By Ramón Emilio De Jesús-Grullón, Microgrid Researcher, PUCMM
Anatomy of the Power System Value Chain
Unfortunately, the electricity grid in the Dominican Republic, as in most of the world, was designed and planned to function like a well-oiled centralized machine, characterized by a unidirectional flow of electricity, as well as economic value, from generators to final customers, developed in an era dominated by the economies of scale of fossil fuel power plants.
Due to its intrinsic characteristics, this architecture is increasingly exposed to rapidly evolving threats, be it malicious attacks, as well as the increasing frequency of natural disasters.
Network planners and operators have long managed this inherent vulnerability through the redundancy and hardening of critical energy infrastructure, but they can not completely avoid the risks of outages when events outside normal operations, low probability and high impact (i.e hurricanes, cyberattacks, earthquakes, etc) show up in the equation. Figure 1 illustrates the components of the network value chain and in particular the reliance on access to electricity for end-users, from fuel supply to generation, transmission, and distribution. If any of the elements of this chain goes down, end-users face outages.
Vulnerabilities and Risks by Segment (4) of the Energy Chain
- Storage and Fuels
Most of the electricity in the Dominican Republic is produced by generators that rely on fossil fuel supply chains of varying length and complexity, each with its associated vulnerabilities. In fact, 76.1% of the general total installed capacity is from conventional sources derived from fossil fuels, mainly natural gas and coal.
The Dominican Republic has only one oil refinery with a refining capacity of less than 30% of the total demand for hydrocarbons, which contributes to the country’s total dependence on imports of oil derivatives. Any important event that affects the production or demand for oil in the refinery has a positive or negative impact on the country’s balance, this is even more evident when one looks at the dependence on hydrocarbon imports from the US, from where 61.4% of oil between January and December (2021) has come, according to statistics from the General Directorate of Customs.
One of the most important aspects of energy security corresponds to the storage of fuels, therefore, it is necessary to know the capacity and location for each stored source. The fuel deposits in the Dominican Republic are owned by the fuel distribution companies, the electricity generation companies, and the Dominican Oil Refinery (REFINDOMSA), with shares of 42.46%, 30.87%, and 26.67%, respectively.
LPG and Crude Oil continue to be the most vulnerable fuels in relation to any contingency that does not allow supplying said storage, with only 32 days to supply the demand for LPG and only 17 days for crude oil.
In terms of distribution by geographical area, the eastern region shows the largest storage capacity with a 37.24% share, where 54.94% of the storage capacity of electricity generators and 47.77% of fuel distributors are located. If a catastrophic event were to happen in the southern-eastern (located in the path of historical disruptive hurricanes) grid reliability and social welfare would be in jeopardy.
- Coal supply chain risk
Coal supply chains have common vulnerabilities associated with the geographic concentration of their key infrastructure. Coal is typically transported by barge, truck, or intermodal (i.e., barge and truck). In 2020, fuel supply to coal-fired generators was also at risk due to extreme weather conditions, even after coal had been successfully delivered to generating stations.
In September 2021, a delay in contracting and “delay by the US coal supplier (Xcoal Energy & Resources) (…) due to geological difficulties and machinery in the coal extraction mine” (Puntes, 2021), caused the exit of part of coal generation, costing the state millions of dollars and creating a generation deficit.
- Natural gas supply chain risk
Natural gas-based generation contributed 32.8% to the National Interconnected Electric System (SENI)’s generation mix as of December 2020, and there is only one supplier and one terminal for this fuel nationwide. The existence of a single natural gas terminal creates uncertainty, any force majeure event that impacts this supplier would create shortage risks for the nine (9) power generation plants (1,780MW) that operate with this fuel, which happened in September 2021 when AES had serious difficulties when its supplier in the United States suffered an accident that forced him to temporarily suspend the production of natural gas. (Ramirez, 2021)
2. Electricity Generation
Conventional generators using fuels such as coal, #6 fuel oil, and natural gas accounted for 76.1% of the country’s installed capacity in 2020. Renewable generators, including distributed energy resources, are rapidly gaining market share. In November 2021, the installed capacity in renewable energy parks totals 1,331.49 MW, broken down into: 365.25 MW of wind power (9 parks), 312.96 MW of photovoltaic solar energy (6 parks), 30 MW of biomass (1 plant), and 623.28 MW of hydroelectric power plants (27 hydroelectric plants and 41 micro-hydroelectric plants).
- Demand and Generation Regionality
SENI demand is concentrated in Greater Santo Domingo (Santo Domingo East, North and West) and the National District with 47%. The North Zone accumulates 33% of the demand (Santiago, La Vega, and Puerto Plata), the remaining 20% is distributed in the East and South regions. In Figure 3 you can see the load distribution across major populations centers.
SENI’s installed capacity has the highest level of concentration in the southwestern and northern regions, with 28.4% and 25.1%, respectively. Both regions group together all the hydroelectric power plants in the country, as well as thermal power plants. The little thermal generation in the North (with 30% of the demand) makes the region extremely dependent on thermal generation located in the east and south. Based on current demand profiles, the East and South areas export a significant amount of the energy produced to the Central region. The North area, unlike in previous years (prior to 2020 and due to the change in the generation matrix), has become an energy importing area (See Figure 4).
- Renewable Generation
The participation of variable renewable energies (VRE) (wind energy (7%) and solar energy (3%) of the installed capacity), has had exponential growth in the Dominican energy matrix. Although its integration into the matrix presents great benefits, such as the reduction of generation costs and greater energy independence, its variable nature presents technical challenges such as the management of instantaneous levels of penetration and the need for firm capacity and flexibility in generation to manage this variability.
According to the draft of the National Energy Plan (2021), it should be considered to require that the base generation of non-conventional renewable technology include mechanisms capable of voltage and frequency regulation. It will be necessary to evaluate the incorporation of storage systems (BESS, pumped hydroelectric and thermal storage, etc.) and require that these correspond to a percentage of the nominal capacity of the renewable power plants. Another possible solution is to install reactive compensation in certain areas, while allowing the entry of small thermal projects in critical areas for the voltage level.
3. Transmission Networks
The transmission system is characterized by four electrical areas interconnected by means of links at 69 kV, 138 kV, 345 kV and 230 kV and operated by the Energy Control Center. The current network topology is loosely meshed, with the existence of rings within the areas. The 138 kV rings are operated in a meshed fashion, while some of the meshed configurations in the 69 kV network are operated in a radial fashion (ETED, 2020).
The 138 kV trunk network connects, through the substations: Palamara – Bonao II – Canabacoa and Julio Sauri-Piedra Blanca, Julio Sauri-El Naranjo, the two main consumption centers Santo Domingo and Santiago. While analyzing energy power flows, the interzonal behavior shows that the central area is a space for energy transfer in both directions, while the southern and eastern areas are exporters, the northern area imports from the central area. The need to link the north and south regions is evident (see figure 6).
There are risks associated with various components throughout the transmission network. Large power transformers are easily identified and difficult to protect from physical attack. They have long waiting times for replacement (5-20 months) due to their specialization and dependence on third parties and/or offshore manufacturers. Transmission lines and towers are also vulnerable, due to their accessibility and lack of surveillance, but most can be quickly restored. Transmission system control centers and/or control equipment can also be targets of cyberattacks.
More critical is the delay in the execution of transmission expansion plans, which not only represent a huge red flag for private investment but also increase operational stress in the network. The Dominican Transmission Company (ETED), is the only agent in the market without any type of regime of consequences for non-compliance, regardless of its performance.
- Limited transmission capacity
According to information available from the monthly event reports in the SENI (available on the CCE web portal), in 2019 there were 86 relevant events associated with the transmission system, which involved loss of voltage in substations, line tripping transmission and/or autotransformers. It is estimated that the cost of shortages associated with these events was (in total) approximately RD DOP$24,158,287.74 (ETED, 2020)
The development of new energy generation projects, especially renewable energy, has been limited by the capacity of the transmission networks to drain said energy to the largest points of consumption. This currently represents one of the main drawbacks when planning the development of new projects and for marking the path to follow in terms of diversification of the generation matrix.
4. Distribution Losses
At the end of 2020, the Distribution Companies lost an average of 33.1% of the energy purchased, an increase of 6.6 percentage points compared to 2019. The Eastern Electricity Distribution Company (EDEESTE) closed 2020 with a loss level of 50.1%. These losses represented a record level for the institution and shot up 11.1 percentage points compared to 2019, rising from 39% to 50.1% during that period. Meanwhile, the Electricity Distribution Company of the South (EDESUR) appears as the second in energy losses, closing 2020 with a level of 25.1%, while the Electricity Distribution Company of the North (EDENORTE) ended in December 2020 with a level of energy loss of 22.6%.
This situation has meant that the cash flow destined for distribution network investment has often been used to cover distribution losses, pay the debt to generators and other current expenses within the sector, prolonging the vicious circle. The estimated investment from 2012 to 2016 was 574 million dollars, of which 180 million dollars have been executed in network rehabilitation and supply normalization projects; a total of 358 million dollars were invested with multilateral organizations for investment in loss reduction projects.
If the loss levels targets are reached (estimated at 15% in 6 years (2026)), distributors would be avoiding losing about 2,380 GWh/year, which is equivalent to about 385M USD/year calculated based on the average purchase price of energy. From another perspective, it can be said that currently 465.5 million dollars/year are being left on the table if the calculation is made based on the average cost of sale of the same energy that is consumed and not billed.
The final nail in the coffin, the series of technical standards for quality of service referred to in paragraph II of article 93 of the General Electricity Law (2001) have not yet been implemented.
- Risk in the Distribution Infrastructure
The infrastructure of the distribution system is generally vulnerable to adverse weather conditions, natural disasters, and fires. Underground parts of the distribution system are more resistant to those threats than aerial systems, but are still at risk of earthquakes and flooding, and are less frequent in the Dominican Republic than aerial systems due to significantly higher costs.
Another important category of risk related to the distribution system stems from the decentralized nature of distribution systems and the associated difficulty of collecting information in a timely manner. The country lacks advanced metering infrastructure (AMI) and other related technologies, so EDES must still send a truck with technicians to manually detect faults, which adds complexity to distribution system operations and slows companies’ response utilities when outages occur.
A timely example is the experience of Puerto Rico with Hurricane Maria in 2017, which indicates that during the event there were significant failures in the distribution infrastructure, including many wooden and concrete poles that failed or fell. The authorities’ evaluation concluded that many of these were probably caused by overloads caused by connections of the communication system to these poles.
So, where do we start?
The national effort to strengthen the safety and resilience of critical infrastructure, and create a framework for the development of new ones, depends on the ability of critical infrastructure owners and operators in the public and private sectors to make risk-informed decisions about the most effective solutions available by allocating limited resources in both normal state and crisis operations. In order to be prepared for the worst of a Black Swan, the state should invest and put human resources into the Indicative National Plan for the Development of Critical Energy Infrastructures.
Here I would like to quote Nassim Nicholas Taleb, author of The Black Swan, “This idea that in order to make a decision you need to focus on the consequences (which you can know) rather than the probability (which you can’t know) is the central idea of uncertainty.”
The Dominican Republic is ranked as the 10th most vulnerable country to the destructive powers of climate change. And I wonder, are we thinking about the consequences or about the probability?
You can not build a modern society on top of decaying infrastructure. Countries that do not invest in the 4th Industrial Revolution are going to be “developing countries” of the future. That is highly probable, almost factual.
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This article is derived from the Subject Data funded in whole or part by NAS and USAID under the USAID Prime Award Number AID-OAA-A-11-00012. Any opinions, findings, conclusions, or recommendations expressed in this article are those of the authors alone and do not necessarily reflect the views of USAID or NAS.
Sources:
– CDEEE. (2020). Informes de Gestión Comercial de la CDEEE. Santo Domingo.
– Organismo Coordinador. (2020). Memoria Anual. Santo Domingo: OC.
– Organismo Coordinador. (2020). OPERACIÓN ISLA DEL SENI. Santo Domingo.Puntes, S. T. (21 de 09 de 2021). CDEEE busca con urgencia carbón para Punta Catalina. Dario Libre. – Ramírez, J. (2021). Atribuyen apagones a falta de gas y alzas de precios combustibles. Listin Diario.
– RMI. (2020). Reimagine Grid Resiliency. Rocky Mountain Institute.
– VSEI, V. d. (2021). La Seguridad Energética, una Estrategia para el Desarrollo Sostenido del SENI [Conferencia].