[MUSIC] Up until now we've talked about primary energy sources and how they can be harnessed to create energy that people can use. Now let's talk about electricity. Not an energy source in itself but an energy carrier. Let's pursue that thought. Electricity is essential to modern society. We use it to light our buildings and streets and to warm and cool the places where we live and work. Electric power supports our supplies of food and clean water, enables communications and computing, keeps hospitals and schools open and operating and many other things. We can't systematically harness the wildly unpredictable power of lightning so we must create electricity by transforming energy from the primary sources we've reviewed during the past 10 lessons. Electricity is a vector or a means of carrying energy from its primary sources to places where that energy can be used. Humanity's consumption of electricity has increased steadily since it became generally available in high-income nations at the turn of the 20th century. Since 1971 it has increased more than fivefold globally. Combustion of fossil fuels particularly coal and natural gas has always been the major source for electricity. Other sources hydro, nuclear and more recently other renewables have grown dramatically since 1971 but fossil fuels still lead the way. In fact low emissions electricity sources are expected to meet only half the projected demand growth in 2021 and 2022. According to the International Energy Agency 2021, electricity markets report, coal and gas are expected to provide about 45% of electricity generation growth in that same time period. Electricity generation and consumption has plateaued in high income OECD nations in the last 10 years as population stabilized and efficiency measures come into play. We'll talk about them in a future lesson. But electricity consumption has exploded elsewhere particularly in China and other Asian nations and will continue to do so in the foreseeable future as people build energy rich modern lifestyles. [MUSIC] The Sankey diagram shows us that while electricity is generated by a variety of sources, its present day applications are primarily in buildings and some industrial processes. The enormous transportation sector is of course dominated by petroleum products with electricity supplying only limited rail and passenger car applications. Energy transitions plans at least in high income nations focus on both increasing the share of electrical generation from low emissions sources, hydro, nuclear and other renewables. And on increasing the applications of electricity to displace high emissions fossil fuels in every area of energy consumption. These are admirable goals. As we've seen in past lessons, much work is being done right now to work towards them. But it's not just a matter of the sources and applications of electricity. Progress hinges on the electrical grid. The immensely complicated local, regional, national and international networks of wires and infrastructure to move electricity from source to application in a timely and safe fashion. Organizations that build, maintain and operate electrical grids must be mindful of the challenges in front of them as electricity sources and applications evolve. The National Academies Press Report puts it very well, people demand that their electrical grids be safe and secure, clean and sustainable, affordable and equitable and reliable and resilient. Let's review some of those challenges. The North American high voltage electrical transmission grid is a huge system bringing together thousands of generation facilities and over 300 million customers. Most of these lines were built with the objective of moving power from large fossil fuel, nuclear and hydro plants. Some in remote locations to serve consumers, both close by and thousands of kilometers away. Adding a completely new transmission line often takes 10 years or longer. Many new gas, wind and solar generation facilities have much shorter construction schedules. Hence regional and long term transmission system planning requires forecasting various build out scenarios of new electricity sources. Electrical transmission companies must supply the exact amount of electricity that consumers demand at all times of the day every day of the year. Well every day is different, each jurisdiction has typical demand patterns that vary systematically. The minimum amount of demand or load on electrical system is called the base load. In this case about 15,000 MW. This load is most efficiently served by generators that run continuously and reliable, which in this case is nuclear and coal fired generation. Hydroelectricity, gas or biomass fuel generation and geothermal can also provide base low power in various systems. Peak load or periods of maximum electricity demand can occur at any time. But typically happen in the morning when people are getting ready to go to work or school and in the evening when everyone comes home and turns on their appliances. Throughout much of the day demand varies minute by minute and the system must deliver electricity to cover that demand, which is called load following. Intermittent renewables like wind and solar produce electricity according to the resource available regardless of demand. Typically, solar generation peaks at midday. Well, wind is less regular. Most operators try to minimize emissions associated with their grid, so try to use the available wind and solar as much as possible. Therefore, a system operator must have dispatchable energy sources available. They can be turned up and down quickly to follow the load, maintaining the reliability of the system. In this example, gas turbines and pumps storage are the main load followers, although hydro is maximized at the morning and evening peaks as well. The duck curve, a plot of energy demand versus hour of the day named for its resemblance to the body and head of a duck illustrates a major challenge for electrical grids. Renewable sources such as solar and wind produce energy intermittently and rarely in sync with electricity demand. The California Independent System Operator or CAISO created the duck curve in 2013. To illustrate the net demand for electrical generation by the utility from sources other than solar on a typical spring day. In 2012, the upper light gray curve, we see relatively low demand in the early hours ramping up in the morning as the workday begins. Demand decreases late in the afternoon as businesses shut down and then ramps up again in the evening as people arrive home. As more solar power was added to CAISO system in succeeding years, net electricity demand from non-solar sources dropped in midday when solar generation was at its peak. By 2020 that same typical spring day saw relatively low midday non-solar demand, but it ramped up quickly during late afternoon to meet evening demand in a significantly larger economy. Of course, the curve looks much different on cloudy days and is less extreme in the winter. The duck curve presents three major issues for the electrical grid operator. Short, steep demand ramps requiring the operator to bring on or shut down electrical generation in a short time period. Peak midday solar production can exceed demand, meeting output must be curtailed by shutting down some non-solar generation, which can be difficult and expensive. Or selling excess electricity to neighboring jurisdictions, which generally gets a low price because of the irregular supply. Management of oversupply during midday hours makes it difficult to vary output quickly to maintain grid reliability as intermittent sources cannot respond quickly. Now, imagine the additional complexity when intermittent wind generation is added to the mix. On top of the daily challenge of meeting electricity demand, electrical grid operators face new challenges in the future. Adding the new infrastructure required to meet expanded electricity demand is a huge challenge. Not just transmission lines, but substations, feeder relays, fuses, and safety devices controlled by software systems resistant to cyber attacks. Solar energy in particular will come from many distributed sources, such as solar panel arrays on homes and buildings. In some places, microgrids will be built to provide more resilience to local power delivery. Connecting all of these reliably to the larger grid and enabling current to flow to and from the distributed sources requires a great deal of integrated planning. As electric vehicles become more common, meeting their charging demands will add complexity and the need for additional capacity to the grid. Government policies at local through national levels must be reviewed and updated to most efficiently serve ever changing electricity markets and grids. As electricity supply and demand becomes more complex, electricity prices respond sharply to supply disruptions and demand spikes. Extreme weather events like the February 2021 ice storm in Texas and adjacent states can cause very high short term price spikes as consumers need more electricity. But some sources go offline or do not perform to specifications because of the weather. While prices dipped with falling demand during the worst of the Covid outbreak in 2020, they rose steadily through 2021 as demand returned. In late 2021, prices rose sharply in Europe as wind power did not deliver adequately. Natural gas was in short supply for a variety of political reasons and fossil fuel capacity growth had been limited by investment and policy issues over several years. The 2022 Russian invasion of Ukraine amplified supply and price issues. Long term solutions to these problems remain to be developed. Meanwhile, many distribution companies are going out of business and governments are spending huge amounts on subsidies to keep the power on for many consumer. Rising electricity prices can create energy poverty even in high income nations, as people with lower incomes cannot afford sharply rising utility bills. In order to meet the challenges of expanding upgrading electrical grids to address supply and demand issues, industry spends hundreds of billions of dollars per year on electrical infrastructure. More than it spends on building new fossil fuel and nuclear generation facilities and similar to all renewable power investments. Regional power trading arrangements allow grid operators more flexibility through electrical grid linkages called inter ties to neighboring jurisdictions. In Europe wind power from the North sea, solar power from Spain, hydropower from Scandinavia, and pumped hydro storage in Switzerland in the UK are interconnected to efficiently make use of the various electricity sources and to minimize costs and emissions. Similarly, in Western North America, hydro electricity from British Columbia and the Northwestern US, plus solar and wind power from several western states are available at different times and can be used more efficiently when all linked at the regional grid level. [MUSIC] Now, I'm going to turn it over to Scott Thon, President and CEO at Berkshire Hathaway Energy Canada and his team at Altalink. BHE Canada is currently building the Rattlesnake Ridge Wind power Project, a 130 megawatt wind generation project in Southeast Alberta expected to be in service in 2022. BHE Canada also owns the Canadian portion of the Montana Alberta tie line, a transmission line connecting Alberta's grid to the Montana grid and supporting the transmission of clean wind generated energy between the two regions. Altalink is Alberta's largest regulated transmission company and their transmission system connects homes, farms, businesses, and industries to the electricity generated across Alberta. Scott and his team are going to address the issues facing major grid operators today and the work they are undertaking to deliver the electricity of the future. [MUSIC] >> Hi, I'm scott Thon I'm the President and CEO of Berkshire Hathaway Energy Canada. It's a great job to have because I get to work with all kinds of people. One of the companies that we own is Altalink, which runs the power grid for the province of Alberta. But I also have a transmission grid group that does grid development in the United States. My team also owns generation, whether that's renewable projects or natural gas. And in my career, I've had just a great opportunity to be responsible for nuclear power, for hydropower for all kinds of things all around the world. And it's really nice to be back focused here in Canada and to think about where electricity and energy is going in the future. [MUSIC] Okay, let's talk a little bit about the electricity grid and I know it's not something that you think of every day. But it's really there just quietly running our economy and keeping you safe, providing you diverse competitive power and it's getting us ready to accelerate into a greener future. Let's think about safety for a second, whether it's keeping the lights on at your local hospital, or maybe it's keeping you warm on a cold winter night, or it's just charging your smartphone. It is just there reliably safely, just quietly powering your home, empowering our economy. The second thing it does, it acts like a collecting point like the internet where you get all kinds of inputs that it weaves together to power your home and your business. Now maybe that's a solar panel, maybe that's a natural gas fired power plant, maybe it's a hydro plant, a nuclear plant, or a wind power generator. You get access to all of them, you get diversity, and you get competition to keep your prices low. And then lastly, it's really paving the way to accelerate us to a greener grid. Just think about it, if you just have the resources in your own little area, you're going to be quite limited. But if you have access to a much broader region of the wind might be blowing over here in the sun over here. You can really accelerate the development of renewables, non emitting greenhouse gas generation. That's what the grid provides you, safety, diverse competitive prices, and more access to non-emitting renewable energy. [MUSIC] One of the big areas of focus for the grid is really protecting it against cyber security. Now, think about it, if you're a bad actor and you want to disrupt things. Maybe you're non-sophisticated person who's just trying to disrupt things you're going to focus on the grid. If you're someone who's a criminal who wants to extract money, a grid is a great place to try to focus your efforts. Or if you're a country or a state-sponsored, sophisticated entity that really wants to disrupt an entire economy you're going to likely target the grid. And so, this is a big area of focus in making sure that we have a safe and reliable grid. [MUSIC] >> State-sponsored actors are becoming more and more sophisticated and they are focusing their attacks on the electricity sector and industrial control systems. We actually saw a large-scale service disruption in the US in May 2021 with Colonial Pipeline. Colonial Pipeline is one of the largest pipeline distributors in Southeastern US and they were attacked with ransomware on their corporate IT network. As a result, they shut down their operations network because they weren't certain that the ransomware had infiltrated from their IT network to their OT network or not. That service disruption resulted in massive fuel shortages across multiple states. Over 70% of shortages at pumps in South Carolina and Virginia and even over 87% of fuel stations in Washington DC being affected. There are two primary methods of attack. One is through phishing emails and the other is through exploitation of vulnerabilities. The first one, phishing emails, very common, everybody has seen these like paying to free the astronaut in space. And some of them are more sophisticated like actual links from a vendor you've made purchases from before. An organization like Ata Linksys is phishing emails like this in the numbers of 20,000 a day. Vendors release vulnerabilities on a daily basis. These are weak spots in their software firmware that can be exploited. Over time, we have seen the number of vulnerabilities published increased significantly since 2017. For example, on your Apple iPhone security patches are released on a regular basis. Sometimes the vulnerabilities that those patches are addressing are zero-day non-click vulnerabilities. That means a bad actor could take control of your phone, lock you out of it and have access to all of your private information. Now, imagine that on the same scale across industrial control systems with thousands of devices. So even as organizations stay on top of phishing emails and stay on top of patching vulnerabilities, hackers have moved to attacking vendors and trusted suppliers. So we've seen that in actuality, in December 2020 solar winds was compromised. SolarWinds was an organization with over 300,000 customers. At least 18,000 of those customers downloaded software updates that contained malicious code that allowed the hackers to now have access to their customer information. Cyber threats are on the rise and we're continuing to see trends of vulnerabilities increasing and the number of phishing attacks increasing on a daily basis. So organizations need to continue to focus on cyber and physical security and strengthening their organization's security posture. As we see, cyber attacks continue to increase and evolve over time becomes more and more important for us to secure the grid. >> So as you can see really, this is a core focus to make sure that we're on top of the threats that are coming at us, as well as we can make sure that we can detect and respond to anything that might be a risk to the grid. [MUSIC] As our climate changes, we're really asking our grid to deliver its peak capacity more often and in much more extreme weather events. More often, why? Because typically our grid would have to perform its peak function through the winter, if you live in Canada, that's when the biggest demand is. But now we're seeing extreme heating events that are requiring the grid to deliver peak capacity through the summer as well. And it's being asked to do this in a much more extreme weather environment. >> Most of the high voltage transmission assets are long-life assets, decades that they'll spend out in the elements. They'll be in the weather, will be in the cold snap, they'll be in the heat wave, they'll be in the Chinook winds. And that wear and tear is really what we have to look after. They're also carrying a high amount of energy to transport it around the province. And so when you combine that wear and tear with that amount of energy, you really have to look out for public safety. You can't have components failing or falling on the ground you're potentially hurting somebody. So we've got a team that basically looks after that, it's spread out over a large geography for us is 13,000 km. And we'll be doing aerial patrols several times a year, we'll be visiting substations, doing a lot of visual inspections, a lot of health checks. We're also using a fair bit now with modern technology of remote monitoring and condition monitoring, bringing back to our central control room to allow us to dispatch field staff if equipment's not behaving as expected. So, those are just a sampling of the activities that the wear and tear and the weather definitely keeps us hopping. Because I think the grid, certainly in Alberta, it's very reliable. It's pretty robust, we've got lots of good practices and we've been doing it for a number of years and I think that so it's reliable. It'll be there when you need it. The trick becomes these larger, more resiliency-based items like the severe weather events where they're harder to predict their new and they seem to be more extreme than they've ever been. And so, that resiliency readiness part for me is a bit of a question. How far do you go, how fast you need to get there? We're doing a number of things to harden some of the assets, looking at the wildfire situation, cyber security threats. But you kind of still left, well, with that question is to just, what's the right place to have the grid be at? And what's resilient enough? >> Whether it's large storms, whether it is very high wind events or its wildfires that we've all read about in the media, the grid is being asked to deliver more in a more extreme environment. [MUSIC] The grid is going to be very important to enabling our energy future and our energy future is going to be much more electrified. An example would be electric vehicles, now, many engineers calling them jokingly motorhomes. And they say that because the power required to charge up an electric vehicle is almost the same as your entire home today. So it's going to double how much electricity we need. The grid can provide that through a diverse group of renewables bringing it to your house. Now, we'll have to certainly reinforce some of the grid, but there's so much we can do with what we already have, by technology and also by how you interact with the grid. >> Although I'm sure the grid is going to require some reinforcements. I think that there's actually a big opportunity to meet these future electrification needs by changing the way customers and the utility interact. Historically, utility customers use electricity whenever and wherever they like. The challenge for utilities has been predicting customer behavior and usage and then designing a grid to always be able to meet that need. This really has resulted in a grid that has been designed to meet the peak demand of customers, which is really likely for very short periods of time. As a result, most of the time, the grid actually has a lot of extra capacity that is not being used. Many of these new, very large loads are very flexible as an example, in the future when people come home from work, they're likely to want to just charge plug in their electric vehicle for charging. However, they really don't need their electric vehicle until they leave for work the next morning. This leaves a very long period of time that they don't need their vehicle. This provides the flexibility if the interaction between the utility and the customer becomes a lot more active and extremely well coordinated to use the existing grid infrastructure to meet all customers needs. Without having to actually do a lot of grid reinforcements. It's just going to require a lot of active coordination between customers and utilities by and large, there's a lot of capability in the existing grid. We just have to use it a little bit differently. A technology that is capable of unlocking the capacity that has always been there, but a bit unreachable is dynamic line ratings. It is extremely important for utilities to always manage their lines within their rated capacity exceeding aligns rated capacity can be a very serious problem. It can create public safety risks. It can result in line outages which can destabilize the grid. Overhead lines are designed to operate up to a maximum temperature. Heat is generated by electrical losses caused by the current flowing through the conductors and it's being dissipated to the ambient air. As a result, the actual rating of the line truly varies with ambient conditions and the ambient conditions that have the greatest impact on the capacity of the line are wind and ambient air temperature. Traditionally, utilities have made very conservative assumptions for these ambient conditions and calculated a single static rating for the transmission line. Most of the time lines actually have a lot more capacity than what their static ratings would suggest. In fact, at times a transmission line might even have twice the capacity as its rating. By applying dynamic ratings, it's possible to get considerably more power through the network. However, there will be some periods when ambient conditions are quite unfavorable that the capacity of lines might be restricted. So it's going to be important for utilities to have operational levers that they can pull to reduce power flows for these periods and they might be accessing flexible loads re dispatching generation or even using energy storage. Energy storage is a very powerful tool that will allow us to optimize the grid that we have to meet these future needs of electrification and integration of increased renewables without necessarily the need to add a lot more wires. I like to categorize energy storage in two different categories. Energy applications and power applications. A good example of an energy application is locating energy storage within a renewable zone. What it does is when the renewables are at high output, this energy storage is actually absorbing some of that energy which is reducing the demands on the transmission system and then when the renewables are at a low output it's being discharged to put that energy back through back through the grid. Power applications are are ones that are used to help the grid work through transitions. In fact a lot of capacity within the grid is designed today and un accessible for normal use because it has to be kept in reserve for to manage these transitions. Energy storage can fill that need. I believe that H. P. D. C. Will play a significant role in the future. Grid, renewables like wind and solar are very low cost today and their cost is actually dropping every year. It seems the only downside about wind and solar is that they're intermittent and they really can't be relied upon and as a result, in order to be sure that you can supply your customers with the energy they require, you need some form of backup generation so you can either build that back up generation or the alternative is to actually use H. V. D. C. Lines to move very large amounts of energy from different jurisdictions into your area when renewables within your area are not producing power. And this is where H. P. D. C. Is very well suited. H. V. D. C, as the name suggests, is using power electronics to convert electrical energy into high voltage direct current. This technology allows you to vary efficiently and economically move large amounts of power over very large distances. Some of the largest H. P. D. C links today are over 2500 kilometers long and some links have capacities of over 8000 megawatts. Put That in perspective. Alberta's average electrical load in the entire province is usually around 10,000 MW So this is equivalent to powering Alberta off a single line. There's been a lot of different parties actually more more and more parties that are have conceptualizing the concept of an HVDC super grid or mega grid. [MUSIC] Now this is a grid that overlays our current grid and its sole purposes to move very large amounts of energy mainly from renewables across very large geographies. And this can be done at a country level, at a continental level or even transcontinental level. HVDC technology is really going to enhance the grid that we have today and ultimately allow us to move to higher levels of renewable energy at a lower cost. Talked about a number of technologies that hold a lot of promise individually. But it's actually when they all come together there's a lot of synergies between these technologies and together they are even more valuable. >> So we've seen that technology can really be used to maximize the existing grid we have in place whether that's to your home or whether that's across regions. And well the idea of a massive super grid isn't going to happen tomorrow. We do have existing interconnections between regions that have traditionally been built to keep the lights on to make sure that we can share power to make sure we have a reliable and safe grid. But as we go into the future where we want a greener and more cost competitive grid enter ties are going to be critical to making sure that happens. [MUSIC] >> The economic benefit of interties are they fundamentally enable trade of electricity across the regions. And that could be imports at some moments of time and exports other moments in time. So they help with reducing electricity pricing volatility. They also help enable lower electricity costs through increased competition. So the reliability benefit of interties are they finally help a grid, be more stable, more reliable. So for example, my boss tells a story, he goes back a number of decades in the industry. And he talks about being in the control room before Alberta was connected to British Columbia through the current inner tie that exists. And he would say that when a certain steel mill in Edmonton would turn on its electric arc furnaces that literally the lights would flicker in Calgary. Those days are behind us and now as a result of stronger interties, we have a much more stable grid here in Alberta. On a macro level the value of interties are as we move to more renewable energy resources here in society, we need to take advantage of resource diversity and geographic diversity. So the western US is a great example. You have very strong solar resources in place like Southern California and Arizona, Nevada, New Mexico. You have very strong hydro resources in the pacific northwest, you have very strong wind resources in states like Wyoming in Montana. So depending on if the water is flowing or the winds blowing or the sun shining at any moment in time, you could have surpluses in one region and deficits of energy in another region. And interties, help move that energy around to take advantage of that diversity. On a micro level the grid still fundamental from my perspective. So let's use rooftop solar. That's the example that people would be most familiar with. So if a household puts solar panels on its roof depending on if the sun is shining, for example, you may have a surplus of energy and if the sun's not shining you may need energy. And so being connected to grid allows you to balance your energy supply and demand. I would suggest that interties in the US are working very well and the US is also pursuing additional investments and interties. I would argue that the US is further ahead in terms of the strength of their interties among states and regions. And when you overlay that with some market design, a concept called the energy imbalance market which allows jurisdictions to move renewable energy between themselves very cost effectively. Interties with that market design has really resulted in some great benefits for consumers saving them billions of dollars since the implementation of the energy imbalance market just a few years ago. So as great as interties sound from my perspective, there are political challenges especially here in Canada. Where we have different political governments that are in power for each province and sometimes don't work as well together as as what we would as Canadians. And we have differences in market design as well. So some provinces have vertically owned crown utility monopolies. Other provinces like Alberta have a deregulated energy market or electricity market. And so getting those governments and those markets to work together for the common good of of all Canadians can be a challenge. >> So the power grid does a lot of things today. It keeps our homes safe through reliable power. And whether that's ensuring we don't have cyber attacks or whether that's reacting to much more extreme weather events brought on by climate change. The grid is there to keep you safe and to really power our economy. But the grids also going to be highly critical as we start to electrify our energy system. And whether that's to the use of technology to get more out of the grid than we can today. Or whether that's collaborating in a much bigger way to ensure that across regions we can tap into renewable resources, whether they be water, wind, solar or otherwise. To make sure we have a greener power grid and one that's much more competitive and lower cost. [MUSIC] >> Thanks to Scott and his team for those insights on the operations of great operator alto link. We want you to leave this lesson with some new insights on the complexities and challenges of operating today's electrical grids. And how much more challenging that will be in the future as more of the world builds electrical infrastructure and more of our day to day activities use electricity. [MUSIC]