Power firms grasp new tech for aging grid

Jul 11, 2008 - Steve Gelsi - MarketWatch.com

BROOKHAVEN, N.Y. (MarketWatch) -- On the ground beneath a forest of power transmission towers in suburban Long Island, experimental wires cooled by liquid nitrogen carried 138,000 volts in flat strands about the size of linguini.

Power executives, engineers, and the media gathered recently to officially throw the switch at the $60 million Holbrook Superconductor project, the world's first transmission power cable transmitting waves of electricity from the grid to a substation that feeds actual U.S. homes.

Surrounded by stainless steel tubing and insulation, the three superconductors at Holbrook move power down a corridor only four feet wide. The 600-meter-long underground cable system consists of about 99 miles of superconductor wires from American Superconductor chilled to minus 371 degrees.

"These are electricity pipelines," said Greg Yurek, CEO of American Semiconductor as he waved his hand at the giant power lines above. "Just look at the right of way, 200 to 300 feet wide. That costs a lot of money. Compress all that down to those three simple superconductor cables, and that's a lot less right of way. That's going to reduce overall system cost. That's gonna go right to the ratepayers."

Faced with the threat of a major crisis from handling increased loads over electricity bottlenecks with 100-year-old gear, electric power providers are eying new technology to help shore up America's aging grid with about $17 billion in spending by 2010.

"If we don't invest in technology and we continue to have an antiquated system that's not able to predict problems before they happen, we'll be looking at increasing power quality problems and blackouts," said David Brewster, president of EnerNoc a provider of so-called "smart grid" technology.

The times remain challenging on several fronts for utility providers, saddled with uncertainty over climate legislation and questions over how much more power will be needed in the face of the economic slowdown. The need for system upgrades brushes against political pressure to keep rates down.

While they've been criticized in the past for moving too slowly, the monolithic electric power generation industry in the U.S. is finally picking up the pace of adopting high tech.

For example, Xcel Energy has been applying new grid technology in Boulder, Colo., which it's dubbing the nation's first "SmartGridCity." And Dominion's Virginia Power unit has been offering smart meters to home owners to tell them how much energy they're using and how much it costs.

For American Semiconductor and others in the electric power equipment game, it's been a long haul before the power industry turned on its light for superconductors and other cutting-edge technologies, even as demand for electricity rises.

Superconductors first emerged in the laboratory in the early 20th century. And American Superconductor has been among those pushing it for some 20 years.

Rate increases move to center stage

This year the power industry is emerging from a relatively quiet period following the headline-grabbing blackout of 2003 and the rolling California brownouts of the Enron era in 2000-2001.

Then, as fuel prices began their record run in 2007, utilities around the country started scrambling to cover costs by imposing fuel surcharges and regular-approved rate hikes. More than 100 state regulatory actions are planned or in progress to address rising electricity costs, according to the Edison Electric Institute.

In June, giant Florida power provider FPL won the OK to hike residential monthly bills by an average of 8% from August through December to cover half of an estimated $746 million in unanticipated fuel costs. All told, FPL is moving to get a 19% boost spread into 2009.

Nationally, electricity rates have been increasing at about 2.5% a year since 2000, ahead of the 2% rate of inflation.

Some argue that even with fatter rates, electric power providers aren't moving fast enough to update the grid.

"They're the biggest bunch of troglodytes this country has ever seen," said analyst Michael Carboy of San Francisco-based Signal Hill. "They're utterly resistant to change."

He pointed out that the industry has yet to live down a massive summer 2003 blackout, when power outages struck from southern New England to Michigan.