Energy Systems, Uptime and the Digital Economy Chicago EDA - - PowerPoint PPT Presentation

Chicago EDA Conference June 23, 2020

Andrew R. Thomas Mark Henning

Energy Policy Center Levin College of Urban Affairs Cleveland State University

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Energy Systems, Uptime and the Digital Economy

En Ener ergy Syst stem em Implica cations s fo for IT T and IoT

• Po

Power o

• ut

utages a are # #1 c caus use o

• f I

f IT d T downt ntime.

• Industries lose upwards of $709,000 per IT outage

caused by power supply failure (Ponemon Institute).

• Se

Sector

• rs se

sensi sitive to to po power er rel eliability have e the e hi highe hest empl employmen ment growth.

• Highest Value of Lost Load (VOLL): Health Care,

Finance & Insurance

• Will add around 40% of the non-agricultural employment

growth nationally by 2026. Bureau of Labor Statistics

• These sectors expected to be major drivers of demand

for UPS systems as they increasingly incorporate the internet-of-things (IoT).

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A microgrid is a contained energy system capable of balancing captive supply and demand resources to maintain reliability

• Defined by function, not

size

• Incorporates multiple

distributed technologies

• Maximizes reliability and

efficiency

• Can include other utilities –

steam, hot water, chilled water, network connectivity

• May function in “islanded

mode” disconnected from larger utility grid

What is a Microgrid?

No No Po Power t to t the he Pe People

Na Nationa nal A Academy o

• f

f Sc Science Re Repor

• rt on
• n Nation
• n’s

El Elect ectrici city System em

• “R

“Recommendation 1 to to DO DOE: E: Im Improve und understand nding ng o

• f

f cu customer mer and d soci ciet ety va value assoc

• ciated with

in incre reas ased re resilie ilience….” .”

Se September 2017 2017.

So So Why the Poor

• or

Un Unders rsta tandin ing? g?

• Complexity of

Electricity Pricing.

• Lack of Uniformity in

Regulation or Industry Terminology.

• Value of Resiliency

Highly Dependent upon Circumstances.

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How How Ca Can We Va Value Re Resiliency?

• 1. Avoided Co

Costs: Maintaining Back Up and Standby Power Systems

• Diesel Generation
• Batteries and Uninterruptible Power Supply

(UPS) systems

• 2. Va

Value e of Lost Oppo pportunity

• Value of Lost Load Calculation:

𝑊𝑃𝑀𝑀 = GDP (or Output) for Industry ($) Electricity Consumption for Industry (kWh)

• 3. Su

Surve vey: What Are Commercial End Users Willing to Pay for Enhanced Uptime?

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Va Value Bas Based Upon Avoided Co Costs

Value Based Upon Lost Production

1 hour outage for 1 MW facility would cost “Securities and Financial Investment” company $50,000

Offices of other health practitioners - (621 3) Newspaper, periodical, book, and directory publishers - (51 1 1 ) Rental and L easing Services - (532) Specialized design services - (541 4) Other professional, scientific, and technical services - (541 9) Truck transportation - (484) Offices of physicians - (621 1 ) Audio and video equipment manufacturing - (3343) Household appliance manufacturing - (3352) Other transportation equipment manufacturing - (3369) Transit and ground passenger transportation - (485) Securities, commodity contracts, & other fin. investments/ activities - (523) Water transportation - (483) Software publishers - (51 1 2) Advertising, public relations, and related services - (541 8) Administrative and Support Services - (561 ) Air transportation - (481 ) Cable and other subscription programming - (51 52) Home health care services - (621 6) Accounting, tax preparation, bookkeeping, and payroll services - (541 2) Insurance Carriers and Related Activities - (524) L egal services - (541 1 ) Management, scientific, and technical consulting services - (541 6) Computer systems design and related services - (541 5)

>1 00 80 60 40 20

Industry Group Description and NAICS

VOLL (Value Added/kWh)

Highest Values of Lost Load for All Industry Groups

Data Sources: Bureau of Labor Statistics; U.S. Census Bureau

Value Based Upon National Survey of End Users

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0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 10 cents

• r more

11 cents

• r more

12 cents

• r more

13 cents

• r more

14 cents

• r more

15 cents

• r more

16 cents

• r more

17 cents

• r more

18 cents

• r more

"Which of the following average "all in" prices per-kWh for electricity that included 99.999% availability would provide a significant inducement for you to locate your business within a microgrid?"

Who Might Be Interested in Grid Resiliency?

Rol Role of

• f Uptime in the new econ
• nom
• my: 40% of
• f non
• n-ag

agricu cultural al eco economic c growth th projected ected to to be e in heal ealth th, , finan ance ce an and in insurance servic ices

• Universities
• Data and Financial

Centers

• Law, Accounting,

Consulting Firms

• Hospitals
• Emergency Services
• Food Services
• R&D Companies

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Proposed Downtown Cleveland Microgrid District

µGrid Cle

• Potential anchor end users
• Ability to leverage existing

infrastructure

• Ability to grow both loads and

infrastructure

• Economic relevance of areas
• Available land for new

infrastructure and end users

• Regulatory compatibility

Sensitivity Analysis For Three Tier Customer Rate Structure

11 $(20,000,000) $(15,000,000) $(10,000,000) $(5,000,000) $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $80 $90 $100 $110 $120 $130 $140 $150

MIcrogrid NPV Customer Rate ($ / MWh)

Tier 1 Tier 2 Tier 3

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200 400 600 800 1,000 1,200 2022 2023 2024 2025 2026

Direct New Employment Among Selected Subsectors that Value High-Quality Power with Microgrid Development

Cumulative Job Growth from Prior Years

Economic Impact of Microgrid in Downtown Cleveland

Associated additional earnings of $91 million within the μGrid by 2026. Assumptions:

• Direct jobs only
• 20% of 48 MW grid

reserved for new development

• Growth in high VOLL

subsectors increases from 10 year city average to national average

• Jobs created based

upon average per kW per employee for each industry (Census Bureau)

Energy Policy Center

Andrew R. Thomas a.r.thomas99@csuohio.edu Mark Henning m.d.henning@csuohio.edu "The Economic and Fiscal Impact of a Microgrid in Downtown Cleveland, Ohio" (2018). Urban Publications. https://engagedscholarship.csuohio.edu/urban_facpub/1560

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Year Shopping SSO Auction Total 2011 $496.70 $2,395.00 $2,891.70 2012 $443.29 $2,366.00 $2,809.29 2013 $744.11 $2,342.00 $3,086.11 2014 $824.21 $2,380.00 $3,204.21 2015 $645.19 $2,339.00 $2,984.19 2016 $540.77 $2553.90 $3,094.67 2017 $403.59 $2,502.10 $2,905.69 2018 $353.40 $2,612.60 $2,966.05

2011-2018

$4,451.11 $19,490.60 $23,941.71

Total Savings Due to Deregulation of Electricity in Ohio 2011-2018 (millions of dollars) "Customer Competition Continues to Outperform Traditional Monopoly Regulation" (2019). https://engagedscholarship.csuohio.edu/urban_facpub/1618

15 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90

2011 - Q2 2016 Q3/Q4 2016 Q1/Q2 2017 Q3/Q4 2017 Q1/Q2 2018 Q3/Q4 2018 Q1/Q2 2019

(Billions of Dollars)

upstream midstream downstream

Cu Cumulative e Shale e Rel elated ed Inves estmen ent In Ohio 2011 2011-2019 2019

Shale Investment Dashboard in Ohio Q1 and Q2 2019" (2020). https://engagedscholarship.csuohio.edu/urban_facpub/1659

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Po Potent ntial D Demande nders a and Nuc nd Nuclear F Fleet S Suppl uppliers o

• f

Hy Hydrogen i n in t n the he M Midwest

"How the Midwest Can Lead the Hydrogen Economy” (2020). htps://engagedscholarship.csuohio.edu/urban_facpub/1656