the voltage determines how big the towers are. 00:52:03.830 --> 00:52:09.110 align:middle line:84% And so that there's a strong dependence on the voltage. 00:52:09.110 --> 00:52:11.670 align:middle line:90% 00:52:11.670 --> 00:52:16.120 align:middle line:90% Say this is maybe typical today. 00:52:16.120 --> 00:52:17.870 align:middle line:84% If we really have a lot of wind and solar, 00:52:17.870 --> 00:52:19.790 align:middle line:84% we need to go to higher voltages than this. 00:52:19.790 --> 00:52:22.630 align:middle line:84% But for typical contemporary line, 500-kilovolt line, 00:52:22.630 --> 00:52:26.450 align:middle line:84% that's something like $4 million per mile. 00:52:26.450 --> 00:52:30.650 align:middle line:84% I asked last night, ChatGPT, to go through and look 00:52:30.650 --> 00:52:32.810 align:middle line:84% at all the data and do its own regression, 00:52:32.810 --> 00:52:36.130 align:middle line:84% and here's the formula it gave me. 00:52:36.130 --> 00:52:39.610 align:middle line:84% So it came up with a $5 million per mile. 00:52:39.610 --> 00:52:44.110 align:middle line:84% And since I did my regression some years ago, 00:52:44.110 --> 00:52:45.710 align:middle line:90% it came out pretty good. 00:52:45.710 --> 00:52:49.670 align:middle line:84% It has this really nice dependence on the voltage, 00:52:49.670 --> 00:52:51.830 align:middle line:90% and it normalizes. 00:52:51.830 --> 00:52:54.050 align:middle line:84% And it has the number of conductors. 00:52:54.050 --> 00:52:58.576 align:middle line:84% It's a fancy result. So something like $4 million, 00:52:58.576 --> 00:53:04.470 align:middle line:84% $5 million per mile is a good rule of thumb. 00:53:04.470 --> 00:53:06.710 align:middle line:84% Of course, there are lots and lots 00:53:06.710 --> 00:53:08.830 align:middle line:90% and lots and lots of entities-- 00:53:08.830 --> 00:53:15.030 align:middle line:84% academics, NREL, Berkeley, Berkeley Lab, 00:53:15.030 --> 00:53:17.645 align:middle line:84% all sorts of entities who are interested in increasing 00:53:17.645 --> 00:53:18.770 align:middle line:90% the amount of transmission. 00:53:18.770 --> 00:53:22.030 align:middle line:84% And they've done all kinds of studies on what it would cost. 00:53:22.030 --> 00:53:24.430 align:middle line:90% And here are their results. 00:53:24.430 --> 00:53:30.970 align:middle line:84% And these lines are slopes of constant costs. 00:53:30.970 --> 00:53:34.170 align:middle line:84% So this is a million dollars a mile, $2 million a mile, 00:53:34.170 --> 00:53:37.230 align:middle line:84% $3 million a mile, $4 million a mile. 00:53:37.230 --> 00:53:40.850 align:middle line:84% And I said it costs $4 million a mile. 00:53:40.850 --> 00:53:45.170 align:middle line:84% And ChatGPT says it costs $5 million a mile. 00:53:45.170 --> 00:53:49.810 align:middle line:84% And the studies all predict that it's going to cost less. 00:53:49.810 --> 00:53:54.200 align:middle line:84% So I think this is basically the same thing-- microreactor 00:53:54.200 --> 00:53:56.450 align:middle line:84% vendors telling you that things are going to be cheap, 00:53:56.450 --> 00:53:59.330 align:middle line:90% and then they're never cheap. 00:53:59.330 --> 00:54:01.570 align:middle line:84% And so I tend to think that whenever 00:54:01.570 --> 00:54:06.270 align:middle line:84% you see these transmission studies, 00:54:06.270 --> 00:54:09.170 align:middle line:84% and if you look at the real historical data, 00:54:09.170 --> 00:54:10.650 align:middle line:84% it's more expensive than they say 00:54:10.650 --> 00:54:17.370 align:middle line:84% it's going to be, not double or triple, but 20% more, some 50% 00:54:17.370 --> 00:54:20.570 align:middle line:84% more or something like that, depending on where they line up. 00:54:20.570 --> 00:54:24.290 align:middle line:84% So I think I will use this scaling 00:54:24.290 --> 00:54:27.590 align:middle line:84% factor when I talk about the cost of these systems. 00:54:27.590 --> 00:54:31.210 align:middle line:90% 00:54:31.210 --> 00:54:34.050 align:middle line:90% Let's just look at some costs. 00:54:34.050 --> 00:54:37.010 align:middle line:84% Here's a line that goes from the Great Plains to California, 00:54:37.010 --> 00:54:38.470 align:middle line:90% 1,500 miles. 00:54:38.470 --> 00:54:42.440 align:middle line:84% This thing would cost like $9 billion. 00:54:42.440 --> 00:54:45.760 align:middle line:84% Here's something that brings hydropower from Quebec 00:54:45.760 --> 00:54:49.800 align:middle line:84% down to New York City, something like $6.2 billion. 00:54:49.800 --> 00:54:54.360 align:middle line:84% It's basically the price of a nuclear power plant. 00:54:54.360 --> 00:54:58.680 align:middle line:84% And they can carry, depending on remember how many lines 00:54:58.680 --> 00:55:02.000 align:middle line:84% you string on the tower and the ampacity of the system, 00:55:02.000 --> 00:55:07.680 align:middle line:84% something on the order of maybe 4 to 6 gigawatts of power 00:55:07.680 --> 00:55:12.280 align:middle line:84% continuous, which doesn't seem like a lot. 00:55:12.280 --> 00:55:18.920 align:middle line:84% But you have to remember that they're also really dealing also 00:55:18.920 --> 00:55:20.930 align:middle line:90% with excess generation. 00:55:20.930 --> 00:55:22.680 align:middle line:84% So there will be a lot of local generation 00:55:22.680 --> 00:55:25.320 align:middle line:84% that is locally consumed and just how much 00:55:25.320 --> 00:55:28.680 align:middle line:84% excess generation do we have to move around 00:55:28.680 --> 00:55:30.260 align:middle line:90% to stabilize the grid? 00:55:30.260 --> 00:55:31.620 align:middle line:90% That's their principal interest. 00:55:31.620 --> 00:55:34.720 align:middle line:84% So they're only taking the cream off the top. 00:55:34.720 --> 00:55:37.400 align:middle line:84% So six gigawatts of transmission capacity 00:55:37.400 --> 00:55:41.940 align:middle line:84% might support a much larger installed base 00:55:41.940 --> 00:55:43.360 align:middle line:90% of variable generation. 00:55:43.360 --> 00:55:46.300 align:middle line:90% 00:55:46.300 --> 00:55:52.420 align:middle line:90% So there is also a new study. 00:55:52.420 --> 00:55:55.240 align:middle line:84% This is the 2024 National Transmission Planning Study. 00:55:55.240 --> 00:55:58.380 align:middle line:84% It's a multi-year study that was run out of NREL. 00:55:58.380 --> 00:56:03.240 align:middle line:84% And I'll just tell you what they found and how they market it. 00:56:03.240 --> 00:56:05.620 align:middle line:84% And I think they're very optimistic. 00:56:05.620 --> 00:56:06.920 align:middle line:90% But here's what they say. 00:56:06.920 --> 00:56:12.420 align:middle line:84% They say that for every dollar spent on building transmission, 00:56:12.420 --> 00:56:16.980 align:middle line:84% we will save somewhere between $1.60 and $1.80. 00:56:16.980 --> 00:56:21.660 align:middle line:84% And in other words, it pays for itself. 00:56:21.660 --> 00:56:24.460 align:middle line:84% And so that comes out to something 00:56:24.460 --> 00:56:29.380 align:middle line:84% like $270 to $490 billion between now 00:56:29.380 --> 00:56:33.500 align:middle line:84% and 2050, half a trillion dollars of saved money 00:56:33.500 --> 00:56:39.240 align:middle line:90% between now and 2050. 00:56:39.240 --> 00:56:41.800 align:middle line:84% So they looked at hundreds different scenarios 00:56:41.800 --> 00:56:45.800 align:middle line:84% and they go through 2050 as their time horizon. 00:56:45.800 --> 00:56:50.040 align:middle line:84% They also say that it will offset 00:56:50.040 --> 00:56:54.280 align:middle line:84% somewhere between 10 and 11 billion metric tons of CO2 00:56:54.280 --> 00:56:55.400 align:middle line:90% emissions. 00:56:55.400 --> 00:57:03.200 align:middle line:84% So that's about 3,000 gigawatt-years of natural gas. 00:57:03.200 --> 00:57:06.440 align:middle line:84% So over that time period, one way you could look at it 00:57:06.440 --> 00:57:09.960 align:middle line:84% is we would have to build 115 nuclear plants 00:57:09.960 --> 00:57:16.480 align:middle line:84% and run them between today and 2050 to save as much CO2. 00:57:16.480 --> 00:57:20.200 align:middle line:84% So the question is, where does all this cost savings come from? 00:57:20.200 --> 00:57:23.160 align:middle line:84% Where does all this CO2 abatement come from? 00:57:23.160 --> 00:57:27.000 align:middle line:84% And it's kind of not exactly intuitive. 00:57:27.000 --> 00:57:30.600 align:middle line:84% What they say is that for the next 10 years, 00:57:30.600 --> 00:57:35.590 align:middle line:84% between 2025 and 2035, most of the cost savings 00:57:35.590 --> 00:57:41.390 align:middle line:84% actually comes from avoiding fossil fuel 00:57:41.390 --> 00:57:44.630 align:middle line:84% use-- natural gas that will not get burned 00:57:44.630 --> 00:57:46.790 align:middle line:84% and carbon and coal that will not 00:57:46.790 --> 00:57:53.310 align:middle line:84% get burned because the existing wind and solar installations 00:57:53.310 --> 00:57:56.990 align:middle line:84% can now use more of their nameplate capacity 00:57:56.990 --> 00:57:59.070 align:middle line:90% and put more power on the grid. 00:57:59.070 --> 00:58:01.450 align:middle line:90% That's basically the offset. 00:58:01.450 --> 00:58:03.910 align:middle line:84% And as a result, they say that the capacity 00:58:03.910 --> 00:58:09.910 align:middle line:84% factor for wind and their model goes up to 40% is pretty high. 00:58:09.910 --> 00:58:13.210 align:middle line:84% And for solar, it goes up to 28%. 00:58:13.210 --> 00:58:14.790 align:middle line:84% You might remember we typically think 00:58:14.790 --> 00:58:19.270 align:middle line:84% of solar as having a capacity factor of around 20%, 00:58:19.270 --> 00:58:21.590 align:middle line:90% maybe 15% in the north. 00:58:21.590 --> 00:58:25.630 align:middle line:84% And they're saying they can actually operate at 28% 00:58:25.630 --> 00:58:30.310 align:middle line:84% because they can shift all that power around. 00:58:30.310 --> 00:58:32.190 align:middle line:90% So that may all be so. 00:58:32.190 --> 00:58:35.690 align:middle line:84% I don't doubt that physically that's possible. 00:58:35.690 --> 00:58:40.650 align:middle line:84% But in the process, they're also making certain assumptions 00:58:40.650 --> 00:58:45.770 align:middle line:84% about capacity expansion, about people building wind and solar, 00:58:45.770 --> 00:58:48.610 align:middle line:84% and also assumptions about people 00:58:48.610 --> 00:58:50.490 align:middle line:90% building all this transmission. 00:58:50.490 --> 00:58:52.770 align:middle line:84% And I think we have to evaluate whether any of this 00:58:52.770 --> 00:58:53.970 align:middle line:90% is realistic. 00:58:53.970 --> 00:58:57.970 align:middle line:84% So for example, they assume that 770 gigawatts 00:58:57.970 --> 00:59:03.170 align:middle line:84% of nameplate capacity of wind and 1000 gigawatts of nameplate 00:59:03.170 --> 00:59:07.250 align:middle line:84% capacity of solar are going to be added, which is something 00:59:07.250 --> 00:59:12.530 align:middle line:84% like the equivalent of 300 gigawatts of nuclear generation 00:59:12.530 --> 00:59:14.810 align:middle line:90% between now and 2050. 00:59:14.810 --> 00:59:16.450 align:middle line:90% That's a lot. 00:59:16.450 --> 00:59:19.370 align:middle line:84% And I think there's some extreme optimism here. 00:59:19.370 --> 00:59:24.930 align:middle line:84% Despite the extreme optimism with these numbers, 00:59:24.930 --> 00:59:28.170 align:middle line:84% the study is good for potentially one thing. 00:59:28.170 --> 00:59:30.810 align:middle line:84% And that is if a very sophisticated study 00:59:30.810 --> 00:59:37.670 align:middle line:84% that looks at, sorry, the mapping of the transmission 00:59:37.670 --> 00:59:40.910 align:middle line:84% requirements onto a future world with a lot 00:59:40.910 --> 00:59:42.790 align:middle line:90% of renewables generation. 00:59:42.790 --> 00:59:46.270 align:middle line:84% Whether that happens by 2050 or not, 00:59:46.270 --> 00:59:50.110 align:middle line:84% that is still an interesting relationship. 00:59:50.110 --> 00:59:52.910 align:middle line:84% And that gives us a price that we 00:59:52.910 --> 00:59:56.310 align:middle line:84% can use to estimate the additional cost that we should 00:59:56.310 --> 00:59:59.870 align:middle line:84% burden on solar and wind, because we 00:59:59.870 --> 01:00:01.630 align:middle line:84% choose a technology that requires 01:00:01.630 --> 01:00:03.310 align:middle line:90% a bunch of new generation. 01:00:03.310 --> 01:00:06.450 align:middle line:84% So they don't give us that price explicitly, 01:00:06.450 --> 01:00:08.790 align:middle line:84% but you can back it out of their calculations. 01:00:08.790 --> 01:00:13.750 align:middle line:84% And it comes out to somewhere between $80 and $200 01:00:13.750 --> 01:00:17.670 align:middle line:90% per kilowatt of capacity. 01:00:17.670 --> 01:00:22.970 align:middle line:84% So this goes on the front of the overnight cost. 01:00:22.970 --> 01:00:25.830 align:middle line:84% You're going to build your wind farm. 01:00:25.830 --> 01:00:29.550 align:middle line:84% It's going to cost you $2,100 per kilowatt, 01:00:29.550 --> 01:00:34.620 align:middle line:84% and you're going to have to add $200 of grid penalty 01:00:34.620 --> 01:00:36.860 align:middle line:90% because of its variability. 01:00:36.860 --> 01:00:40.940 align:middle line:84% And that's kind of their takeaway conclusion. 01:00:40.940 --> 01:00:44.380 align:middle line:84% So that's something like 4 to 14%, 01:00:44.380 --> 01:00:46.700 align:middle line:84% depending on whether you're applying it to wind 01:00:46.700 --> 01:00:49.720 align:middle line:84% or applying it solar and which one you choose. 01:00:49.720 --> 01:00:54.140 align:middle line:84% And remember I said that I think they're 01:00:54.140 --> 01:00:55.980 align:middle line:90% optimistic on the pricing. 01:00:55.980 --> 01:00:57.960 align:middle line:84% Most of these pricing models are optimistic. 01:00:57.960 --> 01:01:02.460 align:middle line:84% So multiply that by a factor of 2, something like that. 01:01:02.460 --> 01:01:04.980 align:middle line:90% 01:01:04.980 --> 01:01:10.640 align:middle line:84% But at the end of the day, it's still not that much money. 01:01:10.640 --> 01:01:16.660 align:middle line:84% Even if it's 30%, the price difference between $2100 01:01:16.660 --> 01:01:24.360 align:middle line:84% and $7,000 is not killed by this 30% transmission tariff. 01:01:24.360 --> 01:01:29.200 align:middle line:90% 01:01:29.200 --> 01:01:31.120 align:middle line:84% And when I did the Shaner calculation, 01:01:31.120 --> 01:01:33.880 align:middle line:84% and I came up with $130 per megawatt, 01:01:33.880 --> 01:01:37.000 align:middle line:84% do you remember what I used for this number? 01:01:37.000 --> 01:01:39.200 align:middle line:90% I used 25%. 01:01:39.200 --> 01:01:41.200 align:middle line:90% This is why I used 25%. 01:01:41.200 --> 01:01:44.702 align:middle line:84% So I think it doesn't really change anything 01:01:44.702 --> 01:01:46.160 align:middle line:84% with respect to the competitiveness 01:01:46.160 --> 01:01:48.200 align:middle line:90% of the technologies. 01:01:48.200 --> 01:01:51.600 align:middle line:84% But it does show how much has to be 01:01:51.600 --> 01:01:55.420 align:middle line:84% done if you want this world of wind and solar to emerge. 01:01:55.420 --> 01:01:56.300 align:middle line:90% Yeah. 01:01:56.300 --> 01:02:01.360 align:middle line:84% AUDIENCE: So do these studies look at electrification as well? 01:02:01.360 --> 01:02:03.380 align:middle line:84% Because I know back home in Belgium, 01:02:03.380 --> 01:02:07.280 align:middle line:84% a lot of the grid expansion now is just from EVs. 01:02:07.280 --> 01:02:10.240 align:middle line:84% It's not really related to a big renewable expansion. 01:02:10.240 --> 01:02:13.640 align:middle line:84% So today, this study, are they looking 01:02:13.640 --> 01:02:17.380 align:middle line:84% at you meet current demand with wind and solar-- 01:02:17.380 --> 01:02:18.840 align:middle line:90% I mean, current demand plus-- 01:02:18.840 --> 01:02:20.940 align:middle line:84% I don't know 2% per year or something? 01:02:20.940 --> 01:02:23.240 align:middle line:84% Or are they also looking at the same time 01:02:23.240 --> 01:02:27.820 align:middle line:84% we assume this many EVs are coming online, et cetera? 01:02:27.820 --> 01:02:30.520 align:middle line:84% I could see it working for or against wind and solar, 01:02:30.520 --> 01:02:31.400 align:middle line:90% to be honest. 01:02:31.400 --> 01:02:34.900 align:middle line:84% SCOTT KEMP: Yeah, so three comments. 01:02:34.900 --> 01:02:37.720 align:middle line:84% A, the detailed answer, I don't know. 01:02:37.720 --> 01:02:41.220 align:middle line:90% We have to go dig in a study. 01:02:41.220 --> 01:02:45.140 align:middle line:84% My general sense is NREL does have a model for increasing 01:02:45.140 --> 01:02:49.420 align:middle line:84% demand that includes transportation sector as part 01:02:49.420 --> 01:02:55.720 align:middle line:84% of it, so that for transmission purposes, total capacity, 01:02:55.720 --> 01:02:58.980 align:middle line:84% there is some EV-related kind of effect. 01:02:58.980 --> 01:03:03.780 align:middle line:84% And the third comment is that I believe most of the expansion 01:03:03.780 --> 01:03:07.420 align:middle line:84% for dealing with that will probably actually 01:03:07.420 --> 01:03:12.900 align:middle line:84% be distribution rather than transmission at this level. 01:03:12.900 --> 01:03:14.900 align:middle line:84% It's the more regional stuff that really is 01:03:14.900 --> 01:03:18.700 align:middle line:90% where that's a sticking point. 01:03:18.700 --> 01:03:22.420 align:middle line:90% So that's a different entity. 01:03:22.420 --> 01:03:26.665 align:middle line:84% But all this could be looked at in more detail. 01:03:26.665 --> 01:03:29.290 align:middle line:84% And then there's a whole issue with it you kind of pointed out. 01:03:29.290 --> 01:03:31.370 align:middle line:90% EVs can go both ways. 01:03:31.370 --> 01:03:34.130 align:middle line:84% They can suck up excess solar capacity 01:03:34.130 --> 01:03:36.650 align:middle line:84% in the middle of the day and therefore 01:03:36.650 --> 01:03:38.830 align:middle line:84% reduce the amount of transmission that you need. 01:03:38.830 --> 01:03:42.050 align:middle line:90% And so it's complex. 01:03:42.050 --> 01:03:46.890 align:middle line:84% People have talked about coming up with dynamic models 01:03:46.890 --> 01:03:51.910 align:middle line:84% so that people can use their EV as like on storage. 01:03:51.910 --> 01:03:53.430 align:middle line:84% And there's none of that exists yet. 01:03:53.430 --> 01:03:55.690 align:middle line:90% But people are looking at it-- 01:03:55.690 --> 01:03:58.670 align:middle line:84% on-grid storage to deal with the problem. 01:03:58.670 --> 01:04:02.210 align:middle line:90% 01:04:02.210 --> 01:04:08.450 align:middle line:84% So here's my kind of final slide. 01:04:08.450 --> 01:04:11.330 align:middle line:84% Is this major expansion of the grid 01:04:11.330 --> 01:04:17.890 align:middle line:84% that is required for this world of wind and solar realistic? 01:04:17.890 --> 01:04:20.690 align:middle line:84% So I think the biggest criticism is that it's 01:04:20.690 --> 01:04:23.590 align:middle line:90% institutionally optimistic. 01:04:23.590 --> 01:04:27.990 align:middle line:84% If over the last decade, we've installed just 70 miles 01:04:27.990 --> 01:04:31.270 align:middle line:90% of 765-kilovolt lines. 01:04:31.270 --> 01:04:34.510 align:middle line:84% And this study, we're going to need to says we need to install 01:04:34.510 --> 01:04:41.670 align:middle line:84% 170,000 miles of 765-kilovolt lines. 01:04:41.670 --> 01:04:44.030 align:middle line:84% There's an institutional growth there that 01:04:44.030 --> 01:04:47.630 align:middle line:90% just is not realistic, I think. 01:04:47.630 --> 01:04:51.430 align:middle line:84% We're supposed to do this in the next between now and 2050. 01:04:51.430 --> 01:04:55.030 align:middle line:84% I think it's a very high level of optimism. 01:04:55.030 --> 01:04:56.552 align:middle line:90% It comes from various things. 01:04:56.552 --> 01:04:58.510 align:middle line:84% For one, there's a long lead time on equipment, 01:04:58.510 --> 01:05:02.310 align:middle line:84% such as power transformers, is unlikely to be the manufacturing 01:05:02.310 --> 01:05:03.990 align:middle line:84% capacity for all the transformers 01:05:03.990 --> 01:05:06.130 align:middle line:84% that would be required here in the United States. 01:05:06.130 --> 01:05:08.670 align:middle line:84% Some of them can come from China, but even that probably 01:05:08.670 --> 01:05:09.170 align:middle line:90% not enough. 01:05:09.170 --> 01:05:10.850 align:middle line:90% Where's this capacity come from? 01:05:10.850 --> 01:05:14.250 align:middle line:84% Same for transmission towers, insulators, wire, switches, 01:05:14.250 --> 01:05:16.670 align:middle line:90% all that stuff. 01:05:16.670 --> 01:05:23.490 align:middle line:84% It also presumes that all these ISOs will have planning capacity 01:05:23.490 --> 01:05:26.130 align:middle line:90% to operate this grid. 01:05:26.130 --> 01:05:28.890 align:middle line:84% This is a level of operations and 01:05:28.890 --> 01:05:31.890 align:middle line:84% of inter-regional transmission that has never before 01:05:31.890 --> 01:05:36.410 align:middle line:84% been demonstrated, especially the high-voltage DC lines. 01:05:36.410 --> 01:05:39.170 align:middle line:84% We just don't have any experience 01:05:39.170 --> 01:05:43.570 align:middle line:84% operating all of this kind of power transmission. 01:05:43.570 --> 01:05:50.730 align:middle line:84% So I think these things are going to be major barriers. 01:05:50.730 --> 01:05:53.350 align:middle line:84% On top of that, none of this is going to get built. 01:05:53.350 --> 01:05:55.650 align:middle line:84% If all the costs of building it is just 01:05:55.650 --> 01:05:58.345 align:middle line:84% going to sit on the next solar generator who 01:05:58.345 --> 01:05:59.970 align:middle line:84% wants to add their plant, and then they 01:05:59.970 --> 01:06:02.250 align:middle line:84% have to pay for another line and so on. 01:06:02.250 --> 01:06:06.890 align:middle line:84% There really has to be something like FERC order 1920 that 01:06:06.890 --> 01:06:10.690 align:middle line:84% socializes the cost of being major lines over all 01:06:10.690 --> 01:06:12.490 align:middle line:90% of the generators. 01:06:12.490 --> 01:06:16.450 align:middle line:84% But of course, that thing could be held up in court 01:06:16.450 --> 01:06:18.790 align:middle line:90% for years, maybe a decade. 01:06:18.790 --> 01:06:23.500 align:middle line:84% So I think for all of these reasons, 01:06:23.500 --> 01:06:25.800 align:middle line:90% it's not likely to happen. 01:06:25.800 --> 01:06:28.240 align:middle line:84% Then there's also the rights of way issue. 01:06:28.240 --> 01:06:31.120 align:middle line:84% 30% of the cost of this transmission line 01:06:31.120 --> 01:06:33.560 align:middle line:90% was rights of way. 01:06:33.560 --> 01:06:36.120 align:middle line:84% It takes 13 years for the average transmission project 01:06:36.120 --> 01:06:37.780 align:middle line:84% to be permitted versus two years. 01:06:37.780 --> 01:06:40.680 align:middle line:84% It just shows how hard this is going to be 01:06:40.680 --> 01:06:42.720 align:middle line:90% unless those policies change. 01:06:42.720 --> 01:06:45.240 align:middle line:84% And yet, despite the bills being written, 01:06:45.240 --> 01:06:48.360 align:middle line:84% there's no indication that these bills are going to be passed. 01:06:48.360 --> 01:06:55.040 align:middle line:84% So there's a lot of legal, regulatory, and political issues 01:06:55.040 --> 01:07:01.920 align:middle line:84% that are in the way of this transmission fantasy 01:07:01.920 --> 01:07:05.800 align:middle line:90% from coming into place. 01:07:05.800 --> 01:07:09.120 align:middle line:84% The most recent blow, the Trump administration 01:07:09.120 --> 01:07:11.640 align:middle line:84% used to have a loan guarantee program for companies that 01:07:11.640 --> 01:07:15.520 align:middle line:84% wanted to build large-distance, high-voltage transmission, 01:07:15.520 --> 01:07:18.760 align:middle line:84% just like we have a loan guarantee program for nuclear. 01:07:18.760 --> 01:07:22.900 align:middle line:84% And the Trump administration last July 01:07:22.900 --> 01:07:26.440 align:middle line:84% just decided to cancel all those guarantees 01:07:26.440 --> 01:07:29.860 align:middle line:84% so that they can basically stop transmission 01:07:29.860 --> 01:07:31.840 align:middle line:90% from being generated. 01:07:31.840 --> 01:07:34.220 align:middle line:84% They're doing their best to prevent 01:07:34.220 --> 01:07:39.140 align:middle line:84% wind and solar from being built. On the finance side-- 01:07:39.140 --> 01:07:40.450 align:middle line:90% yep. 01:07:40.450 --> 01:07:43.420 align:middle line:84% AUDIENCE: Why isn't this is a problem also for nuclear 01:07:43.420 --> 01:07:44.800 align:middle line:90% and just for wind and solar? 01:07:44.800 --> 01:07:46.263 align:middle line:90% You would expect [? nuclear. ?] 01:07:46.263 --> 01:07:48.180 align:middle line:84% SCOTT KEMP: So it will be eventually a problem 01:07:48.180 --> 01:07:49.620 align:middle line:90% for everyone. 01:07:49.620 --> 01:07:52.420 align:middle line:90% 01:07:52.420 --> 01:07:57.060 align:middle line:84% As long as your nuclear plant isn't 01:07:57.060 --> 01:08:00.020 align:middle line:84% needing to deal with the variability, 01:08:00.020 --> 01:08:04.020 align:middle line:84% then you can very reliably say, OK, I need this size line 01:08:04.020 --> 01:08:04.800 align:middle line:90% into this region. 01:08:04.800 --> 01:08:06.650 align:middle line:84% I don't have to send it long distances. 01:08:06.650 --> 01:08:08.400 align:middle line:84% I'm going to take this coal plant offline. 01:08:08.400 --> 01:08:10.380 align:middle line:84% I'm going to put this nuclear plant online, 01:08:10.380 --> 01:08:14.100 align:middle line:84% and the total transmission costs are going to be small. 01:08:14.100 --> 01:08:17.920 align:middle line:84% It's when you've got a lot of wind in the Great Plains, 01:08:17.920 --> 01:08:20.850 align:middle line:84% and you need to move it to Los Angeles. 01:08:20.850 --> 01:08:22.109 align:middle line:90% That's the problem. 01:08:22.109 --> 01:08:24.689 align:middle line:84% Otherwise, you just build your nuclear plant in Los Angeles. 01:08:24.689 --> 01:08:30.250 align:middle line:84% And so that's kind of difference. 01:08:30.250 --> 01:08:32.609 align:middle line:84% So it turns out there's a lot of money 01:08:32.609 --> 01:08:36.210 align:middle line:84% available for new nuclear startups, as we've seen. 01:08:36.210 --> 01:08:40.170 align:middle line:84% Some money may be smarter than other money. 01:08:40.170 --> 01:08:42.649 align:middle line:84% But there's also, predictably, a lot of money 01:08:42.649 --> 01:08:44.970 align:middle line:90% available for transmission. 01:08:44.970 --> 01:08:48.890 align:middle line:84% And there are basically private capital people 01:08:48.890 --> 01:08:50.847 align:middle line:90% waiting to help build mines. 01:08:50.847 --> 01:08:52.930 align:middle line:84% So despite the Trump administration's best efforts 01:08:52.930 --> 01:08:56.890 align:middle line:84% to cancel federal loan programs, the money to build these things 01:08:56.890 --> 01:08:59.330 align:middle line:90% is there. 01:08:59.330 --> 01:09:02.370 align:middle line:90% That may not be enough. 01:09:02.370 --> 01:09:05.210 align:middle line:84% We need these timelines to come down 01:09:05.210 --> 01:09:07.232 align:middle line:84% if we want to build this capacity. 01:09:07.232 --> 01:09:09.649 align:middle line:84% And that means dealing with the regulatory frameworks that 01:09:09.649 --> 01:09:11.330 align:middle line:90% are holding everything back. 01:09:11.330 --> 01:09:16.770 align:middle line:84% So the short answer is we can decarbonize the grid. 01:09:16.770 --> 01:09:19.950 align:middle line:84% We have all the technology we need. 01:09:19.950 --> 01:09:25.790 align:middle line:84% According to these studies, we will save money if we do it-- 01:09:25.790 --> 01:09:31.029 align:middle line:84% $1.70-ish for every dollar spent on this technology by not having 01:09:31.029 --> 01:09:33.189 align:middle line:90% to buy fossil fuels. 01:09:33.189 --> 01:09:35.710 align:middle line:84% We'll save enormous amounts of carbon. 01:09:35.710 --> 01:09:41.310 align:middle line:84% But there is a political battle that 01:09:41.310 --> 01:09:45.830 align:middle line:84% is backed by a lot of dark money by the fossil fuel 01:09:45.830 --> 01:09:50.550 align:middle line:84% industry working to stop this from happening. 01:09:50.550 --> 01:09:54.590 align:middle line:84% And in the meantime, nuclear is benefiting 01:09:54.590 --> 01:09:58.590 align:middle line:84% because it's the alternative that doesn't require 01:09:58.590 --> 01:10:00.750 align:middle line:90% all of this legal architecture. 01:10:00.750 --> 01:10:04.030 align:middle line:84% And so there's a storyline that says, 01:10:04.030 --> 01:10:05.850 align:middle line:84% all this wind and solar is great, but look, 01:10:05.850 --> 01:10:08.350 align:middle line:90% it's not getting done. 01:10:08.350 --> 01:10:11.350 align:middle line:84% And then the question is whether nuclear can actually 01:10:11.350 --> 01:10:15.410 align:middle line:84% be cheap enough and whether it can actually happen fast enough. 01:10:15.410 --> 01:10:18.490 align:middle line:84% We talked about 20-25-year timescales to bring a new 01:10:18.490 --> 01:10:22.690 align:middle line:84% reactor online and whether at the end of the day, 01:10:22.690 --> 01:10:28.010 align:middle line:84% that's really the path we should be taking or not. 01:10:28.010 --> 01:10:32.810 align:middle line:84% So a lot depends on what happens in the next election, 2026, 01:10:32.810 --> 01:10:35.850 align:middle line:84% and for the midterms, whether we can get some bills passed 01:10:35.850 --> 01:10:38.450 align:middle line:84% that help reform some of these things and in 2028, 01:10:38.450 --> 01:10:41.370 align:middle line:84% with the new administration to reinstate 01:10:41.370 --> 01:10:45.410 align:middle line:84% executive-level programs to help streamline and incentivize 01:10:45.410 --> 01:10:47.490 align:middle line:90% transmission production. 01:10:47.490 --> 01:10:50.490 align:middle line:84% I am not terribly optimistic that policymakers 01:10:50.490 --> 01:10:54.930 align:middle line:84% will move the needle on this very quickly. 01:10:54.930 --> 01:10:57.610 align:middle line:84% I think it's probably going to be the case that we're 01:10:57.610 --> 01:11:01.110 align:middle line:84% going to see a lot of business as usual and more of the same 01:11:01.110 --> 01:11:04.530 align:middle line:84% and continuing to see more fossil fuel generators be built 01:11:04.530 --> 01:11:06.970 align:middle line:90% and so on. 01:11:06.970 --> 01:11:09.610 align:middle line:84% And then this transmission and renovation 01:11:09.610 --> 01:11:13.690 align:middle line:84% will happen very slowly over the next 30 to 40 years 01:11:13.690 --> 01:11:18.600 align:middle line:84% in bits and bobs as becomes practical for entities to do it. 01:11:18.600 --> 01:11:24.360 align:middle line:84% So climate change is not a technological problem, 01:11:24.360 --> 01:11:27.800 align:middle line:84% or dealing with the electric grid 01:11:27.800 --> 01:11:29.340 align:middle line:90% is not a technological problem. 01:11:29.340 --> 01:11:32.480 align:middle line:84% It's a legal and political problem. 01:11:32.480 --> 01:11:34.960 align:middle line:90% And that's where we stand. 01:11:34.960 --> 01:11:35.840 align:middle line:90% Yeah. 01:11:35.840 --> 01:11:38.080 align:middle line:84% AUDIENCE: Do you think the potential international 01:11:38.080 --> 01:11:40.880 align:middle line:84% competition, like seeing China build out 01:11:40.880 --> 01:11:44.840 align:middle line:84% like extremely fast solar, could then potentially 01:11:44.840 --> 01:11:47.080 align:middle line:84% become a motivator in terms of the US, 01:11:47.080 --> 01:11:49.840 align:middle line:84% just like the Republican Party becomes jealous in a sense 01:11:49.840 --> 01:11:52.260 align:middle line:84% more so than it being a decarbonizing technology, 01:11:52.260 --> 01:11:55.400 align:middle line:84% and more so just being China's doing it better than us? 01:11:55.400 --> 01:11:58.400 align:middle line:84% SCOTT KEMP: I think all these arguments will be brought 01:11:58.400 --> 01:12:00.400 align:middle line:90% to bear on the politics. 01:12:00.400 --> 01:12:02.280 align:middle line:84% But at the end of the day, I think 01:12:02.280 --> 01:12:05.560 align:middle line:84% that the argument that will win is who 01:12:05.560 --> 01:12:07.420 align:middle line:90% is paying for your campaign? 01:12:07.420 --> 01:12:10.840 align:middle line:90% 01:12:10.840 --> 01:12:11.740 align:middle line:90% Yeah. 01:12:11.740 --> 01:12:15.460 align:middle line:84% AUDIENCE: [INAUDIBLE] talk about financing and interest costs 01:12:15.460 --> 01:12:18.180 align:middle line:84% as a portion of cost for nuclear. 01:12:18.180 --> 01:12:21.020 align:middle line:84% If wind and solar farms do have to end up 01:12:21.020 --> 01:12:22.500 align:middle line:84% paying for their own transmission, 01:12:22.500 --> 01:12:26.620 align:middle line:84% we know what that cost of transmission will [INAUDIBLE] 01:12:26.620 --> 01:12:30.700 align:middle line:84% against the actual [INAUDIBLE] cost? 01:12:30.700 --> 01:12:33.363 align:middle line:84% SCOTT KEMP: Well, that's the I think if I'm understanding 01:12:33.363 --> 01:12:34.780 align:middle line:84% your question, you're asking, what 01:12:34.780 --> 01:12:38.380 align:middle line:84% is the fractional increase in capex? 01:12:38.380 --> 01:12:38.880 align:middle line:90% Yes, 01:12:38.880 --> 01:12:39.940 align:middle line:90% AUDIENCE: Yes. 01:12:39.940 --> 01:12:41.860 align:middle line:84% SCOTT KEMP: Which is this number. 01:12:41.860 --> 01:12:44.020 align:middle line:84% AUDIENCE: Given the amount of time 01:12:44.020 --> 01:12:46.220 align:middle line:84% it takes to actually build the transmission. 01:12:46.220 --> 01:12:49.340 align:middle line:84% SCOTT KEMP: Oh, like the IDC, the Interest 01:12:49.340 --> 01:12:50.240 align:middle line:90% During Construction? 01:12:50.240 --> 01:12:52.285 align:middle line:90% AUDIENCE: Yes. 01:12:52.285 --> 01:12:54.960 align:middle line:84% SCOTT KEMP: So the actual construction times, 01:12:54.960 --> 01:12:59.240 align:middle line:84% once you get through the rating period, I'm not sure. 01:12:59.240 --> 01:13:01.100 align:middle line:90% They're probably not very long. 01:13:01.100 --> 01:13:01.700 align:middle line:90% Yeah. 01:13:01.700 --> 01:13:02.780 align:middle line:90% Yeah. 01:13:02.780 --> 01:13:04.380 align:middle line:90% You look it up. 01:13:04.380 --> 01:13:06.660 align:middle line:84% But I would guess a couple of years or something. 01:13:06.660 --> 01:13:09.200 align:middle line:90% So any other questions? 01:13:09.200 --> 01:13:10.000 align:middle line:90% Yep. 01:13:10.000 --> 01:13:13.080 align:middle line:84% AUDIENCE: Do we expect the unregulated and regulated map 01:13:13.080 --> 01:13:14.380 align:middle line:90% to pretty much stay the same? 01:13:14.380 --> 01:13:16.160 align:middle line:84% SCOTT KEMP: Yeah, I don't think there's 01:13:16.160 --> 01:13:17.677 align:middle line:90% any momentum to change that. 01:13:17.677 --> 01:13:19.760 align:middle line:84% AUDIENCE: So then I guess in a lot of those states 01:13:19.760 --> 01:13:21.768 align:middle line:84% that won't be changing to unregulated markets 01:13:21.768 --> 01:13:23.560 align:middle line:84% and that might potentially be a place where 01:13:23.560 --> 01:13:25.000 align:middle line:90% nuclear could thrive. 01:13:25.000 --> 01:13:27.087 align:middle line:84% I mean, assuming that you're able to build a not 01:13:27.087 --> 01:13:27.920 align:middle line:90% Nobel Prize, though. 01:13:27.920 --> 01:13:30.823 align:middle line:90% 01:13:30.823 --> 01:13:33.240 align:middle line:84% SCOTT KEMP: There have been people in the nuclear business 01:13:33.240 --> 01:13:35.520 align:middle line:84% that have obviously self-interest at least said, 01:13:35.520 --> 01:13:37.520 align:middle line:84% oh, we should get rid of deregulation 01:13:37.520 --> 01:13:39.920 align:middle line:84% and go back to regulated markets. 01:13:39.920 --> 01:13:44.800 align:middle line:84% And I don't know if there's anything there. 01:13:44.800 --> 01:13:49.340 align:middle line:84% It's a mumble I hear, but I don't 01:13:49.340 --> 01:13:51.840 align:middle line:84% think there's a lot of people waiting to jump on board like, 01:13:51.840 --> 01:13:55.200 align:middle line:90% oh, let's get rid of regulation. 01:13:55.200 --> 01:14:01.080 align:middle line:84% The regulation is still right for corruption, 01:14:01.080 --> 01:14:02.820 align:middle line:84% and it doesn't serve the public interest. 01:14:02.820 --> 01:14:09.280 align:middle line:84% This is why the Vogtle plant was billing its customers for years 01:14:09.280 --> 01:14:11.670 align:middle line:84% and years and years for the cost of the plant, 01:14:11.670 --> 01:14:17.350 align:middle line:84% well before it ever was built. And these poor people 01:14:17.350 --> 01:14:19.870 align:middle line:84% are basically footing the bill and avoiding the interest 01:14:19.870 --> 01:14:22.750 align:middle line:84% that really the corporation should be paying. 01:14:22.750 --> 01:14:24.990 align:middle line:90% So it's not a great-- 01:14:24.990 --> 01:14:26.632 align:middle line:84% AUDIENCE: Necessarily a great system. 01:14:26.632 --> 01:14:28.590 align:middle line:84% SCOTT KEMP: But markets are totally acceptable. 01:14:28.590 --> 01:14:29.830 align:middle line:84% That's a whole Enron scandal too. 01:14:29.830 --> 01:14:31.788 align:middle line:84% Markets, you can do all kinds of bad things to. 01:14:31.788 --> 01:14:33.210 align:middle line:90% So I don't know, maybe. 01:14:33.210 --> 01:14:33.710 align:middle line:90% Yeah. 01:14:33.710 --> 01:14:37.790 align:middle line:90% 01:14:37.790 --> 01:14:39.510 align:middle line:90% Anything else? 01:14:39.510 --> 01:14:41.190 align:middle line:90% All right. 01:14:41.190 --> 01:14:43.720 align:middle line:90% See you next Wednesday. 01:14:43.720 --> 01:15:10.000 align:middle line:90%