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Superconductors Play Vital Role in the Smart Grid

This article is based in part on research from Markets for Smart Grid Cables and Insulators: 2010  

High-temperature superconductor (HTS) cables can carry an order of magnitude greater power
than traditional cabling and conduct electricity at near zero resistance. Smart Grid Analysis believes Page | 1 
there is considerable potential for this new type of cabling to be deployed in the power grid to
increase grid capacity, integrate renewable energy, and enhance reliability and security, all key
requirements of the Smart Grid vision.

Despite this potential, the future of superconductors in the grid is uncertain and will depend on
several factors, most importantly the continuation of subsidies and technical improvements in the
superconductors themselves.

More Capacity Through Superconducting

The huge increase in carrying capacity that superconductors can provide to the power companies
is well illustrated by a project in New Orleans, where HTS cable is being used to address power
supply constraints affecting the Metairie area--a densely built residential neighborhood. As larger
homes rapidly replace older, smaller ones in this neighborhood, power demand is increasing and
stretching existing distribution capacity to its limit.

The conventional solution here would be for the utility to bring in a 230 kV line and build a
complete new substation, involv ing significant investment and time. Instead, 13.8 kilovolt
superconducting cable will connect two existing substation sites in greater New Orleans creating a
"virtual substation." This is the kind of situation that many power companies will face in the next
decade and we therefore believe that it will create a major opportunity for superconducting cable
in the future.

Smart Grid Analy sis believes that this opportunity is enhanced by the fact that in many areas
where new facilities might have to be built, there is little room to do so. In the Resilient Electric
Grid (REG) program, also known as Project Hydra, the high power density of superconductors
allows them to fit in available underground real estate in the dense urban area of Manhattan.

Greater Reliability through Superconductor Interconnection

The high capacity of superconducting cables also suggests that they can usefully serve as
"trunking" for interconnecting substations and formerly separate grids. We believe that demand for
this enhanced architecture is likely to emerge from the power companies for at least two reasons:
(1) it makes the grid more resilient and facilitates load sharing, because power can be transferred
between regions and locations when outages occur; and (2) it allows large amounts of intermittent
power generated by renewable energy sources (especially wind) to be transferred between
regions. Power generated by wind turbines can now be used in urban areas.

NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-270-7017
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With regard to (1), we note that ConEd expects Project Hydra to improve reliability by allowing the
utility to re-route load from one part of the grid to another in an emergency. This obviously speaks
to important needs in a world in which major outages in large cities throughout the world have
been on the increase and threats to the grid from terrorists and hackers have become a significant
concern of government.
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Superconductors can also address the reliability and security issue through superconductor-based
fault current limiters (FCLs). When FCLs sense a fault current, they prevent a large increase in the
electrical flow, choking off a potentially damaging electrical spike (thereby preventing cascading
failures) while allowing normal current to pass through unimpeded. Several companies have
already built and delivered superconducting FCLs; they are used in Project Hydra, for example.

Connecting Renewables

The examples given above--relating to the need for more capacity, reliability and security--are all
clearly based on familiar issues that power companies face already and will face increasingly in the
future. As such, the size of the opportunity for superconductors depends on relatively easy-to-
calculate benefits and costs. However, when it comes to opportunity (2), using superconductors to
effectively make use of intermittent power generation, there are far more unknowns.

Nonetheless, integrating renewables into the grid is one of the prime objectives of the Smart Grid
and how it can be done is well illustrated by the Tres Amigas project, where superconducting
cables link the three major grids in the U.S. and enable gigawatts of renewable energy to be
transmitted over large distances. The Tres Amigas project is taking place in Clovis, New Mexico, a
location that has easy access to the three grids. It is probable that more than four power
companies will be involved in this project by the time it goes operational at the end of 2014.

To understand the commercial importance of this kind of project, consider the cancellation of T.
Boone Pickens' massiv e wind farm planned for the Texas panhandle. Lack of sufficient transmission
capacity was cited as one of the factors that contributed to the cancellation. Could a renewable
energy hub such as that proposed at Tres Amigas be the answer to this type of problem facing
wind power?

The truth is no one really knows. For one thing, the jury is still out on just how the Smart Grid
needs to be architected to make the most effectiv e use of renewables. (We note that the
telecommunications industry has been changing its mind on exactly this kind of issue for more
than a century now!)

And perhaps even more importantly , no one really knows what the real costs and benefits of this
type of Smart Grid architecture would be. The dream is of wind power being generated in vast
quantities in Texas and Kansas and solar thermal power being generated in en masse in Nevada
and then shipped cost effectiv ely to the East Coast (or beyond). The nightmare is that wind power

NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-270-7017
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(in particular) will never make much economic sense without Smart Grid facilities that everyone--
the power companies, the wind generation industry and government--is reluctant to pay for.

Costs, Policy and Technology

Indeed, the cost issue facing superconducting cables in the Smart Grid is, for the time being, Page | 3 
bigger than just the problems associated with renewables. The superconducting cable firms with
which we have talked have stressed that government subsidies are essential to the immediate
revenue prospects for their type of cabling. This creates uncertainties; for how long will
government subsidies for superconducting grid projects continue?

Again this is a big unknown. The likelihood is, however, that where national security is perceived to
be at stake, government will continue to cough up the funds. We note here that the U.S.
Department of Homeland Security has funded Project Hydra. Secondly , government subsidies for
renewable energy seem to be well established in many important markets and this policy priority
would seem likely to continue to fund superconducting "renewable energy hubs" such as the Tres
Amigas project. However, taxpayers' patience, unlike the power of the wind and sun, is not
inexhaustible when it comes to renewables and we note that the generous subsidy programs for
renewables in Germany are now under political pressure.

Government subsidies for superconductor projects that address everyday issues faced by the
power companies, such as higher capacity demand and network reliability, are even less likely to
surviv e in the long run. They can be sold as job programs for just so long before looking more like
corporate welfare.

This means that in a year or two or three, power companies will have to come up with ways to
make real business cases for the deployment of superconducting technology in their Smart Grids.
And this will require considerable improvement in the cost of superconducting cable.

Superconductor cables are much more expensive than conventional cabling materials--orders of
magnitude. Smart Grid Analysis believes that there are at least three ways that this can change:
lower-cost manufacturing methods and materials platforms for mass production of
superconducting wires; improved cable making; and improvements in field repair, maintenance
and remote diagnostics for superconducting cables and wires.

Superconducting wires are already in their second generation of materials and several companies
are working on improved cabling as well. Finally, the impact of significant productivity gains in field
repair and maintenance for superconducting cables should not be underemphasized. It was
precisely these gains that helped to spearhead the deployment of fiber optics in the telecom
network; and in many ways this is a very similar situation to what we face with superconductors in
the telecom network.

NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-270-7017
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We are hopeful in all these areas. As a result, we expect the market for superconductor products
used in the power grid to grow to more than $175 million by 2017.

For additional information on this and other reports from Smart Grid Analysis, please visit us on the
web at www.smartgridanaly
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NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-270-7017