Evaluating Economic and Institutional Issues and Opportunities in Commercializing Super Conducting T

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Evaluating Economic and Institutional Issues and
Opportunities in Commercializing Super Conducting
TechnologiesCenter for Advanced Power Systems
(CAPS) ConferenceJuly 29-30, 2001National High
Magnetic Field Lab
Tim Lynch, Ph.D.. Director Center for Economic
Forecasting and Analysis Florida State
University Tallahassee, Florida
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DEFINING THE INSTITUTIONAL NEEDS FOR ELECTRICAL
GENERATION AND CAPS RELATED TECHNOLOGY
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URBAN USES HIGHER DENSITY TRANSMISSION USES
HIGHER ECONOMIC PRODUCTIVITY NEW TECHNOLOGICAL
EXPANSIONS REDUCED ENVIRONMENTAL IMPACT
CAPS TECHNOLOGY SPINNOFF
INDUSTRIAL USES ELECTRICAL / MANUFACTURE
PRODUCTION - STORAGE - TRANSMISSION EXPANSIONS
TRANSPORTATION USES STORAGE AND TRANSMISSION
GAINS LEAD TO RAPID GAINS IN VIABILITY OF MAGLEV
TECHNOLOGY ADVANCES IN ELECTRIC CAR \ BUS
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From Electricity Technology Roadmap 1999
Summary and Synthesis, (1999).
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Value of Electrical Energy in the US Economy
Increases

• In the last decade, there has been a four-fold
  increase in the value of bulk power transactions
  in the U.S.
• Electricity is sold in wholesale markets and
  transported over increasingly larger distances.
• Growth in bulk power transactions is continuing
  while the North American transmission system is
  already at full capacity and taxed to its
  limits.

From Electricity Technology Roadmap 1999
Summary and Synthesis, (1999).
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Projected Energy Needs
Percent ()
Years
From Electricity Technology Roadmap 1999
Summary and Synthesis, (1999).
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Economic Costs Due to Breakdowns in Electric
Transmission

• August 10, 1996 power outage in California
  resulted in an estimated loss of 1 billion
• Nigeria loses 1 billion annually due to
  poor-quality electric services.
• Latin American power shortages result in a 10-15
  billion annual loss

World Bank, 2000
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Measuring the Economic Value of Super Conducting
and Other Advanced Technologies to the US
Economy
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The Good News from a Technology Perspective

• The transition to a more efficient economy on
  both the demand and supply sides is not about
  ratcheting down the economy rather, it is about
• Investing in new technologies
• Putting Americas technological leadership to
  competitive advantage and
• Developing new ways to make things, and new ways
  to get where we want to go, where we want to
  work, and where we want to play.

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Opportunities for Efficiency Improvements in the
U.S. Production and Use of Electricity

• U.S. wastes in the production of electricity (24
  quads annually) is more energy than is used by
  the entire Japanese economy for all end uses.
• According to the study, Scenarios for a Clean
  Energy Future, cost effective end-use
  technologies might reduced electricity
  consumption by 1,000 billion kWh by 2020. This
  level of savings is more than Japan now uses for
  its entire economy.
• For more background, and a full copy of this
  study, visit the CEF website at
  http//www.ornl.gov/ORNL/Energy_Eff/CEF.htm.

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The Case of the Information Economy

• Many different information and communication
  technologies contribute to increasing
  opportunities for energy savings and large
  productivity gains in business.
• The Lawrence Berkeley National Laboratory
  indicates that the Internet and all electronic
  equipment only consumes 1 and 3 percent,
  respectively of the nations electricity.
• Yet, further efficiency gains are emerging. LCD
  screens consume one-half to two-thirds less
  energy than CRT devices. And new server
  technology may reduce the energy needed to move
  data bits by one-half or more.

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Historical Trend in U.S. and Florida Electric
Grid Efficiency
Years
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Comparing U.S. Trends in Overall Energy
Efficiency with Electric Generating Efficiency
Nations Overall Energy Efficiency
Electric Generating Efficiency
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Fuel Mix Use in U.S. and Florida
Percent ()
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Electricity Generation in U.S. and Florida
Percent ()
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The Value of the Florida Electric Industry to the
Economy The Potential Impact of Deregulation
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Floridas Largest Utilities
Source Energy Information Administration/State
Electricity Profiles
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Electricity Prices in Florida /1000 Kwh(1978
2000)
Nominal Price
Real Price
Source Florida Public Service Commission
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Florida Revenue From Sales To Consumers by Sector
(Thousands 1999)
TOTAL REVENUE 12.8 Billion
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EXISTING NUMBER OF MILES AND COST OF EXISTING
FLORIDA ELECTRIC TRANSMISSION LINES
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NUMBER OF NEW TRANSMISSION LINE MILES AND ACRES
OF LAND NEEDED IN FLORIDA (2000-2009)
NUMBER OF MILES OF NEW TRANSMISSION LINES NEEDED
FLORIDA PSC, DEP, 2001
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Florida Summer and Winter Peak Demand by
Year(1999)
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Florida Energy Use By Customer Type (1999)
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REMI Inputs For Ten Percent Price Shock Analysis
 
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Summary of the Results of a Ten Percent Increase
in Florida Electricity Prices

• A loss of employment of 27,740 for 2001. This
  corresponds to a reduction of approximately
  half-percent of Floridas total current
  employment levels.
• A decrease in GRP (1.5 Billion) and real
  disposable income (1.6 Billion) for 2001.
• . Both of these levels drop to statewide losses
  of (2.6 Billion) by 2021.

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DROP IN FLORIDA EMPLOYMENT RESULTING FROM A TEN
PERCENT INCREASE IN ELECTRICITY PRICES
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DROP IN FLORIDA PRODUCTIVITY AND INCOME
RESULTING FROM A TEN PERCENT INCREASE IN
ELECTRIC RATES
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Measuring the Potential Economic Impact of
Deregulation
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Summary Chart of Emissions Results (for Texas,
Massachusetts and Differences in 2001 Dollars)
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The Potential Market for and Value of HTS
Technologies to the US and Florida Economy
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Recalling a Basic Economic Relationship
GDP Investment Personal Consumption
Government Spending Net Exports
Hence, a technology-based energy efficiency
strategy could lead to (1) greater
investment in energy efficient/ highly reliable
reduced emission low-carbon technologies (2)
increased spending as a result of energy bill
savings (3) RD, incentives, and market
development programs and (4) reduced oil
imports Therefore, an investment-led innovative
high tech investment strategy can lead to a net
positive gain for the economy
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Price/Performance Ratio First Generation HTS
Cable
US Military SMES/Motors-Generators/Cable
Applications
Commercial SMES/Motors-Generators/Cable
Applications
Residential SMES/Motors-Generators/Cable
Applications
Source Modification of American Superconductor
Inc, 2001
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Economic Analysis of HTS Technologies

• One recently study of HTS technology in the
  electrical utilities industry was completed by
  L.R. Lawrence and Craig Cox, examine currently
  available HTS products and benefits.
• The authors attempted to quantify market entry
  dates and total annual savings HTS annual
  benefits, to 2020
• Electric motors
• Transformers
• Generators
• Underground cable
• Fault current limiters and, among other
  variables.

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The Projected Entry Dates where HTS is Expected
to Capture 50 of the Potential Market
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Total Annual Benefits for Motors based on 2.5
Annual Growth in Capacity and Generation
(Billions )
Source Lawrence Study, 2000
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Total Annual Benefits for Transformers based on
2.5 Annual Growth in Capacity and Generation
(Millions )
Source Lawrence Study, 2000
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Value of Annual Benefits of Saved Energy from
Installing HTS Generators based on 2.5 Annual
Growth in Demand (Millions )
Source Lawrence Study, 2000
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Value of Annual Benefits of Saved Energy from
Installing HTS Underground Cable based on Annual
Growth in Capacity and Generation (Millions )
Source Lawrence Study, 2000
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Total Value of Annual Benefits of Saved Energy
from Installing HTS Motors, Transformers,
Generators, and Underground Cables based on 2.5
Annual Growth in Capacity (Billions )
By the end of 2010, benefits accrue totaling
1.086 Billion. By the end of 2020, the accrued
benefit is 61.2 Billion
Source Lawrence Study, 2000
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Using Regional Economic Models (REMI) to Measure
The Potential Value of HTS Technologies to the
Florida Economy
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Recalling a Basic Economic Relationship
GDP Investment Personal Consumption
Government Spending Net Exports
Hence, a technology-based energy efficiency
strategy could lead to (1) greater
investment in efficient/ (environmentally
desirable choices such as HTS and low-carbon
technologies (2) increased spending as a
result of energy bill savings (3) RD,
incentives, and market development
programs and (4) reduced emissions, energy
consumption and foreign oil imports Therefore, an
high tech investment strategy can lead to a net
positive gain for the economy
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HTS Model Framework (Basic Assumptions)

• Two scenarios were developed that simulated the
  Lawrence study benefits applied to the State of
  Florida.
• One model simulated the 2.54 growth rate and the
  other model represented the 1.4 growth rate in
  demand for the electrical industry.
• Additional assumptions used for both REMI models
  included for HTS technologies a decrease in the
  price of electricity of 0.9/year in the
  commercial and industrial sectors (from the
  Lawrence study), and a decrease in household
  consumer expenditure price index of 0.03
  (household savings/household consumption).
• The HTS technologies are assumed to save the U.S
  18.24 Billion per year in presently envisioned
  equipment (10 market penetration is assumed
  within the first five years, and 50 market
  penetration is assumed after five years. These
  assumptions are incorporated into the 18.24
  Billion annual benefits).

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REMI Inputs for HTS Technologies Analysis
 
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Results of Growth in Economic Productivity from
Use of HTS Technologies in the State of Florida

• Implementing HTS technologies across the Florida
  commercial, industrial and residential sectors
  would result in
• At the 2.5 growth rate initial new net
  employment increase of 9,889, for 2001
• This new net employment continue to decrease
  through the forecasted years, ending with an
  additional thousand employed in 2021.
• At the 1.4 growth rate additional employment of
  8,557 jobs for 2001 and 300 by 2021 would result.
  
• This analysis assumed both a 2.5 and 1.4
  future annual growth rate of demand for
  electricity in Florida.
• Source CEFA/FSU

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Results of Growth in Economic Productivity from
Use of HTS Technologies in the State of
Florida (Continued)

• GRP for both models for the State of Florida
  would be approximately 500 million for 2001 and
  decline incrementally throughout the forecast
  period.
• Likewise, the real disposable income for both
  models would be approximately 300 million for
  2001, and decline incrementally throughout the
  forecasted period.

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• HTS Technologies Have the Potential to Provide
  Significant Future Additional Benefits to the
  State of Florida.
• The higher efficiency of electric generation,
  transmission, distribution and utilization
  results in reduced emissions of
• Localized pollutants
• Long distance transport pollutants
• Greenhouse gas emissions and
• Associated environmental and Socio economic
  effects

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Examples of How Air Pollution Environmental
Economic Impacts Are Modeled in Regulatory
Settings
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Applying the Damage Function Approach
Emissions and Resource Use (e.g., Changes in SO2,
NOX Emissions)
Changes in Environmental Quality (e.g., Changes
in PM2.5, Ozone, . . . .)
Environmental and Social Impacts (e.g., on human
health, visibility, materials)
Changes in Well-Being or Damages (measured by
willingness to pay)
Aggregation of Impacts Across Effects,
Individuals, and Time
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50 Billion in Health Benefits from Title IV SO2
Reductions
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Annual Health Benefits of A Multi-pollutant
Strategys Fine Particle Reductions in 2010

• 10,600 cases of premature mortality avoided
• 5,400 new cases of chronic bronchitis avoided
• 3,100 cardiovascular and respiratory hospital
  admissions avoided
• 2,000 asthma emergency room visits avoided
• 17,600 cases of acute bronchitis avoided
• 8.5 million respiratory symptom days avoided
• 1.5 million work-loss days avoided

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Monetary Value of Selected Health Events (in
1997)

• Mortality 5.4 million
• Chronic Bronchitis 319,000
• Hospital Admission 10,600 to 13,600
• Emergency Room Visit 280
• Respiratory Symptoms 7 to 47 per day
• Acute Bronchitis 55
• Work Loss Day 102

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Florida Economic Impacts from Achieving the U.S.
Global Warming Solutions Would Result in the
following

• Reduce carbon emissions by 36 percent in 2010
  (back to 1990 levels)
• Increased annual savings, 300/household by 2010
• An additional 27,000 jobs would be created in
  Florida by 2010

Source The Impacts in Florida of a U.S. Climate
Change Strategy, by Tellus Institute