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4 The Electric Grid TODAY’S ELECTRIC GRID “The U.S. electrical grid is the largest interconnected machine on Earth: 200,000 miles of high-voltage transmission lines and 5.5 million miles of local distribution lines, linking thousands of generating plants to factories, homes and businesses” (Weeks, 2010). The National Academy of Engineering acclaims it the “supreme engineering achievement of the 20th Century” (Constable and Somerville, 2003). The United States is the largest electric power producer, with about 1,100 GW of generating capacity, serving the largest economy in the world (EIA, 2011b). Private investors own most of the electric utilities, but some are owned by individuals (cooperative utilities) and municipalities. Public policy oversight of the industry is vested primarily in the states and the District of Columbia (Willrich, 2009). The Federal Energy Regulatory Commission sets interstate rates and commerce, including interstate transmission siting and approval. More than 3,200 entities within the electric power industry provide power to consumers (EIA, 2012i). The electric power industry in the United States has annual revenues of more than $250 billion, and a base of assets of more than $800 billion. The distribution of these assets is as follows: 60 percent is power generation, 30 percent is distribution, and 10 percent is high- voltage transmission (Willrich, 2009). The grid1 consists of four components: generators, transmission lines, distribution systems, and consumer systems (MIT, 2011). Electricity is generated from a variety of sources, from fossil-fuel-fired plants to renewable-energy generation facilities. This electricity is moved from generating plants over long distances by transmissions systems, generally through high- voltage, high-capacity transmission lines. The high-voltage transmission system delivers its power to local distribution systems that transform the electricity into a lower voltage and send it to consumer systems. The distribution systems move the electricity through substations and transformers to the 144 million U.S. consumers, from residences to large industries (EIA, 2011b). Figure 4.1 provides a schematic of the electrical power system, from generation to final consumers. 1 For a comprehensive description of the U.S. electricity grid, including its technical, managerial, and regulatory complexities, see: MIT (2011). 159 Prepublication Version

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160 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES FIGURE 4.1 Structure of the electric power system. SOURCE: MIT (2011). Transmission lines are owned by investor-owned utilities (73 percent), federally owned utilities (13 percent), and public utilities and cooperative utilities (14 percent (EIA, 2000). The national transmission and distribution system consists of three separate networks with limited interconnection: the Eastern Interconnect, the Western Interconnect, and the Texas Interconnect.2 The Texas Interconnect is not actually interconnected with the other networks (the only connection is by certain direct- current lines), and the Eastern and Western Interconnects have limited interconnection (EIA, 2000). In essence, the continental United States consists of three independent systems that are further divisible among regional, state, and local distribution systems. Altogether, 3,233 organizations provide customers with electricity (EIA, 2012i). The Federal Energy Regulatory Commission regulates the investor-owned utilities to control and set rates. Electric utilities own and operate any or all of the following: generation plants, transmission lines, distribution lines, and substations (which contain equipment to ensure safe and smooth current flow and regulate voltage). System operators (either independent or associated with a utility) manage and control electricity generation, transmission, and distribution. The effective functioning of the electricity industry is highly dependent on control systems. Operators must constantly balance power generation and consumption because electricity is generated and used almost at the same instant. For a long time, some parts of the electrical power network did not have sufficient technologies, for example, the means to enable system operators to know important information in order to measure how much electricity is flowing along distribution lines, to enable networks to more closely integrate parts of the grid with control centers, and to enable computerized control equipment to automate system management and recovery (GAO, 2011a). In concept, the grid resembles the earliest days of power transmission and distribution with Thomas Edison’s commercial power grid in Lower Manhattan in 1882 (Brady, 2009). The grid is a one-way system that is not very responsive to ever-changing energy needs and to alternative sources of nonbaseload power. Although the current U.S. grid is aging, the system 2 A map of the national power grid is available at http://www.eia.gov/energy_in_brief/power_grid.cfm . Prepublication Version

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THE U.S. ELECTRIC GRID 161 shows improvement in transmission and distribution losses. The performance of transmission and distribution systems is measured by the fraction of energy lost from heating of the lines and components. Losses have decreased from 10-13 percent in the 1950s to 7 percent today (MIT, 2011). Reliability, as measured by the number of outages and time without power, is comparable to other developed countries, but is highly variable depending on urban versus rural locations (Maitra, 2003). Utilities continue to invest in the transmission and distribution of electricity. Also, many projects are under way to move the grid to a smarter generation. Several studies have been conducted to estimate the magnitude of the major investments needed—$1.5 to $2.0 trillion by 2030, with $880 billion for transmission and distribution to maintain present levels of electric service across the United States (Chupka et al., 2008), and $338 to $476 billion for Smart Grid investments until 2020 (EPRI, 2011). Transmission Projects Under Way The Edison Electric Institute (EEI) is the association of U.S. shareholder-owned electric companies and represents 70 percent of the U.S. electric power industry. The EEI published a report, Transmission Projects: At a Glance, (EEI, 2011) that lists 121 representative transmission projects that 37 of its members have planned for the next 10 years. It is not a comprehensive compilation of all projects that are being undertaken, but the sampling of projects captures a wide variety of project types that are under construction or planned. Investment of $61.2 billion is expected in more than 100 projects from 2010 to 2021, as reported by the EEI, to advance transmission. The reported investment includes large-scale, interstate projects, renewable resource integration projects, and upgrade-for-reliability projects. The large-scale, interstate projects involve an investment of $41.1 billion and an addition of 8,300 miles of transmission lines. The renewable resource projects equate to the addition or upgrade of 11,400 miles of transmission lines and an influx of $39.5 billion. The reliability projects represent the addition or upgrade of 3,600 miles of transmission lines and an investment of $15.5 billion (EEI, 2011). While the information provided in the EEI report indicates the gross features of the included projects, the data granularity is insufficient to make specific estimates of human resource requirements. One impact of new transmission lines, however, will be more land use, and this, in turn, will likely mean that more industry and government expertise will be needed for environmental impact statements. THE SMART GRID Utilities have been working to update the transmission and distribution systems with new technologies and more information technology (IT) systems and networks. However, industry and government stakeholders are calling for a more expansive and integrated approach to changing the electrical power grid into an improved grid with enhanced performance, a grid that facilitates alternative types of electricity generation (including wind and solar) and one that provides instantaneous information about varying electricity costs to consumers (GAO, 2011a). This would involve making the current grid smarter by applying digital technology that ranges Prepublication Version

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162 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES from meters on houses to transducers that monitor grid operation to advanced computer systems to evaluate data and more. The benefits of such an innovation include:  Increased transmission efficiency;  Quicker restoration after power disturbances;  Reduced utility operations and management costs, and ultimately lowered consumer costs;  Reduced peak demand;  Increased integration of large-scale renewable energy systems;  Better integration of customer-owner power generation systems, including renewable energy systems; and  Improved security (DOE, 2012b). Electrical supply and demand must be balanced in the electrical power system at every instant; therefore, the central consideration in modernization of the grid is continual data sharing among all of the system elements, such that the conditions within the grid are known and can be adjusted quickly as needed. To make this possible, multiple devices throughout the system must be interactive and computer controlled. Smart Grid design will involve incorporating into existing systems the sensors, controls, and wireless communication equipment that will enable the needed monitoring and control of grid activities (Fox-Penner, 2010; Weeks, 2010; Kowalenko, 2011; DOE, 2012b). Conventional power plants have been energized by fossil fuels, by hydropower, or by nuclear power. In its current configuration, the grid has been developed to connect all of these to the users. However, the most favorable locations for large wind or solar sites are not usually within easy access to existing grid installations. Geographical dispersion of future grid connections for multiple wind and solar generators is important, not only for transport of generated electricity to potential user loads, but also to mitigate the power fluctuations that arise from the intermittency of wind and solar drivers. For example, wind power is not used to provide baseload electricity because it is intermittent. (Baseload electric power is steady and continually produced, despite the varying demand.) Connecting multiple wind farms with a smart grid, however, would moderate their power variability, permitting a sizable portion of the wind farms to provide steady power (Alternative Power International, 2009). Interconnecting multiple wind farms could allow an average of 33 percent of yearly wind power to be used as baseload electric power, as long as minimum criteria are met for wind speed and turbine height (Archer and Jacobson, 2007). Modernizing the grid to become a smart grid is an ongoing process that involves many steps at multiple levels of the system. Smart meters that communicate with the grid and hence the utility would continue to be installed for homes and commercial spaces. According to Federal Energy Regulatory Commission estimates, the use of advanced metering has increased from 0.7 percent in 2006 to 4.7 percent in 2008 (GAO, 2011b). In addition, Smart Grid initiatives have included new smart components to give system operators more data on transmission and distribution system conditions and the grid overall. Smart components include smart switches on the electricity distribution system—a smart switch can communicate with other smart switches to redirect electricity around problem areas when trouble arises. Smart components also include time-synchronized, high-resolution monitors on transmission systems. Future Smart Grid Prepublication Version

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THE U.S. ELECTRIC GRID 163 technology would also include storage capacity to allow storage when electricity is cheap to produce (GAO, 2011a). With real-time information on all of the electrical flows on the grid, a little more variability is acceptable. In the Smart Grid, everything will be monitored at a very detailed level and ultrafast response will be possible, allowing operators to engage other plants if wind and solar generation drops, for example (Fox-Penner, 2010; Weeks, 2010). According to a study by the Pacific Northwest National Laboratory, preparing a full-scale Smart Grid by 2030 could potentially reduce annual carbon emissions from the electric power sector by about 12 percent (about the output from 66 average coal-fired plants). The study attributes the reductions to nine sources, including the connection of more renewable power sources (Pratt et al. 2010; Weeks, 2010). Challenges and Opportunities Grid modernization is widely seen as an urgent need, requiring new technologies. Fortunately many of these technologies are now available or in advanced development. Modernization of the grid will require public policy reforms at the federal, state, and local levels, and cooperation between the industry and government. A large investment of resources will be required to achieve a new and smarter grid (Willrich, 2009). Some Recent Smart Grid Projects Through the Department of Energy Office of Electricity Delivery and Energy Reliability, the U.S. government in the American Recovery and Reinvestment Act of 2009 (Public Law 111- 5), also known as the Stimulus Act, invested $4.5 billion to jump-start the Smart Grid. This was matched by $5.5 billion in private investment. Some recent Smart Grid projects are listed in Table 4.1. TABLE 4.1 Federal Funds for Some Recent Smart Grid Projects (Millions of Dollars) Smart Grid Investment Grant Program $3,483 Smart Grid Demonstrations $685 Interoperability Standards and Framework Development by National Institute of $12 Standards and Technology Resource Assessment and Interconnection-Level Transmission Analysis and Planning $80 State Electricity Regulators Assistance $49 Enhancing State and Local Government Energy Assurance $52 Workforce Development $100 SOURCE: American Recovery and Reinvestment Act Overview. Adapted from Energy.gov, http://energy.gov/oe/information-center/recovery-act (accessed July 17, 2012). In October 2009, nine federal entities signed a memorandum of understanding, increasing their coordination to expedite and simplify the building of transmission lines on federal lands. Following this, the Obama Administration formed the Rapid Response Team for Transmission Prepublication Version

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164 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES (RRTT),3 composed of these agencies, which will accelerate deployment of seven pilot project transmission facilities beyond federal lands as follows:  Oregon and Idaho, 300 miles of transmission lines (TL), creating about 500 jobs;  Wyoming and Idaho, 1,150 miles of TL, creating 1,100 to 1,200 jobs;  Minnesota and Wisconsin, 125 miles of TL and several substations, creating 1,650 jobs;  Oregon, 210 miles of TL, creating 450 jobs;  New Mexico and Arizona, 460 miles of TL, creating 3,480 jobs;  Pennsylvania and New Jersey, 145 miles of TL, creating 2,000 jobs; and  Wyoming, Utah, and Nevada, 700 miles of TL, creating 2,000 jobs. Using just these limited data, it appears that these projects will create more than 11,000 new jobs; approximately one new direct job per mile of new transmission line (White House, 2012). On a smaller scale, the Obama Administration has announced a plan to provide approximately $250 million in loans to rural towns for replacement of aging infrastructure and to encourage development of renewable energy (White House, 2011). WORKFORCE AND TRAINING REQUIRED TO IMPLEMENT GRID EXTENSIONS AND IMPROVEMENTS AND FOR THE SMART GRID Replacing aging grid infrastructure, with its consequent pockets of unreliability, together with new goals for penetration of renewable generation and modernization to deal with growing electrification and climate change issues, dictate major investments in the grid over the next decade or two. Not only is the grid infrastructure aging, but so also is the electric power industry workforce. As noted by several reports, the electric utility industry faces the problems of an aging workforce and likely skilled workforce shortfalls. After the North American Electric Reliability Corporation (NREC) raised the issue in 2006 (NERC, 2006), it reported in 2007 that: “Industry action is urgently needed to meet the expected 25 percent increase in demand for engineering professionals by 2015. Enhanced recruitment and outreach efforts through consortia, partnerships with local colleges, and increasing R&D support of university programs are vital for developing future industry talent (NERC, 2007, p. 8). In 2009, NREC further noted that: “In . . . 2007 . . . , NERC . . . confirmed industry concern on the qualified workforce gap, ranking the aging workforce high on both likely to occur and likely to have a consequence on the reliability of the bulk power system. Meanwhile, the demand for power workers to plan, maintain, and operate the bulk power system continued to increase . . .” (NERC, 2009, p. 64). Further, an MIT report notes: “Because of its aging workforce and the nature of emerging challenges, the electric utility industry faces a near term shortage of skilled workers, particularly power engineers. While this problem has been widely recognized, it remains to be seen whether efforts to deal with it will prove adequate (MIT, 2011, p. 18). The Center for Energy Workforce Development found in its 2011 survey that 62 percent 3 See http://www.whitehouse.gov/files/documents/ceq/Transmission%20Siting%20on%20Federal%20Lands%20MOU.pd f and http://trackingsystem.nisc-llc.com/etrans/utility/Search.seam. Prepublication Version

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THE U.S. ELECTRIC GRID 165 of the electricity and natural gas utilities workforce has the ability to retire or leave for other reasons (CEWD, 2011a). Losses through attrition and retirement of technicians, nonnuclear plant operators, engineers, line workers, and pipefitters/pipe layers through 2015 could be 32-39 percent according to the 2011 survey (see Table 4.2). (The data in Table 4.2 do not consider the implementation of Smart Grid technologies.) Based on estimates from Heydt, et al. (2009, p. 5) and adjusting the estimated numbers of engineer replacements from Table 4.2 for power engineers, approximately 2,200 to 2,900 power engineers will be needed in the United States per year for 2010-2015 and approximately 850 to 1,150 per year for 2015-2020 simply to maintain the present levels. The loss of the knowledge and expertise of these workers is a challenge that will have to be addressed by improving the effectiveness of education at all levels, improving employability and retention, attracting potential employees at all levels, and successfully integrating culturally different workers into the industry. TABLE 4.2 Center for Energy Workforce Development 2011 Survey: Potential Employee Losses Through 2020 2010-2015 2015-2020 Potential Attrition & Estimated Potential Estimated Retirements Number of Retirements Number of Job Category (%) Replacements (%) Replacements Technicians 39 28,500 19 13,500 Plant operators 37 12,400 17 5,800 Engineers 38 10,600 15 4,100 Line workers 32 22,100 15 10,300 NOTE: Totals exclude nuclear. SOURCE: Adapted from CEWD (2011a, p. 3). According to surveys by the CEWD (2009) and the National Commission on Energy Policy (NCEP, 2010), surveyed companies had difficulty finding qualified applicants to fill the skilled-craft positions. The CEWD found that 30-50 percent of the applicants that met the minimum requirements for a position were not able to pass the preemployment aptitude tests. Additional applicants were eliminated by background and drug screening so that 30 applicants had to be interviewed for every successful hire. Line workers were the hardest to find, with a hiring success rate of 1 in 50 applicants. However, by working with secondary and postsecondary institutions to create programs designed for the industry and aligned to industry skill requirements, companies have seen significant improvement in preemployment testing success (CEWD, 2009). Hiring experienced engineers is a critical need and, while hiring has been slow in the electrical power industry (but less so than in other industrial sectors), filling engineering jobs with appropriately skilled applicants (e.g., with electrical engineering degrees), has been particularly difficult. About 23 percent of applying engineers did not have the appropriate education or experience. This may be partly because of a drop in students enrolled in electrical engineering degree programs and partly because median salaries for power engineers are the lowest among major electrical engineering fields. New hires with less than the required skills have been given company-sponsored training. In utilities, hiring of international students is not usual or is very limited. For a number of reasons, utilities are more likely to hire graduate engineers at a B.S. level Prepublication Version

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166 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES rather than at M.S. or Ph.D.MS/PhD levels. However, the strongest U.S. university programs in power engineering are those with substantial research and graduate programs, according to Heydt et al. (2009). Using their four criteria that an electrical engineering department must satisfy to be identified as having a strong power engineering program, the authors found fewer than five very strong power engineering programs in the United States. Some of the postbaccalaureate graduates of such programs are likely to become future faculty members at these or other institutions. They also are likely to teach important courses in power engineering at the undergraduate level in the 20 or more universities with substantial power engineering programs and the 100 or so other universities with some power engineering courses. All told, there are approximately 200 full-time equivalent power engineering faculty or instructors in U.S. universities. An estimated 40 percent will be eligible for retirement by 2013, and possibly one- half will do so (Heydt et al., 2009). The number of graduating power engineering undergraduates is estimated at 1,500. This is roughly half to two-thirds of the number of utility replacements required each year, not taking into account the requirements for implementing new Smart Grid technologies. Enrollment in graduate power engineering programs is estimated at 550 in master’s programs and 550 in doctoral programs. The number of graduating students at the master’s level has been estimated at about 250 at the master’s level and 100 at the doctoral level per year (Heydt et al., 2009). Many of these are of foreign origin and may return to careers in their home countries. Implementing many aspects of the Smart Grid will require the traditional competencies, with some additional training to understand the new technologies, procedures, and protocols. This will be the case for line workers, power plant operators, relay and substation technicians, and other skilled-craft positions in the electric industry. Legacy power engineering educational programs are considered to be insufficient to accommodate the main elements of the Smart Grid, such as new designs and paradigms and new aspects of power system operation. These kinds of new technologies will have to be integrated into power engineering programs and their depth will have to be extended to the master’s level (Heydt et al., 2009). Beyond the workforce needs for operating, extending, and improving the existing grid, deployment and operation of the Smart Grid will require many workers. A 2008 study estimates the potential workforce impact of an accelerated deployment of Smart Grid technologies in the United States (KEMA, 2008). (It assumed a deployment period of 2009 to 2012.) Table 4.3 shows the study’s estimates, projecting a net increase of approximately 55,900 direct utility jobs (the addition of new skills and transition of displaced workers) and contractor jobs, and an additional 25,700 new utility or energy service jobs during deployment. After the Smart Grid is deployed, KEMA projects that 32,000 utility jobs will be transitioned and there will be a net increase of about 27,200 jobs that will remain. Prepublication Version

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THE U.S. ELECTRIC GRID 167 TABLE 4.3 Smart Grid Jobs Created and Transitioned Jobs in Deployment Jobs in Steady-State Jobs Category Period (2009-2012) Period (2013-2018) Direct utility Smart Grid 48,300 5,800 Transitioned utility jobs −11,400 −32,000 Contractors 19,000 2,000 New utility or energy 25,700 51,400 service company jobs Total jobs created 81,600 27,200 SOURCE: Adapted from KEMA (2008, pp. 1-2). Cybersecurity Considerations The emergence of the Smart Grid will bring enhanced reliance on IT systems. As with all IT systems and networks, cybersecurity vulnerability and threats will emerge in relation to the new electricity grid. These potential vulnerabilities include an  Increased number of access points and pathways for potential exploitation by adversaries and other malicious users,  Interconnection of systems and networks providing wider access to exploitive and malicious users,  Increased amount of customer information on systems raising concerns of monetary and private information theft by unauthorized users, and  Increased risk from new and unknown vulnerabilities (GAO, 2011a). Attacks have occurred on current smart systems. U.S. Government Accountability Office (GAO) testimony to Congress in 2012 (GAO, 2012) noted a number of issues. They include a lack of a coordinated approach to monitor industry compliance with voluntary standards, a lack of security in smart meters, a lack of information sharing in the electricity industry, and a lack of metrics to evaluate cybersecurity (GAO, 2012). The Central Intelligence Agency has reported successful attacks on the IT systems of electric power systems in multiple regions abroad (White House, 2009). It is clear that the cybersecurity aspects of grid modernization efforts will require the employment of individuals with very specialized skills not customarily associated with the electric power industry workforce—IT specialists expert in the security of network systems, engineers capable of integrating new mixes of hardware and software systems, and managers with up-to-date technical knowledge not derivable from past experience and capable of instilling an appreciation and respect for the new standards that will have to be followed meticulously. CONCLUSIONS 4.1 The Smart Grid would facilitate increased integration of wind and solar systems. 4.2 The electric utility industry has an aging workforce, with large numbers of retirements expected in the near term, and it faces a near-term shortage of skilled workers, particularly power engineers. Prepublication Version

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168 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES 4.3 Approaches to addressing a shortfall in qualified workers include improving education at all levels, attracting employees at all levels, improving employability and retention, and integrating workers from different cultural backgrounds. Utility hiring of international students is not usual or is very limited. 4.4 Companies are having difficulty finding qualified workers to fill skilled-craft jobs. By working with secondary and postsecondary institutions to develop programs designed for the industry and aligned to industry skill requirements, companies have seen significant improvement in preemployment testing success. 4.5 Hiring experienced engineers is a critical need and it has been difficult to find workers with the appropriate skills (e.g., electrical engineering degrees). 4.6 One study found fewer than five very strong power engineering programs in U.S. universities. Some of the postbaccalaureate graduates of such programs are likely to become future faculty members. 4.7 The number of graduating power engineering undergraduates is roughly half to two- thirds of the number of utility replacements required each year, not taking into account the requirements for implementing new Smart Grid technologies. 4.8 Implementing many aspects of the Smart Grid will require traditional competencies, with some additional training to understand the new technologies, procedures, and protocols. Legacy power engineering educational programs are considered to be insufficient to accommodate the main elements of the Smart Grid. Such new technologies will have to be integrated into power engineering programs and their depth will have to be extended to the master’s level. 4.9 An estimated 81,600 jobs could be created during Smart Grid deployment and 27,200 jobs following deployment. Prepublication Version