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Power system reshvctunng and daegulatian: trading, perfomance. and inlomrion technology/ edited by L.L. h i . p. em Includes bibliograpliical rsfemces and index. fS%N0 471 49500X 1. BIcciriml power systems - Control. 2. Electric utilities - Cost control. 3. Elcch’ic Utilities Deregulation. 4. Elecmc utilities . Technological innovation%1. Lai, h i Lei ~
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............................................................................................................................. reface ............................................................................................................................... e~~~............................................................................................................ ................................................................................................................. ent ..........................................................
xv 5
xxi
............. 1
1.2 1.3 1.4 1.4.1 1.4.2 1.5 1.5.1 1.5.2 1.5.3
Competitive Market for Generation ............. .................................................. The Advantages of Competitive Generation .................................................. ....................... The Role of the Existing Power lndustry ............. Reconfiguring the Electricity System. ............................................ Trends in Conventional Electricity G Electricity Demand Operation and Reliability ............................................. Power Plant Operation .................................. Reliability Assessment ...................................................... Availability of Fuel .......................................
2 4
7
s ...........................................
1,6.5
Solar.....................................................
1.9.1
Capital Costs for New Plants ........................
....................................................................
17
.............................. .................................................
1.10.4
Coimectioii and Use of System Charges .
1.11.1
Introduction ..........
25
Contents
vi
1. I J .2
Circuit Connection and P 1.11.3 Performance Analysis..... 1.11.4 Solution Technique......... 1.1 1.5 Results and Discussion ........................... 1.1 1.6 S i ~ p l i ~ Phase-balanci ed 1 .11.7 Appendix ......................... ..................................................... Case Study 2: Controlling a S 1.12 1.12.1 1.12.2 The Solar Power Plant .................................................................................. 1.12.3 Control Structure of the Plant ....... ................................ 1 A2.4 CA Formulation............................................................................................ 1 .12.5 Experimental Results ........... .................................................................. 1 .I3 Conclusions ........................................................................ 1.14 References ...... ............................................................... .........................
38 40
42 46
....................................................................................
2.1 2.2 2.3 2.4 2.4.1
2.5 2.5.1 2.5.2 2.5.3
2.6 2.6. I 2.6.2
2.7 2.8 2.8.1 2.8.2 2.8.3 2.8.4 2.8.5 2.8.6
2.9
l a ~ ~ oofnE ~ ~ c~~ ~~ ~i c~ i t ~ e s Introduction ............................ .......................... Traditional Central Utility MO Reform Motivations...................... ................... Separation of Ownership and Central Dispatch Versus Competition and Direct Access in the Electricity Market.................................... Competition in the Energy Market ..... .............................................. Competition and Auction Mechanism ..................................... Direct A c c e s s ~ ~..e e ~ ~ ~ ~ Independent System Operator .............................................................................. Pricing and Market Clearing .................... Risk Taking............. Retail Electric Providers.,. ............................................................ Different Experiences........................................................ England and Wales .......... ........................................................ Norway ................... California................ ........................................ Scotland ..................................................................... New Zealand........... ........................................ The European Union and Gennany ..............................................................
......................................
.............................
.................................................................
3 CO a ~ ~ e ~ ~ 3.1 Introdtiction ................................................................. .................................. 3.2 The Independent System Operator ................... ............................................. 3.3 Wholesale Electricity Market Characteristics............ .................... 3.3.1 Small Test System ............ .......................................... ............................................... .................... 3.3.2
50
54 54
60
61 63 64
71 72 73 74
76 76 79 80 81 82
Contents
vii
3.3.3 3.3.4 3.3.5 3.3.6 3.3.7 3.3.8
Bidding ..................................................................... ........................... Market Clearing and Pricing ........ ............................................ Market Timing ........................................... Sequential and Simultaneous Markets ............................................... Bilateral Trading............................................... .............................. Scheduling..................
3.3.11
Physical and Financial Markets......................................
....................................................
83
89
97
stem Capacity .......................................................................... 3.5.4
Technical 'Issues......................................................................
4.2. I
Competition in Supply..
4.2.4
Key Issues €or Distribution Businesses ..................
4.2.6
Use of System Billing.................................................
4.2.8
Competition in Metering ..........................
4.3
4.3.5 4.3.6 4.3.7 4.3.8 4.3.9 4.3.10
Maintaining Distribution Planning ...................
Network Planning Tools............................................................................. 124 Asset Replacement Planning ................... . 125 Risk Assessment ......................................................................................... 125 Skills and Resources ................................. .......... 125 Neiwork Design ....... ............................................................................. 126 ~ i s ~ ~ on ~Automation u t i .......................................................
viii
Contents
4.3.1 1 Automation Case Study .Remote Control in London Electricity ............. 129 4.4 Future Devclopmeiit .............................. 4.5 Appendix: Distribution Automation i 4.5. I Introduction ................................ 4.5.2 Remote Terminal Units .................................................. 4.5.3 SCADA Master Station . ....................................................................... 134 4.5.4 S o h a r e Functionality .................................... .... 136 4.5.5 Operations and Maintenance (O&M)......................................................... 136 4.5.6 System Integration, Design and Management................... ............... 137 4S.l Coi~~inunication Systems . ............................................................ 140 4.6 References ............................................................... 5.1 5.2 5.2.1 5.2.2 5.2.3 5.3 5.3.1 5.3.2 5.3.3 5.4
5.5
....................................................1
Introduction ........................................................................................................ Role of the TP ....... .................................................
New Market Organisation .
Priority Insurance Scheme........................................................ Transmission Expansion ........................... Conclusions ........................................................................................................ References .............................................. ....................
...........................................................
6.1 6.1.1 6.1.2 6.1.3 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.2.4 6.2.7 6.3 6.3.1 6.3.2 6.3.3 6.3.4 6.4
153 155
169 170 171
................
pen Access ...*..........= 17 Introduction .................................................................... The Traditional Power Industry Motivations for Restructuring the Power Industry.. Unbundling Cencration, Transmission and Distribution ........................... 174 Components of Restructured Systems........................................ ...... 175 Gencos ................................. ............ ..................................... 175 BOT Plant Operators and Contracted IPPs .. 175 Discos and Retailers ..................................................... 175 Independent System Power Exchange (P
....................................................
176
....................................................
176
....................................
176
PX and ISO: Functio California Power Exchange ........................................... IS0 Functions and Responsibil~ties........... ..................................... Classification of IS0 types ..................................................... Trading A~angements ................................ ..........................
178
183
6.4. I 6.4.2 6.4.3 6.5 6.5.1 6.5.2 6.5.3 6.5.4 6.5.5 6.6 6.6.1 6.6.2 6.6.3 6.6.4 6.7 6.7.1 6.7.2 6.7.3 6.7.4 6.7.5 6.8 6.8.1 6.8.2 6.5.3 6.8.4 6.8.5 6.9 6.10 6.1 1 6.22
The Pool .......................
.........................................
ulti 1atera1 Trades ......... T r ~ s ~ i s s i Pricing on in
olled-in Pricing Methods ..............
..........................
184
..........................
186
.........................
187
System Control ............... hicillary Sewice Provision............................................. Congestion ~ a n a g e ~ eii?n Open-access t Transmissioo Systems...................... Congestion Management in Nomial Operation.......... Integrated Transmission patch Strategy................ wer System ........................ ~ ~ ~ u s t r a Using ~ i o i i a Sma Sfatic Security-constrainedRescheduling ...................................... Dynamic Secmity-constrainedRescheduling ................. ........................... Open-access ~oordi~iatioii Strategies..... Price Elasticity as a Me Relieving ~ongestion ~ o o r d i n a ~ ~betwce on ~l~ustrat~on o€Traii~actionCoordiiiatioii ...... ~ n t e ~ r ~Coordinati ted Conclusions ..........................
............................................................................. ...... .................................................................................... a
............................................
*.**
195
202
209
2 16 216 217
a***...
7.1 Development of Electric Power Industry 7.2 S ~ c c e ~ Growth ~ ~ v e of Power Produ 7.2.1 Further Expansion of Power Nehvo 1.2.2 Continuo~I~ increase of Electricity C 7.2.3 7.3 ~ a n a ~ e i System n e ~ ~of Electric 7.3.1 The State Power Corporation ......... ..................225 hilosophy aiid Strategy o f tlie SP ............................................................. 23 1 7.3.2 Market in China... 7'4 7.4. I ~ o ~ i v a t ifor o ~Reformation s ...................................................................... 234 7.4.2 efonn PLaii of tile SP ........ 235
Contents
x
Obstacles in Establishing the Power Market in China 7.4.3 7.5 Electricity Pricing .................................................... Basic Theory of Predicting Electricity Costs .. 7.5.1 Electricity Cost Derivation.............................. 7.5.2 Elcctricity Pricing of Inter-provincial Power 7.5.3 7.6 Traiismission pricing ...........,....,.......................,.,,. Current Decomposition Axioms 7.6. I ~athematicalModels .,.................................. 7.6.2 ................................... '......'.....~..,..252 Methodology of Graph The0ry..... 7.6.3 Algorithms and Case Studies............................ .... ...... 253 7.6.4 ......................................... ......................... 254 7.7 7.8 Acknowledgenients............... ............... 7.9 ~
8.1.1 Benefits o f FACTS Technology....................... 8.2 Transmission System Limitations ........ 8.2.1 System Stability.................................... s..............._...261
8.2.4 8.3
Thermal Limits ......
FACTS TeGhnology.............
..........................................................
262
Control Methods and DSPiMicroprocessor Technology ........................... 264 8.3.2 8.3.3 Present Status on FACTS Solution Options with FACTS ............ 8.4 8.4.1 Fundamental Concepts of 8.4.2 Skuiit Controllers.. ............................................................................. 266 8.4.3 Series Controllers .................................................. Combined ScriedShuiit Controllers ...,............,.............. 8.4.4 8.4.5 Phase Angle Controllers.................... HVDC Transmission Controllers ............................................................... 278 8.4.6 Other Controllers........."............. 8.4.7 8.5 ........................ '........ 281 8.5.1 85.2 8.5.3 8.5.4 UPFC .................................. Concluding Remarks ....... 8.6 Ackaowledgements ........................... 8.7 ...."_........_._. ..... 284 .........l............................ 8.8 ~
~
Contents
Xi
.........................................................................................................
anagenment
...............................................................
9.2 Pre-privatisation (1 990): Th 9.3 Post-privatisation(1990): F 9.4 Early-inid 1990s: Getting t 9.5 1994/5+: Getting More for Less .................... 9.6 Late 1990s: Capital Effici August 1999 Interim Report: All Change?.... 9.7 9.8 The 1990/2000 Regulato 9.9 Asset Ownership............................. 9.10 Asset Governance. 9.11 Asset Management ...................................... 9.12 Asset Information and t 9. I3 Condition Monitoring.................................. 9.13.1 Transforniers.....
.......................
Switchgear..
9.13.5 9.13.6 9.13.7
~ n d e r s ~ a i i dLong-term in~ Asset Costs ......................................... Underground Cables ..................................................... HV Cables.................... .............................
9.13.9
Zero Sequence Impedance
...................
...............
9.17
9.17.5
Common Mode Failure.................. Asset Infoimation Acquisition ...........
Data Cleaning ...........................................
289
...............
9.13.3
9.16.4
287
298
Xii
Contcnts
--
I -
9.18 Conclusions .......................................... ........................ .322 Appendix: Fuzzy DGA for Diagnosis of Multiple Incipient Faults...................323 9.19 9.19.1 The IEC DGA Codes ...... ......................................... The Fuzzy IEC Code 9.19.2 9. i9.3 Fuzzy C)iagnosis Results... ............................. 9.19.4 Trend Analysis of Individual Faults .... ........................................ 327 9.1 9.5 Comments........................... ............................. 9.20 Refesences . y
10.1.1 10.1.2
10.2.1 10.2.2 102.3
10.3.4
10.6
11.2 11.2.2
..............................................................................................................
..................................................................................... A General Overview .................................... PQIS
The Wavelet Transform. ........................................... Wavelet Analysis ..................................................... Application to PQ [25] . .....................................
336
...........................................
342
........................................................
353
~ p c s i o ~Distortion ic
~~f~rc~ces
S o h a r e Agents .....................................
Genesal Issues and the Future of Agents.
....................................
.4
339
362
Evolutionasy Programming-based Optimal Power Flow Algorithln
.............................. 11.4.2
EP.. ...................................
..............................................
11.4.4 11.4.5
Load flow Solution.......... Gradient Acceleration........................................................
...........................
373
379
'.*
Contents
U
Complex Artificial Neural Networks for Load Flow Analysis ..... 11.5 Conventional A" for Real Numbers .. 11.5.1 New ANN for Complex Numbers ......... 1 I .5.2 Comparison of the two ANNs by Coinputer Sirnulatiou ........................... 11.5.3 113.4 Applicati 11.6 Virtual Reali Types of' VR systems................... 11.6.1 1 1.6.2 Non-immersive (Desktop) Systems. .............................................
11.6.6
Cave ....................................................
11.6.8
Augmented ...............................
11.7.1 11.7.2
The Hardware ................. ................................................................... The Correspondence......................................
388
396
401
X 1.7.4 Iinp~eiiientationExample........................ 11.8 Coiiclusioris ........................... 11.9 Acknowledgements..
................. 12.2 The Internet................................ ...................... 12.2.1 What Is the Internet? .................................................................................. 416 12.2.2 oes the Internet Work .... ............417 12.2.3 What Would Happm Without the Intcrnet? ............................................... 417 12.2.4 Wow Can the Power lndustry Benefit from the Internet?. 12.2.5 ow Can I Find the Inromiation I Need?.................................................. 419 12.3 Usability of the Interne 12.3.1 12.3.2 12.3.3 Internet Products.......... 12.3.4 12.3.5 iltimedia Access .............. 12.3.6 0x1-line Setvices ......................................................................................... 42 I 12.3.7 Support for Professionals ........... 422 12.3~8 The Power Industry and the liitemet .......................................................... 422 12.3.9 Recent Improvements on the Inteilnet ....... 424
Contents
xiv
12.4 Internct Technology............. .... ....... .................424 12.4.1 Access to the Internet ................................................................................. 425 12.4.2 Operating Platforms on the Internet ..
12.4.7
Internet Sccurity ......................
......................
433
Interpreled Versus Compiled Iaiguages .... 12.5.3 What Is JavaScript? .................................................................................... 434 12.5.4 What Is Java? .............. .......... ........ ........ 435 12.6 Web Pages. ................................................ 436 12.6.1 .. 437 12.6.2 Difference Between a Static and a Dynamic Web Page ............................ 437 12.6.3 Displayiiig Database Content ................................... 438 12.6.4 Web Pages with Fuuctionality.................................................................... 440 12.6.5 Web Pages with Integrated Applications ...... 12.7.1
Why the Need for XML
12.75
ation of Content and I .ayout.. .................... Layout Validation with DTD .............................. Styleshects .......
.....................
445
Monitoring Power Station Equipment........................................................ 454 12.8.3 .457 12.5) Case Study 2: Power Trading Application .... Trading Platform Architecture ................................................................... 458 12.9.1 12.10 Conclusions ................................ 12.11 Acknowlc~~ements ...... ................................................................... 460 12.12 Refercnces .................... ex
..................................................................................................................................
The electricity power utilities in many countries have been, or are being, rest~c~ured. There are many reasons for restructur~ng,In some countries restruc~uringhas been driven by the desire of gove~mentto meet ~ncreasingdemands for electricity by encouraging independent power production, which relieves government of a financial obligat~on.In countries where ownership of assets is in private hands, restructuring has been driven by mergers and ac~Liisi~ion~, as companies seek to gain competiti~eadvantage. In the most a ~ v a n countries, c~ restruciuring is being driven by the desire to allow consu~ersto choose their electricity supplier on the basis of price and service provided~ These drarna~~c changes in the organisation of electricity power utilities bring with them new challenges and opportunities, as the previous centrally designed and operated systems are di~mantledand replace by a new competitive framework. ~ o m p a n i ~operating s in a competitive market need more s o ~ ~ ~ i s t i c acontrol ~ e d and management systems to ensure that their business objectives can be achieved. The development and application of new technologies is also accelerated in this new environmen~~ as companies seek to improve their effecliveness and efficiency. This book is con~ributedby a group of world authorities. It explains in depth the reason ring, without including superfluous detail. Examples are given from tails are provide^ on new s~rate~ie$ and tec~nologie~ which are being f ~ e ~ ~ e ~ a~ransmission tion~ and supply. The implications for the ~ n v i r o n ~ e ~ ~ are also reviewed. Tools being ~ t i for ~ asset ~ s an~age men^ and fo management of ~nfrastruc~ur~ are i~l~strated with practical examples. m o d e ~ l i nand ~ general analysis of ~ o m p e t i ~ power ~ v e markets are also illus This book provides a com~rehensivereview of all the many facers place in a d y n a ~ i c~ ~ d u s X~t iys .c o ~ p u ~ s o rreading y for graduates and e n g i ~ e ~and ~s, other pro~essiona~s, who are entering or involved in the electricity power industry.
avid G. Jefferies CBE, B;
This book was written as a result of the ongoing stimulating worldwide dere of the power industry. This move away from the ~aditionalmo towards greater competition, in the form of increased numbers of indepe producers and an u ~ b u of~ the~ main ~ ~service, n ~ starred in the United King and this change was driven by the large differences in electricity tariffs across regions, by adva~icemen~s in technologies which &low small producers to c o ~ p e t ewith large ones, and by a strong belief that competition will produce an all-win situat~on. group of experts to produce a broad and The book was contributed by an ititernat~ona~ of the main issues. The intent has been to provide the reader with an in etail ut without excessive specialisation, to avoid a purely ~ualitativetrea~meIi~ epth by ~ ~some a ~~ a ~ y and ~~ c numerical ~ d to offer9 ~ whenever ~ possible, ~ a ~l methods, and real case studies, worked examples and project discussions. Since each power utility is unique, it will not be possible to present the best path to fotlow in the restructuring exercise. The market models, regulation and tariffs used by orks, and the r r ~ e c h ~ ~for ~ s~m~ i n t a a~high ~ ~ level n g of r e ~ ~ a ~will ~~i~y, use of the advancement of communications technology and increased compu~iii~ power, it is possible to consider different market structures. a d v ~ n c ~ ~no e n~ t ~ n f ~ ~ could a ~ be ~ availabtbte o n in time for the business o ~ ~ r a t ~ ~ n . Different markets have been considered in the book. In brief, they could be § u ~ m a r ~ s e d types. In the complete1 ~ a r ~ e t - d r i v eenv~~onment n rket ~orcesseek to the b e h a v i ~ of ~ rvarious layers in the market, e.g. the regulators. In the kransiti 1 markec there is a process o r ~ ~ u i a et n~ vdi r o n ~ ~ to n t a d ~ r e g u l a ~~nvironment. e~ In the embry~nicfree m a ~ ~ e ~ , state retains own~rshipof the generators and some of the ~ a n s ~ ~ s sinfrast~uct~re, ion opens up the market to ~ ~ m competition ~ ~ e d at the distribution level. As there is much u i i c e ~ ~ n in t ythese environments, due to the s t ~ c t ~of r ethe E p i ~ n i n gover a long-term horizon is p e r c e i v ~as very difficult at present. Yet, long-term planning, it is likely that the electricity power industry would be at great risk, as it ~~~$~~ not be able to supply the growing d ~ or to~~~~~a~~ n the ~ ~ service as it is c ~ r r e ~ t providing ly to its consu~ers.The recent chaos in his could have very serious con~~quences to the lon ~ndus~~. This book shows how new ~ e c ~ i n o ~will o ~allow y us to cha market structure to one that relies on co~~petition to set the t e c ~ ~ o ~ o g iwe e s ,can use less energy, result in^ in lower ene avoid OX defer a d d i ~ ~ o nexpensive a~ plant c o n ~ ~ rThe ~ ~a ~~~ do OF ~~new . ~ p~ ~o ~~ ~ ~ ~ such as independent power producers, power marketers and brokers, has a ~ d e da new task of maintai~inga reliab~eelectric system. This book will detail into accou$itsome of these issues. In the new market e n v ~ r o n generation ~ ~ ~ ~ ~ represents ~, most of the CO r e p o ~on~ the deve~opmentof new strategies and compares ~ ~ f f e ~tec ent e l e ~ t r ~ c i~~ey n e r a ~ iwith o ~ ~ n v i r o n m ~and n ~ ~political considerat~ons. This i ~ c i ~ d e s t
xviii
Preface
decen~a~ised power supplies, renewables, regulatory constraints, new technical challenges ifferent mechanisms, such as the pool, have been set up for the operation of the new emerging electrical market. The market should dictate when new generation is needed and where it is located. ince there i s a large number of players in the m ~ k ~it ti s, i m p o ~ n to t WO type of bidding, or negotiation strategies that each player can use. It is especially ~ ~ p o ~ a n t to work out the information content of the bidding strategies. Chapter 2 covers expe~ence tools for from various countries on power utility res~cturingand deregulation. An~lyt~cal the ~ o d e l ~ i nand g analysis of c o m ~ t ~ t i vpower e markets are presented. Chapter 3 also discusses several wholesale electricity markets around the world and most of these are in a continuous process of change. This evolutionary process is being d ~ v e Kby ~ the need to address some of the outs~andingissues in the design and implementation of these markets. Some challenges, such as reliability, market power evaluation and mitigation, are outlined. hapter 4 reports on the change in ~~s~nbutio13 business in a dere~ula~e Various issues such as planning, control, load forecasting, metering, customer services and risk assess men^ have been considered. A case study on the remote control of London ~ l ~ ~ r iiscincluded, ~ly Chapter 5 deals with transmission expansion. Following develop men^ of the market, the transmission provider transforms into the independent transmission company (TTG) so as to adnilmir a highly sophisticated market. The ITC is required to make c~mplexbusiness 5 over a wide range of time scales, such as the long-term, short-term and near realis chapter discusses future directions and ~ o d i ~ c a t i o ntos the ~ g u l a ~ o policies ry r. 0th a market maker and a service ssion open access. The economic issues associaked with scussion of some ~rnpor~an~ opera~oiia~ issues in the e ~ e r g ~ n mal dispatch, congestion mana~ementand the e ~ f e of c ~~ e c ~ i n en discussed with examples from the open-access viewpo~nt. Chapt~r7 deals with the Chinese market. A tailed back~roundon the industry is given. It also explains why the approaches a opted by the d e v ~ ~ o p are not suitable. The chapter also proposes a new app ch to c a l c u trans ~~~~ power systems with better e f ~ c i ~ n can y ,ac~urate To operate the ever i transmission loss m ironment, reactive power control to assure v o ~ ~ ~ Row control to avoid line overloading o p ~ r a t i o Flexi ~. ctronics technology presents the applica ms. The impact of entrants is discussed. Chap~er9 deals with asset management. A comprehensive awe ~i~y required to support business in the deregulated e ~ e c ~ i market. characteristics 06 the model components are descdbcd in detail. It wit1 benefit all internal and external users in the open-access environ~ent,resulting in realistic and traflspa~ent open-access charges, and bring long-term ecoi~omicbenefits to all pa anagemene in power industry r e s ~ ~ ~ c t utire n ni ~ ~ u ~ ~with a t epractical d ex~~pl~s.
Preface
xix
Elechicity industry restructuring has had a dramatic impact on the energy market. To gain a conipetitive advantage, toclay’s energy providers need to focus on value-aclded products and services, such as power quality. Powcr quality is a critical issue for industrial customers, especially in the high-tech sector. In order to understand power quality, many customers or energy providers have installed power quality monitoring systems to record electrical system perfo~ianceandor facility equipmcnt reactions, and the analysis of the monitored data has become a challenge. Chapter 10 reports on the techniques, methods and standards used or proposed for power quality issues. The explosion in thc use of information technology has seen the introduction of computer-based work management systems, asset management systems, and control systems to manage system operation. Information teclinology is rnalcing markets more efficient, resource production less speculative and costly, and the delivery and monitoring of energy more etficctive, while enfi-anchising customers to make more intelligent choices. Improvements in infomation technology will continue to allow economical aiid reliable solutions to problems facing tlie power industry. Chapter 11 introduces intelligent agents, genetic algorithms, evolutionary programming, artificial neural networks and virtual reality technology, and reports on their applications to load flow, valuing electrical options and power equipment diagnosis. Tlic chapter highlights the technology behind the new market brought about by deregulation. Energy service companies will continue to make iucreasing demands for more sophisticated software and equipment to monitor and control various aspects of power delivery. In just a few years, Java has taken the networked world by storm. Java comnbiries powerful, object-oriented programming with the ability to run on any computer platform without the need for recompiling or translating. Java promises to play a yet more kndaiental role in the future of on-line computing, including electronic commerce, for it can allow anyone to make use of powerful applications anywhere. One result of its i s that a scrap of code called a Java applet can be embedded in a platform iI~~lepe~idence World Wide Web page. Chapter 12 deals with the application of the Intcmet to power station monitoring and discusses its use for energy trading. It also presents an introduction to Web technology and i t s applications. This book addresses the most up-to-date problems and their solutions in the arm of power system restructuring aid deregulation in a cohesive manner. It will provide invaluable information for power engineers, educators, system operators, managers, planners and researchers.
i
The editor wishes to thank Mr Peter Mitchell of Wiley and his team in supporting this project. The editor also wishes to thank all the contributors, without whose siipport this book could not have been coiiipleted. In particular, the editor thanks Harald Brawn in maiiagiiig to complete the m a n ~ ~ s c rdespite ip~ great diffkulties caused by software ~iico~patibility. The editor also wishes to thank rs Vinay Sood and Professor Sood for their creation of the iuitial manuscript. The editor i s very grateful to Dr D a d Jefferies for writing the ~ o r $ w ( ? rThe ~ . permission to reproduce copyright materials by the IEEE and IEE for a number of papers mentioned in some of the chapters i s most helpful. The arrange~ento f the index by Miss Qi Ling Eai and Chun Sing Lai is imch appreciated. Last but not least, we all thank Wiley for supporting the prcparat~~n oftbis book and for the extremely pleasant co-operation.
ei Eai was appointed Senior Lecturer at Staffordshire Polytechnic (now Staffordshire University) in 1984. From 1986 to 1987, he was a Royal Academy of Engineering Industrial Fellow to both GEC Alsthom Turbine Generators Ltd and its Engineering Research Ceutre. He is currently Head of Energy Systems Croup and Reader in Electrical Engineering at City University, London. He is also an I-lonorary Professor at the North China Electric Power University, Beijing. Dr Lai is a Senior Member of the IEEE and a Corporate Member ofthe TEE. We has authoredlco-authoredover 100 technical papers. Tn 1998, lie also wrote a book entitled Ivrtelligenf System Applications in Power Engineering - Evolutionary P r o ~ a ~ m and i n ~Neural Networks published by Wiley. Recently, he was awarded the IEEE Third Milleiiiiium Medal and 2000 IEEE Power Engineering Society UKRl Chapter Outstanding Engineer Award. In 1995, he received a high-quality paper prize from the International Association of Desalination, USA. Among his professional activities are his contributions to the organisation of several ~nternat~ona~ conferences in power engineering and evolutionary computing, and be was the Conference Chairman of the International Conference on Power Utility Dercgulation, ~ e s ~ c ~ f l n g and Power Technologies 2000. Recently, he was invited by the Hong Kong Institution of Engineers to be the Chairman of an Accreditation Visit fo accredit the University (IIons) degree in electrical engineering. Dr Lai is also Student Recruitment Officer, IEEE UI(R1 Section. In 1999, he was included in The Dictionury of Contemporary Celebrities qf Worldwide Chinese. In 2000, his biography was included in the 18th Edition of J%zo ’5 !4%0 in the FVorld, Marquis, 1JSA. His b i ~ ~ g r has a ~ also ~ y been selected €or inclusion in the 2001 Who I;yho in Science and Engineering, Marquis, USA. Sc, PhD and DSc from UEUIIST, ~ a n c h e s ~ eIJK. r,
of the Royal Society of New Zealand. From 19’70 to 1975, he was Head ofthe Power Systems and High Voltage Groups, UMIST. From 1975 to 1999 he was Professor of Electrical Engineering, University of Canterbury, ~ h i ~ s t c ~ ~ uNew r c h ,Zealand. From 1982 to 1995, he was also the Director of Systems Software & Instrumentation (a Christchurch-based consulting conipany established in 1982). From 1985 to 1990, hc was Head of Department, Electrical and Electronic ~ n g ~ n e e rUniversity i ~ ~ ~ , of Canterbury. From 1988 to 1995, he was a ~ e i n b of ~ rthe CIGRE-I4 Working Group on HVdc harmonics (14-03). From 1989 to 19525, he was Convenor of GIGRE Task Force 36-05114-03-03 on AC System Harmonic ~ o d e l ~ i nfor g AC Filter Design. From 1990 to 1996, he was a Member of CIGRE JWG 11/14-09 on Unit Connection. From 1996 to 1999, he was Convenor of CIGRE Task Force 14.25 on Wannonic Cross-inodulation in HVdc Traiisniission. Since 1990 and 1995 respectively, he has been Dircctor of CHART Instniments, Clx-istchurch and Director o Consulting, a Christchurch-based consulting conipany. Professor Arrillaga h many awards, such as John Hopkins Premium of the IEE, UM, 1975; the Premium, IEEE Conference on Harmonics and Quality of Power, ~ ~ ~ Q P 9 Electrotechnical Paper, IPENZ Annual Conference, 1996; Uno Lamm Hig Current Award, IEEE, 199’7; John Munganest International Power Quali Power Industry, 199’7; President’s (Gold Medal) Award, Annual Meeting xxiii
~ogra~hy
XXIV
~otechn~cal paper, I P Annual ~ ~ o~n f e r e~n ~1999; e , Silver a1 S o c i e ~€or Innovatio~in S~ienceand ~ e c h n Q ~ o2~ y , ~ e c h n i e aCommittees ~ Award, 2000, trained in the area of ~ o ~ e~ec~ronics e r with ~emen$,~ r a n k f u ~ , Germany, from 1985 to 1989. He obtained his Diploma in ~ e ~ e c o m ~ u n i c a t iato n F r i e d ~ ~ r ~ - ~ ~University, essen G ~ ~ a n in y , 1994. He was a ~ a ~ - t i ml eec ~ r e rat City ni~~ ~ ~ ~ ~ r ~s Q i tny~, ofrom n , 1994 to 1996 ~ e a c ~oi bnj ~ c ~ - ~ r i e~n tr ~od g ~ a ~inr C++. e was a Senior Programmer at A M . EST I n t ~ ~ a t i o nEtd, a ~ ~ o ~ ~ from o n 1996 , to esent, he is a Senior Software ~ n ~ i n e e r A L T I ~London, , deve~op~ng new nology s o f ~ a r eHe . is w ~ r k i nfor~ his at City ~ n i v e r s on i ~a p a ~ - ~ i m e ects to achieve it in July 2001. His arch interest is the e~tractionof i n f o ~ from a ~ data ~ ~using ~ neural nehvor ~0~~~~~~A. is Chair Professor and ~ngin~ering, The Hong Kong Polytechni ity. His BE degree is from the U n ~ ~ ~ofrGeylon s i ~ and PhD from ~ ~ p e r i a l Londo~.He has ~ ~ e v i o u worked s~y in Sri Lanka, USA, ~imbabweand Sweden a search interests are in power system r e s ~ ~ ~ ~pricing, i n g , control, MVDC, ~ a n s ~ estability, n~ ~ro~ection and ~ e l i a b i ~ i ~ . ~ r ~ € e s sDavid o r was elected an IEEE FeItow in 2000 for his ou~s~and~ng ~ o ~ ~ i b ~to~ i o n trans~i~$sion acces He is the regional editor electricity supply in dust^ reform an ~o~~l tric ~ o wSystems ~ r for Asia of the ~ n ~ e r n a tJournal
is r~$p~nsible for skate s the dis~ibutioneonip ~ ~ n of c ethe pian~inga n systems in the UK and abroa businesses, and helped deve~opthe d~s~ibutjon artered ~ n ~ ~ nand eer lie has been at MIT since 1984 as a Senior Research Scientist in the here she conducts research and teache§ ~ r a d ~ acourses te in the area of systeni§~ Since September 1999
Young Investigator Award for ~ s ~ i n ~ ~Li esc~~ r~e er .Pro~ess d ale ~ i e c t ~ power c sys
Biography
xxv
has been Chairman of the National Grid Company plc since 1990, when the Company was formed as part of the privatisation of the UM electricity sector. His bold and far-sighted leadership has been a key ingre~ientin its success of the National Grid Group plc from the performance of the transmission system during a decade of major change in the industxy, though the conception and development of Energis, to the growth of the group internationally. He retired as the Chairman of the National Grid Group plc in July 1999. Dr Jefferies was previously Chairman of the London Electricity and of Viridian plc. He was the 1997/98 TEE President. Owing to his huge contrihution made to thc institution, he i s an Honorary Fellow of the IEE. He i s also a Fellow of the Royal Academy of Enginecring. He was a pioneer in the restnicturing and deregulation of the UK electric power utility. ia received his PhD from the University of California, Berkeley, in 1983. Since then, he has been at the University of Washington, Seatile. He is currently Professor of Electrical Engineering and Associate Dean of Engineering at the University. Dr Liu is a Fellow of the IEEE and the US representative on CTGRE Study Committee 38. His areas of interest include power system economics, intelligent system applications and vulnerability assessment.
o obtained his MSc and PhD from the University of Manchester Institute of Science and Technology. He is currently the Head of the Power Systems Research Group at the University of Strathclyde. His group specialises in energy management systems, issues concerning the electricity market and deregulation, simulation, analysis, monitoring and control of powcr networks. Professor Lo has been an international advisor and member of many organising committees of international conferences, consultant/visiting professor to over 12 educational institutions, and has lectwed extensively in the Far East, Europe and America. He is the author of over 260 technical pL~blications.He is a Fellow of the TEE and a Fellow of the Royal Society of Edinburg~~. is a member of London Electricity’s Executive and is currently the Managing Director of both London Power Networks (LPN), which i s the distribution business of London Electricity, and London Electricity Services (LES), which is the private networks business of London Electricity. As Head of the Public Distribution Business he led the work during 1999 which culminated in the formation of 24sevei1, the joint venture network management services provider formed by LE and TXU Europe (Eastern Electricity). He has been in the electricity supply industry for 25 years in a variety of both operational and strategic roles within the distribution business. He has a practical engineering background having worked in a number of operational, project manager and leadership roles i n utility power distribution. Mr Morton is a Chartered Electrical Engineer and a Fellow of the IEE. He also represents the UK in the business area of distribution at ~ U ~ the pan-European E ~ association ~ ~ of electricity ~ companies. ~ C ~ SS ~~~yreceived his BE and PhD degrees from the National University of Ireland, Dublin, in 1983 and 1989 respectively. He is currently a Professor at the National University of Ireland, Dublin, with research interests in power systems, control theory and biomedical engineering.
XXVi
Biography
ebllk is a Professor of Electrical and Coinputer Engineering, Iowa State University, Ames, Iowa. He received his BS and MS degrees in electrical engineering from Purdue University and his PhD in electrical engineering from Virginia Tech. His industrial experience includes over 15 years with a public utility (Commonwealth Edison), with a research and development film (Systems Control), with a computer vendor (Control Data Corporation) and with a consulting firin (Energy and Control Consultants). He has participated in the functional definition, analysis and design of power system applications for several energy management systems since 1971. Dr Sheble also designed the optimisation package in use at over 50 electric utilities to schedule electrical production. He has consulted since entering the academic world with companies in North America and Europe on electric industry deregulation as well as expert witness testimony on the National Electric Code and lntellectual Property Rights. His consulting experience includes significant projects with over 40 companies. He developed and implemented one of the first electric market simulators for the Electric Power Research Institute using genetic algorithms to simulate the competing players. He conducts approximately 24 seminars each year on optimisation, artificial neural networks, genetic algorithl~~s and genetic programming, and electric power deregulation around the world. His primay expertise is in power system optimisation, scheduling and control. Dr Sheblt? has been awarded over 1 million dollars of research support over tlie last 10 years, primarily in the application of adaptive agents to market bidding. He has authored a review of adaptivc agent market-playing algorithms for the Kluwer press release P o w r Systems Restmcluring: Engineerin'q and Economics edited by Ilk, Galiana m d Fink. He has written a monograph on tools and techniques for energy deregulation entitled Conjputational Auction Mechanisms.for Restructured Power Industry. He has also been an invited guest on radio talk shows and a resource for several news articles on electric power deregulation and industrial trends. His research interests include power system optimisation, scheduling and control. Professor SheblC is an IEEE Fellow. ~ o ~ Vijay e ~So0s obtained ~ ~ his BSc ftom University College, Nairobi, and his MSc degree fi-om Strathclyde University, Glasgow, in 1969. He obtained his PhD degree in power electronics from the University of Bradford, England, in 1977. From 1969 to 1976, DKSood was einployed at the Railway Technical Centre, Derby. Since 1976, he has been employed as a Researcher at IREQ (Hydro-Qukbec) in Montreal. Dr Sood also has held Adjunct Professorship at Concordia University, Montreal, since 1979. Dr Sood is a Member of the Ordre dcs ingknieurs du Quebec, a Senior Member of the IEEE, a member of the IEE and a Fellow of the Engineering Institute of Canada. He is the recipient of the 1998 Outstanding Service Award f%omIEEE Canada, the 1999 Meritas Award from the Ordre des IngBnieurs du Quebec, and the IEEE Third Millennium Medal. Dr Sood is presently the Managing Editor of the IEEE Canadian Review (a quarterly journal for IEEE Canada). He is a Director and Treasurer of IEEE Montreal Conferences Inc. He has worked on the analog and digital modelling of electrical power systems and their controllers for over 25 years. His research interests are focused on the monitoring, control and protection of power systems using artificial intelligence techniques. Recently, Dr Sood has been interested in the Internet and its applications for teaching purposes and was mandated by IEEE Canada to publish the journal IEEE Camdian Review on the Internet (www.ieee.ca). Dr Sood has published over 70 articles and written two book chapters. He has supervised 14 postgraduate students and examined 13 PhD candidates frotn universities all over the world. He is well known amongst thc electrical engineering community in Canada.
Biography
xxvii
is Technical 2% Regulation Manager of London Power Networks (LPN). r Cliff LPN is the distribution business of the London Electricity Group. In his current position, he is responsible for all technical and regulatory matters regarding the public cleclricity distribution system in London and particularly the quality of supply and reliability performance that sets London apart. He has previously been Strategy Manager, Asset Manager and Planning IvIaager for London Electricity's Public Networks Group. In his recent roles he has championed the development of an integrated technology strategy, strategic asset management, fault causation analysis, incipient fault detection and location techniques, as well as creating the strategies behind the implementation of one of the largest distribution remote control, telemetry and automation pro-jects. Mr Walton joined LPN whea it was established in April 2000; his career in electricity distribution spans 29 years. IIe has worked with a number of overseas utilities and has written and presented many papers on a wide variety of technical and asset governance and m ~ a g e ~ issues. en~ He is a Chartered Electrical Engineer and a Member of both the IEE and IEEE.
r ~ ~ ~ s s ~ r was born in May 1936. He graduated from Xi'an Jiaotong University in 1957. He has since been with the School of Electrical Engineering of the university, where he now holds the rank of Professor and is the Dircctor of the Electric Power System Department. He is a Senior Member of the IEEE. From September 1981 to September 1983, he worked iii the School of Electrical Engineering at Cornell University in Ithaca, New York, USA as a Visiting Scientist. From September 1991 to September 1993 he worked at the Kyushu Institute of Technology in Kitakyushu, Japan, as a Visiting Professor. Prof Wang has a 40-year experience of researching and teaching in electric power system analysis and planning. His main research fields include reliability evaluation, generation and transmission network planning, operation planning, system contingency analysis, dynamic and transient stability, short-circuit current calculation, optimal load flow, and probabilistic load flow. He is especially proficient in constructing mathematical models and developing application software in the above areas. He also took part in many research and planning tasks of key electric power projects in China, such as the Three Gorges Hydro-Power Station. He proposed a new transmission system, namely the fractional frequency transmission system (FFTS) which uses a lower frequency to reduce the reactance of AC h-ansniission systems. I n recent years, he has been researching the electric power market.
~ t received s ~his BE ~ (€Ions) and PhD degrees fiom the University o f Canterbury (New Zealand), where he is now a Senior Lecturer. Dr Watson has authored and co-authored approximately 100 technical papers and 3 books. Paper awards received include; Best Paper Award (The Sixth International Conference on Harmonics in Power Systems, 1994), the William Perry Award (TPENZ) and Finalist for the Carter Holt Harvey Packing Award for Innovative Technology (IPENZ). He has also given a nuinbcr of invited lectwes in Singapore, Australia and Canada, ail Wen received his BEng and h4Xng degrees from Tiarijin University, China, in 1985 and 1988, respectively, and his PIiD from Zhejiang University, China, in 1991, all in electrical engineering. He was a Postdoctoral Fellow at Zhejiang University Eroin 1991 to 1993. He joined the faculty of Zhejiang University in 1993, and has been a Professor of Electrical Engineering since 1997. We held a visiting position at the National
xxviii
~io~apliy
apore from 1995 to 1997. e is on leave from Zh ong Polytechnic Universi as a research fellow. ral Science Award of China, Zhejiang Provin~~aI Top Young ~cientist and several other awards from the Ministry of Education (China), Zhejiang ial gove~ment,Zhejiang University and the National University of Si~gapore.He is a ~ e ~ bofe the r editorial board of the JournQzo ~ ~ ~ ? o mofEleclric u ~ ~ o n Power ~ y s ~ e ~ s ese) and was a guest editor of a special issue on ‘Artificial intelligence ~pplicat~ons r systems’. His research interests are in power system r e s t ~ c ~ r i nand g artificial lications in power systems. obtained MSc, PhD and DEng from University of ~ a n c h e s ~ e r echnology in 1971, 1974 and 2001 res~eceive~y. C u ~ e he n is ~ ~ ~ Electrical En~ineeringat the University of Western Australia. system dynamics, protection, electromagnetic transient evaluatio n, artificial intelligence and c o ~ p u ~ a t i o nin~elligence a~ in power system operation and planning. Professor Wong has published over 140 research papers and has been awarded the Sir John Madsen Medal of the Knstitution of Engineers Australia. He was the Founding Chairman of the Western Australia Chapter o f the IEEE Power Eiigineer~ng Society and was the Chairman of the Western Australia Section of the IEEE from 1999 to 2000. He h a member of numerous technical committees for intema~i~nal 2000 E ~ co~~erences~ r Wong was the General C h a i ~ a nof the IEEE ~ ~ S / C S Inte~ational nce on Power Systems Technology powerc con 2000). We is an editorial board member of the interna~ionaljournal Electric Power Systems Research and Jour~~ul of ~ ~ t e f l i g~en~f of r ~ u t i oProcessing n Syst~ms.In 1999, he was uts~ndingEngineer Award of the lEEE Power Enginee~ngSociety WA Chapter. He was a recipient of the IEEE Third Miflennium Medal in 2000. Professor Wong is a Fellow of the Hong Mong ~iisti~ut~on of Engineers, Fellow of ~nstitu~ion o f ~ngjneers Aus~alia,Fellow of the IEEE, and Fellow of the TEE. cquired her degree of Bachelor of Engineering in Electrical ee S The University of Hong Kong in 1996. In the same year SYS Miss Yuen was awarded The China Light & Power Company Prize in Electrical Energy, ‘The applic~~ion of ~ i ~ c i a l because of the dis~inctionof her final year project en~~tled neural n e ~ o r k son the detection o f high i~pedancefaults’. During 1994 to 1998 Miss Yuen pursued the degree o f Master of Philosophy with a thesis entitled ‘Fault detection and oven tection in low voltage power systems’. In 1998 she was awarded the China Light Co. Led. Electricai Energy Postgraduate Scholarship. In the same year she was awarded John Swire & Sons Ltd. James Henry Scott ~cholarshipfor ~ngineering Studies at the U n i v e r ~ oi ~f S~athclyde ~ which enabled her to pursue the degree o f Doctor of ~hilosophyin Scotland. Miss Yuen is also an Associatc Member of the IEE. Her current research interests include the analysis of international energy markets, congestion m a n a g e ~ e ntransmission ~~ piicing and the application of i n f o ~ ~ ~tcc~nology ion in energy markets. received SB degrees in applied m a t h ~ ~ a t i cand s in electrical engineering and com~uterscience and MEng degree in electrical engineer~ngand computer science from the Massachusetts Institute of Technology (MIT), Cambridge, in 1995 and in 1997, respectively. He completed his PhD degree in electrical e n g i n e e r i ~and ~ computer
IT, c ~ n c e n t ~ t i nong e l ~ ~power r ~ csystem economics engineer^ network economics: underlying p~inciple§ is entitled ‘Electric independent transmiss mpany (ITC) and designing a ~ c ~ ~ tfor e cre~ r ~ research i n t ~ r e s ~include s ~ o d e l l i ~ofg energy markets as stochastic dyn epts for the 1°C and ~esigningsoftware tools for various en~rgym a ~ ~ e ~ has a strong b a c ~ ~ r o uinn control, ~ estimation, m a ~ h e ~ aresearch ~~~s, design and r ~ g u l a t economics. o~
Dr Loi Lei Lai City University, London UM
Restructuring of the ele&icity supply industries is a very complex exercise bas na~~onal energy strategies and policies, macroe~onomic develo conditions, and its application varies from country to country. It is i m p o ~ to~ point t out that there is no single solution applicable to all countries and there is a broad range of diverse trends, ~ ~ b e r a ~ i s ~ ~eregulation tion, (or reregulation) and pr~vatisationare all processes under the general label of market reform. Liberalisation refers to the ~~troduction of a less restrictive regulatory framework for companies within a power sector. This could deregulation, which is the modification of existing regulation. It can reregulation is a more accurate term than deregulation since new laws are on the industry with reguIato~watchdogs appointed to protect c o n s ~ ~~nterests. er I~eally, then, a true liberalised energy market would work within a set r e g u l a t o ~framework, overseen by a regulator and with no external political influence upon the particip sation is the sale of g o v e ~ e n tassets to the p n v ~ t e sector, by itself, ~rivati~ation is not sufficient to introduce competition into a reformed sector. ~ompet~tion will be the result of careful regulation of the privatised entities to allow new e n ~ r access a ~ ~ ~ to the ~ a r ~ e~ompetition t. is ~ u n d a m e n ~to1most market reforms and it is introduced in order to reduce costs and increase efficiency. There is considerable variation in the extent tion which is introduced. For example, competition could be introduced just n of new gene~atingcapacity and referred to as competitive bid din^ where the existing gen~ratingcompany invites contractors to tender to build, operate and sell d Alternative~yall licensed g~nerator~ ower to the monopoly at a ~ p e c i ~ eprice.
e allowed to compete to supply wholesalers or retailers through a short-term market ~ k or via ~ longer t ~ term contracts; this is called compet~t~ve g e ~ ~ ~ tThe i onext ~. vel i s wholesale competi~ion~ i.e. competit~onin the sale of electricity to wholesale ies for resale to a retail level or directly to final customers. This usually allows the ion at final c o n s ~ ~ mlevel, ~r n s ~ ~ e to r s choose their own s This is us~allythe very last ~ouseholdconsumers, is calle step o f the reforms, as it requires a complex information technology system because of the of small users involved. Retail c o ~ p e ~ t i oisnusually i n t r ~ d u c ~ the larger i n d u s ~consumers, ~~~ then the medium cons~mers und the world are currently in ~ a n s i t towards i ~ ~ more arkets. The changes were initiated by: 8 r~alisat~on that generation and dis~ibution nctions need not be mono a feeling that public service obligations are lion potential of competition; availability and fuel supply s ~ ~ b i l iand ty~ the develop men^ of new technologies in power generation and i n f o ~ a t i o ntechnolo
erican electricity m The ~ontinu~ng growth of competition i the 1978 passage o f the Public Utility latory P o k e s Act ( conservation measure, PURPA establ ducers (IPFs) to sell electricity to local regulated investor-owne~utilities (IOUs). were broadened s ~ b s t ~ t i by a ~the ~ ypassage of the Energy Policy Act of 1992 which requires transmission line owners to wheel bulk power [l]. Thus, under current fe(iera1regu~ationsnon-utility power producers can sell electrici~to any utility on the grid, n a policy F u ~ h e r ~ o rin e , April 1994, the California Public Utility C o ~ m i s s ~ oadopted establishing complete open access to all power producers. By 1996 ~ n d e p e n d ~generators n~ could compete to sell electricity directly to large industrid customers, ef~ectiveiy ~ d i t i o n autilities. ~ By 2002, the policy will pennit all ele consu~ers, of size, to purchase electricity any utility or independe rator on the grid. No longer will the consumer be res to buying e l e c ~ c i t yfrom the local utility. A ~ o ~ p e t i ~market i v e for gene~tionwill have been es~abli§hed[2,3]. The system evolving in the USA provides i ing competition and div~rsityamong gen~r~tors. They vary from established utilities and co-generators to small producers that use renewable fuels and other non-utility genera~ors y 1990, a decade after reform movement got under way in the USA, co-gen enerating capacity than were the ~aditionaiutili C a ~ ~ f o r Edison n ~ a buys 30% of its power from NUGs. in M ~ c ~ ~ consists g a n of 12 gas turbines with a generati C ~ ~ p a nin y ,~ i z o n ais , an indepen~~nt power b~~~ custo~ers,n a ~ e l ythe Tucson Electric Power Edison 141. Compared with the deregulation of I 0 monopoly requires a complete and ~ d ~ chane n ~ ~
Energy Generation under thc New Environment
3
property rights in the electricity supply industry in order to obtain the benefits of increased efficiency and innovation. A shift from public to private ownership refocuses the goal O f the producer towards profits. Pursuit of the latter provides a strong econon~icincen~ive,in a competitive environment, to improve and maintain the quality of customer services, monitor costs more closely, and invest in productivity-enh~cingt e c ~ o l o ~ i eThese s~ incentives are blunted by state ownership. With respect:to privatisation, the since 1989 seems more germane than does the regulatory reform the USA has been undergoing since 1978. The European C o i ~ is ~addressing i ~ these same issues and has agreed to draft directives calling for open access in energy markets. As of January 1993, the E u r o p e ~ Commission seeks to let large users of electricity, those using 100 g i g a w a ~or more of power per annum (aluminium, steel, chemicals, glass and fertiliser producers), to purchase electricity from any supplier in the Community.
.3
Th
Competitive generation provides a market within which independent fimis compete on the basis of price to sell electricity directly to large industrial customers, and to supply electricity, via common carrier transmission, to distributors who in twn sell power to final users [5,6], Produc~rsmay specialise or diversify by load characteristic. For example, some may prefer to compete for long-term base-load contracts. These firms are likely to own hydro and nuclear power plants. On the other hand, f m s with fossil fuel plants might seek to supply base and cycling loads. Finally, producers with gas combustion turbines and co-generators could compete to meet peak loads. Other firms may diversify and be ready to compete for base, cycling and peak loads. Prices charged for each type of service (peak and off-peak load, daily to ~ e a s o n a l ~ could be established by contract, 24 hour advance notice, and in spot markets. Unit could vary by the amount of electricity purchased per period. As a result, customers face more service options and a more complex pricing scheme. There are a nu advantages to having a variety of types of generators linked to the transmission grid. The first major advantage involves cost savings. At any given moment^ power is supplied to the transmission grid by the firm with the lowest marginal costs. according to merit saves resources and reduces the cost of generating electricity. Because the different plants may have different load characteristics, peak and load duration curves, generating capacity can be more fully utilised and additional capital resou~cessaved. The second ~ d v a n of ~ competitive g~ generation is that a spot market for electricity will develop. The ability to sell electricity on the spot market increases the ge~erator’s ~exibilityin scheduling production. The presence of a spot market means that less idle capacity must be maintained in order to provide a given level of service re Shortfalls and emergencies can be met by purchasing power on the spot market. and supply are eq~libratedby flexible spot prices. The third advantage o f competitive generation is that the market will provide an anray of service standards that more closely match consumer preferences. Consumers could be offered priority service with a schedule of electricity rates increas~ngwith the level of reliability. According to reference [7], priority service offers significant efficiency gains over random ration~ngwith fixed electricity rates. A compet~tivemarket in elec
Power System Restructuring and ~ e ~ e ~ l a t i o n
generation would offer a much broader m a y of services than do state n i ~ ~ o p o l i eors r e ~ l a t e dgenerators. erhaps it is not surprising that 70% of USA private utilities, facing new c o ~ p e ~ ~ tpressure ive at the generation stage, now offer some form of voluntary inte~up~ible service 181. The fourth advantage of competit~vegeneration is innovation. C o m p e ~ i ~ not i ~ n only leads firms to be more responsive to consumer demands, monitor costs more closely, and compete:on the basis of price, but also provides an incentive to be i ~ ~ o v a t i vDevel e, a new c o n s u ~ e service, r a better method o f reducing costs, or a faster way of d e a l ~ nwith ~ pro~~em promises s the innova~ora competitive edge.
xis~i The nature of the existing generating plants will affect the speed of reforms. In countries where the coal industry has dominated the economy there has been opposition to r e s t ~ c ~ r i nthe g electricity industry, which usually includes a s u b s ~ t i a al ~ o ~ofn coalt fired capacity. Deregulation of the electricity sector meant loss of a secured market for coal w h i ~ hnow has to compete for its share in the market. The nuclear industry in the UK was initially excluded from competition and subsidised. The nuclear power s ions bid into the power pool and were electricity due to the n-Fossil Fuel Obligation (NFFO). The on the distribution companies to buy a set percentage of their electricity from stations using non-fossif.hels. In 1990, this was mainly nuclear power. A Fossil Fuel Levy was placed on the e l e c ~ i cbill i ~ of all electricity consumers (which ~ ~ u n t toe 10% d of the total bill) and over 90% of the money collected was given to Nuclear Electric to cover gen not recouped from sales of electricity to the pool [9]. In 1996, when British formed, the subsidy to the nuclear power industry was abolished. The levy and since then it has been used to support renewable energy projects. Prices tend to go down as competition is introduced and are expected to fall sign~~cantly in the long-term. For example, in the UK prices have fallen since the market open in^ and they are expected to fall even lower. In 1995 real prices, the price of elect~cityfor industry decreased by almost 13% and the price for households by 6.3% between 1991 and 1995. It is has been observed that i n d u s ~ prices a ~ have decreased more ousehold prices in most of the countries where reductions have occurred [IO]. ne of the conse~uencesof p~vatisationis the ~eve~opment of the i n t e ~ a ~ i energy on~~ c o ~ p a n yconcept - a company whose focus is becoming more global and more multile US electricity and gas companies have been ~ u r c h ~ electricity in~ Australian and UK companies have been heavily involved in setting r projects in developing countries. Another change with privatisation older value. Privately owned companies have to compete for funds in the capital market and it is important to show that they operate efficiently to do well in the business environment to attract investors. That means a comple~elynew organisational structure and strategies for companies from what were used in the highly r e ~ l a t e dpower industry. Goal is expected to retain a strong position in power generation worldwide in the future. In 1995 solid fuel, mainly coal, accounted for almost 40% of world electricity pro~uctionand is expected to retain this percen~geuntil 2020. In 1995,60% of total world
Energy Generation under the New ~ n v i r o ~ e n t consumption was for power generation and this is expected to grow to 65% in 2020. The emand for coal will increasing~ybe dominated by Asia. expect^ to increase from 25% in 1995 to 43% in 2020 E1 11. There are a number of issues that will affect future use of coal and in some cases the results are quite u n c e ~ i n .The Inte~ational Energy Agency (IEA) points projections of coal use are subject to the outcome of competition between coal urope, and to the policies adopted by governments to improve nnance and comply with greenhouse gas reduction c o ~ i ~ e [InI].~ s
In the past, power systems were developed to transmit large amounts of power at hi voltage from remote generati~gstations and to diskibute power at lower voltage down millions of small consumers. This was the favoured pattern, allowing ever-l~gerpower stations, mostly coalfired, to be built and achieving economies of scale and high efficiency. The national grid evolved to ensure secure supplies to all consumers and centralised conkol and supe~isionwas essential. In the present privatised electricity supply ~ n d u s ~ based on free trading of electricity as a commodity, central control is unwelcome. er ever possible, electricity generation should be closely i ed with space and stems. newab able process heating in a diverse array of combined heat and power energy sources should be harnessed by large numbers of wind and wave machines, marine t i d a l ~ ~ u r r eor n ~s m ~ ~ - h y d rplant, o solar photovoltaic generators on roofs and small generating plant close to farms supplying wood fuel or to sources of combustible waste products. Generating plant will be small and dispersed and since CHP systems must be located close to their heat loads there will be a natural tendency for most e ~ e c ~ c i ~ generation capacity to lie close to the consumer. There will be little need to transmit large amounts of electric power over long distances. The h c t i o n of the power system will be to handle the f l u ~ ~ a t i o in n s load and in the output from the renewable power generators. ~ i g ~ - p o w long~distance er~ kansmission will be much less important, In the current energy structure, a central power plant is the key facility providing energy for houses, factories and offices. With decentralised co-gener power and the d ~ l o ~ eofn renewables, t this situation would change. would be less centralised and more dispersed. Network stability and frequency regulation would gain in importance and energy storage would become very ~mportant.Ele genera~ionis provided by a large number of small units rather than a small number units, Co-generation is the generation, on site, of your own power and at the same time taking advan~ageof the exhaust heat from your gas turbine or other engine to meet on-site heat needs. Heat can be used to heat buildings, heat dryers, generate steam ~ o u an~ h HRSG (heat recovery steam generator), or to provide air-conditio a b s o ~ t i o nchiller. Power and beat can be generated locally from na~ural using an efficient, reliable gas turbine. The uncertainty in the USA today is what will happen to electricity prices. The major c o ~ p e t i factors n~ are limited deregulation and lack of new generat~ngstations ~ ~ c u ~ a r l y large coal or nuclear stations). Estimates range from modest decreases in prices, to the levelling of local inequities, and significant increases driven by demand without supply. Our view is that prices over the long haul will increase slightly with some local equities
Power System Restructuring and ~eregulation
being eased. All this means that for many sites cogen (distributed power) will be a viable option for those willing to improve their competitive position through ~ e d ~ c e dn e r ~ costs. New enabling technologies have now improved transport of eleclkcity in ~ ~ g h - v o ~ t a g e C systems to the point where this may be cheaper, and use less energy, than ~ a n s p o ~ i n g fossil fuels, for distances o f 5000 km and above. This might make it possible to link lowCOzpower sources where demand is low to distant regions where demand is high.
1.4.2
Trends in Conventional Electricity Generation Tec~n~logies
Co~ventionalsources of electricity supply will m a i n ~ their i ~ central role in ~ r i ~ a r y energy supply for many years to come. Further advancement of fossil fuel generation technologies will increase the options for mitigating greenhouse gas (GBG) emissions. This is particularly important for some developing countries and transitiona~economies with abundant, low-cost fossil fuels, where electricity demand is increasin~rapidly. The large share of nuclear and hydro in the generating mix of some countries already makes a s i ~ i ~ c a~ontribution nt to mitigation of GHGs.
atio World electricity production is expected to grow by an annual rate of 3% in the period 1995 to 2020 according to IEA projections. Coal retains a strong position in world power generation and will continue so. However, gas is expected to grow faster at 6% than solid fuels at 2.9% (e.g. coal) [I 13. This is because, in countries where gas is available at competitive prices, gas-fired plants are cheaper to build and operate. D e r e ~ l a t ~ ohas n played a role in opening the way for gas to compete with other fuels. Coal is still the favoured fuel in locations close to low-cost coal production (e.g. p a t s of North America, Australia and South Africa), in areas where gas is unavailable or expensive (as in those deveIop~gcountries that have coal available, like China and India), and in areas where there are existing coal-fwed units. Prior to deregulation, utilities tried to predict the future energy demand in their area and build new capacity accordingly. In a deregulated energy market gener current demand is and try to fill as much of the demand as possible plants. The predicted growth in the demand for energy on a wor provide an incentive for generators to build new plant or extend their existing capacity to take advantage of this trend. Competition rules will determine the market players. However, the only players in practice who can invest in new capacity are those who feel they can achieve a competitive advantage. In deregulated markets this should not be market access or cost of capital but a genuine advantage such as feedstock, technology, captive market of heat, extension of existing plant to take advantage of existing assets, refurbishme~t,etc. The possibility of having stranded costs would seem to rule out new, ensive power plants. Most of the additional capacity is expected to come from incremental i n v e s ~ e n t in extensions done as part of general ~ p ~ v e ~ e or n t s ma~ntenance.New plants are likely to be smaller, more cost effective, and close to areas of demand that can compete effectively for local market share. This means that there could be a swing away from large fossil-fuel-fired plants in the ene y mix towards sma~ler,less
-
-
Energv ~ e n e r a ~ under ~ o n the New Envirolment
7
intrusive plants sited close to the area o f demand. The fact that industrial sites are now allowed to install their own genera~ngcapacity and export electricity to the grid could lead to an increase in smaller scale distributed g ~ e r a t i n gcapacity.
1.5.1
~ Q w ~ r
The operation o f power plants is also changing dramatically in dere Generating companies are no longer obliged to generate electricity; generate and sell their electricity when they think it is profitable for them. This means that most of the generators will want to operate their plants at base load where most profit can be made. There is little incen~vefor the generator to provide electric~tyfor more expens~ve intermediate and peak demand, which make up only a small portion of the market. As d e r e ~ l a ~ i proceeds on an increasing number of players enter the system which is no centrally controlled. This makes the quality and reliability issues more difficult to m Experience so far shows that deregulated markets can reliably meet demand and are expected to do so in the foreseeable future. The UK system’s re~iabilityand availa~i~ity actually increased between 1992 and 1997 when the transmission and dis~ibu~ion network was restructured [4]. It i s believed that the system will work without problems of security of supply for the next 5-10 years. Coal contracts are also affected by changes in power plant operation. There is a general move to shorter term fuel supply contracts to match the electri sales contracts in deregulated markets. ~ ~ e x i ~ini plant l i ~ operation i s an adv the competitive small-scale units market where conditions change quickly. Distributed gene could also give more flexibility to the system. An advantage of coal is the fact that it cm be easily stored in stock~iles,whereas storing gas is much more complicated and expensive and restricted to certain quantities. In deregulated markets demand and a v a i ~ ~ ~o fi l i ~ dictable and therefore the risk of disruption in fuel s u ~ p l yis more es can ensure security of supply for the generator.
Utilities are forced to operate in a more reliable, economic and efficient manner and plan their expansion investments more accurately. There are a number of reasons promoting int~rcon~ec~ions among utilities. These include economic interch~nge,Brm power and energy transactions, wheeling, improved operating reliability and ~ ~ x i b iand l i reduction ~ in installed generation reserves. Usually utilities construct new power plants to meet the increas~ngdemand or to rep~aceold plants, which need large investments, ~ o w e v e r ~ ~ t ~ r ~ o ~ ~utilities e c t emay d jointly install a generating unit in which the utilities may have different or similar shares or the interconnected utilities may buy a certain perce the output of a generating unit, which already exists in the other utility, Therefore, the failure of a jointly owned generating unit will cause a decrease in the available capacities of all the sharing utilities simu~taneous~~. Because of this correlation, the conventional model of a ~eneratingunit cannot be used to represent a jointly o ~ e generating d unit, The re~iability modelling and evaluatio~methods of composite ~efierationand transmission systems need to be extended when the system being analysed includes generating units that are jointly owned with other interconnected systems. This is because
Power System R
~
~
~and c~ ~ r~e g ur l ~it i o~n ~
the modelling of jointly owned units causes two major problems. The first problem is that they cannot be included in the area generation model in a conven~ionalmanner because a jointly owned generator contributes generating capacity to two or more areas. Consequently, a failure or derated state of a jointly owned generator affects all the sharing areas. This condition cannot be incorporated in the traditional generation model, which has an inherent assumpt~onof independence among generation models of various areas. The second prob~emis with the transmission model. In the absence of jointly owned units the transmission links are used only for emergency help and energy transaction^^ Since the ontracts and the transmission c ity states are fixed, emergency help th n e ~ g h b o ~ nareas g is fixed. when jointly owned units are includ reliability analysis of the system, common generation flows are present and vary depending on the states of jointly owned units. Consequently, the emergency help that can be given to neighbouring areas is dependent not only on the tr~nsmissioncapacity states and energy contracts, but also on the common generation flows which vary according to the states of the jointly owned generating units [12,13]. Further research on a detailed system representati~nis necessary to consider the particular operating features of jointly o w e d units so that their impact on the reliability performance of the respective power systems can be i n v e s ~ i g a t ~ . It is impo~antto ~nderstandthe market response to the increased risk associated with the introduction of competition into the market for generating electricity, Typically a v e ~ i c a l ~iyn t e ~ a t e dstate monopoly deals with fluc~ationsin demand and r ~ d o m equipment failure by carrying excess capacity, including redundant backup capacity. It may also address predictable fluctuations in demand by offering peak-load pricing schemes, although the incentive to do so is weakened by state ownership or regula~on. Competitive generation produces at least two additional sources of complex pricing structure, and loop flow problems when independent electricity into the transmission network. Moreover, electricity flows along the path of least resistance. Thus, for example, electricity sold by Generator A to Industrial Customer may not travel along the ‘contract path’ that is, the shortest line within the network tha directly links the buyer and seller, Depending on circumstances, electricity introduced into the network at any point may give rise to ‘loop flow’ affecting ail suppl~ersto the grid. Loop Bow can disrupt the quality and reliability of service to everybody taking electricity from the grid at the moment additional power is introduced. If decentralised markets introduce additional risk, they have to provide a bro ways of dealing with it. All of these sources of risk potentially influence the service to the final consumer of electricity. In general, the market offers methods to reduce risk and to price risk so that it can be spread or shared optimally. Consider how a generator faces the risk of uncertain prices for electricity. Firstly, the producer can sell power by long-term contract to large industrial customers and regional distributors. ~ o n ~ a cspecifL ts prices and adjustment clauses. Thus, only a small proportion of its output may even be exposed to unknown price fluctuations [ 141. Se the spot market on a regular basis offers normal returns because prices mean over a large number of sales. By selling regular~yon the spot market, the producer is reducing risk through diversification. Thirdly, the producer can hedge spot market sales in the futures market.
Energy Generation under the New Environment
Fuels used to generate eleclricity are produced using the follow~ngfuel sources: namely, coal, nuclear, natural gas, ail, hydrogen and renewable resources. ~ e n e w a b ~resources e include hydro power, geothermal, biomass, wind, solar and p~otovolt~ics. Coal is the predominant fuel source. ~ u c l power e ~ is projected to decline her over the next 20 years owing to retirements of existing units, Generation from both natural gas and coal i s pro~ectedto increas~to o€fset these retire~entsand to meet the growing demand for e l e c t r ~ c iThe ~ . coal trade has been increasing and is expected to continue doing so in the future. It is expected to increase faster than coal production. Between 1992 and 2010 the coal trade is projected to grow by an annual 4.3% whereas coal product~0nwill 2.3% a n n ~ a l ~[15j. y Coal prices dropped during the 1990s in line with compet~t~on and with the fact that there is excess capacity for mining coal for the international market. Cheap coal i s seen as being readily availabie in the short and medium tern. The ~ollowing sections s ~ a r i s the e discussions of issues related to the markets for coal nuclear, natural gas, oil and renewable fuels, followed by electric power industry res fuel markets. Goal Power generators will attempt to pass on market risks to coal producers and carriers wherever they can. As a result^ coal purchase contracts will ~ i k e ~become y s ~ ~ in~ e r duration and lower in price. The existing capacity of the power industry in each country will play an important role in its ~ t u r fuel e mix. In the EU, 17% of the conventional thermal capacity is over 30 years old, indicating that much of the plant is in need of refurbishment or replacement [16]. Where coal-fired plants already exist it is usually more economic to operate them rather than build new gas-fired capacity. Refurbishing or repowering an existing coal-fired plant can reduce costs as the entire i n f r a s ~ c ~ uremains re in place. Retrofit of pollution ~ n t r o ~ e ~ ~ i p m e nmay t be necessary to meet environmental standards. In cases where h y d ~ e l e ~ ~a ~n ~ oi nuclear tr y power dominate base-load generation other fuels notab~y coal and gas wiIl compete more strongly for position in the mid-merit market for electricity,
-
~
wer plants are expected to become uneconomical. ~ o m p e ~ i t i ev el e c ~ i c ~ ~ prices may be so low that nuclear power plant operators will not ee enough income to enable them to recover the costs of operating and maintaining the ants and the costs of capital ~~provenients, such as steam generator replacements. In the immediate f u ~ e , some nuclear power units will be at risk of early retirement as a result of r e s t ~ c ~ ~The ng. additional inability of plant operators to cover a plant’s full costs, ~ n c ~ u d ~capital n g costs, under restructuring produces ‘stranded costs’. For nuclear plants, operating costs after deregulatio~will be driven mainly by plant size, age, capacity factors, and requirements for new c a p i ~ limprovements. Average fuel costs make up only about 0 n e - f o ~ hof the operating costs for nuclear power plants, but the competitive environment created by a r e s ~ c ~ electric e d power industry will encourage nuclear power plant operators to ~ d u c ~ all o ~ e r a t i ncosts, ~ inc~udingthe costs of purchasing and managing nuclear fuel. ore over, if early retirements of nuclear power plants result from competition in electricity markets, the deniand for nuclear fuel will be reduced. To compete, suppliers in the n u c l e ~fuel
Power System ~ e s ~ c ~ rand i n~ge r e ~ l a t i o n
0
~ d u s t r ywill be forced to reduce prices or improve efficiency, In 1996, 434 nuclear reaclors in operation in 32 countries produced 2400 TWh of electricity avoiding an estimated 10%of global human-made emissions of carbon dioxide. S
gas is primarily used during peak demand periods and is the prefe~edenergy source for new generating capacity. The electric power and natural gas industries are both network industries, in which energy sources are connected to energy users through ~ s m i s s i o nand distribution networks. As the restructuring of electric^^ m a r k e ~ proceeds, the develop~entof htures contract markets and electronic auction markets could lead to greater integration of the electricity and natural gas industries and the em~rgenceof competitive energy markets. The availability of market information and public markets for natural gas and electricity will be a key to the development of an integrate for those commodities. The use of natural gas in electricity generation has been growing rapidly. According to the IEA World Energy Outlook, gas-fired e l e c ~ c i t youtput will almos~double ~etween 1993 and 2010, even under an energy savings scenario. Low capital cost, short construction time and competitive fuel price make natural gas generation attractive, especially in deregulated markets. Technologies being in current c o ~ e r c i a l operation are gas turbines and gas engines. The rapid devel o f gas turbines in recent years - bringing higher efficiency, lower cost, reduced NO, emissions and increased ope~ationalflexibility . puts natural gas electricity generation tec~ologiesin a position to make a large contribution to GHG mitigation. For large gas turbines, complex cycles (Le. reheat, intercoo~edcycles, etc.) may hrther improve efficiency. Gombined-cycle power plants attained thermal efficiencies of 40% in 1970, and are now close to 60% ~ ~ i c i e n t , Gas turbines and gas engines for small-scale generation need firther to improve their e ~ c i e n c yprice , and e n v i r o ~ e n t a performance l to gain wider application in the market, Conver~iontechnology using electrochemical reactions, namely he1 cells, should become competitive in the near future. Natural gas-fuelled fbel cells can attain 50% e f ~ c i e n ~ y (under very h i g h ~ t e ~ p e r operation), a~e which would be further i ~ ~ r o v to e d70% if used in combined cycle.
a Oil prices have ranged between US$l0 and 20 per barrel during the 1990s and &ere is no sign of any shortage in the short or medium term. Owing to assumptions about electricity industry restrucbxing prompting the construction of Iess capita-intensive and more efficient natural gas generation technologies, the share of coal generation will e ~ e n ~ a l l y decline while the natural gas share will continue to increase. With the d e r e ~ ~ a t i oofn electricity generation and the resulting incentive for power generators to lower fuel costs, the use of relatively expensive residual he1 oil for electricity production is likely to decline even fisther. As a result, petroleum refiners may be faced with a growing ~roblem:that is, how to dispose o f leftover residual fuel and petroleum coke. Among other options, two po$s~bilitiesare related to electricity markets: (1) selling petroleum coke to e l e c ~ c i t y generators for use as a fuel component, and (2) gas~~cation at the refine^ by using integrated gasification combined-cycle (IGCC) technology to produce steam for process heat and for electricity production.
11
Energy ~ e n ~ r a t i under o n the New ~ n v i ~ o ~ e n t
~ e c a u s ee l e c ~ c i t ygenera~ionfrom renewable sources generally is more conventiona~sources, constrained competition in electri result in a reduced role for renewables. As a result, a variety of propos~~s, schemes and policies incIude specific ~rovisionswhich are used to s~pportthe c ~ n t i n ~ e system ment and use of renewable energy. Renewable portfolio standar ing and charges are among the programmes being considered. Green pric~ngprog~ammes,already being im~lementedby electric utilities, may also provide a se c o n s u ~ demand ~r for electricity from renewable fuels. The role of y sources in competitive electricity markets will also depend an the cost of the indiv~dualrenewable fuels. In addition, because renewab~ee ~ e r g y generat~g~acilitiesgenerally depend on the availability of energy resources at s p e c ~ ~ c sites, often at sites remote from major electricity grids, transmission issues will affect the pene~ationof renewable fuels in the electricity ~enerationmarket. e an essential element of the climate change p r o g ~ ~ ssions and ~ ~ ~ i ~ clower a n levels ~ l y of other ~ ~ l ~ u t a n ~ s ~ ort for renew~bles,policies and prog stry to become comp~titive. supply a proportion of renewable powcr ren~wable~eneratorsc ~ n ~ ~ e that n c ethere will be a market for their pro ren e~~ctricity genera~ionschemes, using established te Pro power at prices which are more or less competitive mains~eamcoal and gas. Figures 1.1 1.2 show the changes in the arke et shares and the geneTa~ionmix ~ ~ s p e c t i in v ~the ~y
Links First Hydro Others 1pp* 7%
7
1%
,/-1%
lPPs
-. .
National
.
Energy 18%
1.1 C ~ a ~in~the e market s shares
\-Mission 4%
12
Power System Restructuring and Deregulation
8%
33%
igure 1.2 The generation mix
Althou~ha number of the technologies are inherently small-scale c o m p ~ with e ~ central station power generation, this has some distinct advantages suc d operation. As electricity markets are restnuc is likely to expand and renewables will become There is a more diverse range oE techno~ogies, 0th their technical and economic devel energy crops, p h ~ t o v o l ~ i cfuel s , cells, ass residues, wave power and geothetrnal energy. The world is c h a n ~ i nand ~ es are driven by the use of energy.
n operates on a small to m d combined cycles can also a d v ~ ~ of g er e m o v ~ ~allg p ~ i c u l a t e sfrom the co iency of over 85%. This teclmology is close Eurther ~evelopmentis the fuel cell, where a version at conve~ingche i authorities, difficult f trade or promotional orga~isatio~s w tariffs for sale of bi ackup electric supplie costs also consti~teserious barriers.
Energy Generation under the New Environment'
6.6.2
13
Fuel Cell
A fuel cell consists of two e~ectrodessandwiched around an e ~ e c t r o l ~ e ~ over one electrode and hydrogen over the other, generating electricity, water and heat. Fuel cell systems will compete with other distributed generation technologies, inc~uding micro~rbinesand reciprocating e n ~ ~ iavailable ~s, at prices competitive with e x i s t ~ g forms o f power ~eneration.Fuel cell systems will have a competitive advan~agein that they can be more easily scaled to residential size and will be more efficient in handling the load profile of residential customers. They will be quieter, e n v ~ o n m e n ~cleaner, l~y more efficient, and less expensive to install, service and maintain. Fuel cell systems will also te with solar and w~d- ower red systems. enerative fuel cell technology, National Power rece developed a new electricity storage technolo change the way power systems o f the future are planned and opera the world's most ad~ancedr e ~ e n e r a t ~fuel v ~cell t e c ~ o ~ o gRe y be attractive as a closed-loop form of power generation. Water is separated into and oxygen by a solar-powere~el water. The water i cell, which genera~eselectricity, h solarpowered ~ ~ e c ~ o ~and y sthe er The e ~ e ~ ~ ~ o ~process, h e m ~which ~ a l operates like a giant rechargeable b a ~ has ~ the e ~ ~ potential to deliver commercial, operational and environmen~~ benefits for electricity suppliers worldwide. It stores electricity when demand and costs u e low and releases it when demand and prices are high, removing the need to call up more expensive pawer plants. The system, which can deliver power instantly, can therefo~eassist deman~ planning, improve the use of power station assets so that less capacity is n~eded,enhance operational. control and give customers greater security of delivery. It will also offer lower lifetime costs than convent~onalstorage. The single biggest i n v e s ~ e n ~ Regenesys is that: it will offer lower lifetime costs than either pump ry plants - energy storage that could curtail peak demands stored, power electronic developments offer 8 fast respo Work and electrical DC energy stored in batteries. These considerations underline the potential value of energy storage in curtailing daily peak periods and that it would most e~ectivelybe located near the source of load variations, the consumers in the distribut~onnetworks [183. Coupkd with advanced power electronics, storage systems can reduce h ~ o ~d iis ~co ~ i oand n s elimina~evoltage sags and surges. Most ~istribu~ed ene o n ~so ~ that, storage § y ~ ~ m can§ be made ~ u l t ~ - ~ n c t with ~ o nlittle a ~ or no ~ d d ~ t i cost, example, both uninterrutable power supply (UPS)and energy ageme me^^ applications can be served by the same equipment. In combination with renewable reso~ces,energy storage can increase the values of p~otovoltaic(PV) and w~nd-generated e ~ e c ~ ~ c ~ t y supply ~ o i n c i d ~with n t periods of peak consumer demand. Energy storage systems used to follow load, stabilise frequency and manage peak loads. ~egenesyshas a. number of distinct a d v ~ t a g e sover existing electricity storage technologies like hydro rind battery storage. It offers all the benefits of pumped-hydro, but can be located here on a power system thus avoiding environmental problems. Though similar to a battery storage plant, ~egenesysis much more flexible. Unlike a battery, the power o u ~ u ~ and storage capacity can be specified individually, Based on h e 1 cell technology, ~egene§yscan be built in modules to the required size ranging from 5 to 500 megawa~sof
.
Power System R ~ s ~ c ~ rand i n ~g~ r ~ g u l ~ t i o n
I4
capacity. It i s able to provide vital services to elec~icitygrids, ~ncIudin voltage control. Regenesys could meet peak demand and maximise inve allows better use to be made of the cleanest generating plant by reducing the need to operate less efficient peaking plant. It can also enhance the value of renewable generators such as wind and solar power.
1.6.3
Wind
Cunently some 50 countries have major wind power ins~allations~ Europe is presently the most important market but demand in Asia is growing strongly. Ease o f rapid installation (six to nine months) and a free local source of power make wind an attractive technology in developing countries. Over 1300 MW of wind-electric capacity has already been instal~edin Germany and more than 1000 M W is on-line in Denmark. The Danish goal is to provide 10 % of its elecwicity consumption through wind-electric energy by 2005 and more than 40 94 by 2030. At about 4 US cents per kW of installed power, electricity from Danish turbines now costs around the same as the average cost for electricity from coalfired power plant. However, there is no such thing as a single price for wind energy as the costs depend on both wind speed and the accessibility of sites. Wind-electric energy has the potential to supply 25 % of Europe’s electricity needs. Some countries could also export power to neighbour in^ countries.
Potential applications of PVs range €rom basic electrification for the 2 billion people of the world without electricity to the integration of PVs in building structures in deve~oped, urban areas. Customers need complete systems of PV modules, panels and arrays to provide electricity appropriate to their needs. Improved light-to-electricity conversion efficiency of individual cells is less important than reliable, integrated systems. The flexible thin-film amorphous silicon panel is at the forefront of PV technology. D i s ~ i b ~ t e d generat~onwith PVs has been tested to relieve substation o v ~ ~ h e and ~ ~ as ~ na gmeans to defer transmission or distribution system upgrades. Remote locations in developed countries are also prac~icalapplications for PVs. ~xamplesinclude water p u m ~ ~ n fence gq elect~~cation, and radio station power supply. PV is one of the most flexible technology s u ~ ~options ly available for electric power product~onbecause they can supply loads from several watts to megawatts.
More than 350 MW of electricity are generated by commercial solar-thermal power plants in the USA. To exploit s o i ~ - t h e ~ apower l hlly, broad~r coop~~ation g o v ~ ~ m e nelectric t, utilities and private industry i s ne~ded.The major investments ~ieeded to develop and market solar technology must be supported by stable ~ o n g - t re ~ e ~ l a ~ o ~ policies, which can only be provided by government. For example, in the UK recent
Energy G e n ~ r ~ t i under o n the New Environment
1
studies point to the need of tax equity to improve the economic ~ompetit~veness of solarthermal plants more than ~echnolog~cal ~reakthroughs.
World concern over carbon emissions, new domestic pollution regulations, ~mprov~ng small-scale technology, and the: prospect of open competition for energy markets are forces that converge to demand greater efficiency in energy generation - to lower h e l costs, iiicrease marketable products and reduce emissions. These forces argue strongly for a new paradigm o f dispersed, combined heat and power (CMP) plants that have double the efficiency and produce half the pollution. Although large units will continue to operate in the short term, most will eventually be replaced by new facilities and virtually all new growth will come in the form of small units. Readily available technologies now exist to combine the generation and supply of heat and power. By capturing unused heat energy, generators and consumers can, in effect, use the same fuel twice. Combining heat and power production reduces the net fuel demands for energy generation by supplying otherwise unused heat to residential, commercial and industrial consumers who have heating and air-conditioning needs. CHP technologies can be widely implemented. In almost every case, such teGhnologies will save enough money, now spent on fuel, to pay for their capital cost. By combining roduction and supply, 80 to 90 % of the useful energy in fuel can be put to beneficial use. When these plants extraGt steam from the turbines ar relatively low pressure to drive industrial processes or provide heat, they lose some electricity production, but capture all of the heat, eliminating the use of other fuel to make this heat. Total ef~ciencies can reach 90%, d e p e n ~ n gon how well the electric and thermal needs are matched or balanced. CHP takes energy from a central electric plant and distributes it to end users as steam, hot water and chilied water using piping networks. An increase in efficiency of 1% would result in a 2.5% reduction in CO, em~§sions,An UK study suggests that half of the CO, savings required up to 2010 can be met most casteffectively with CHP. CHP can reduce fuel use, cut emissions and save money. Policy makers should take a ~ ~ ~ asteps ~ i tov encourage e use of CHP. The technology is ~eadily available, has a net economic benefit and can cut fuel consumption and pollutant emissions in the e n e supply ~ ~ ~industry in half. There are many ways in which r e ~ l a c i nseparate ~ heat and power generatiQn with CHP systems can reduce emissions s i g n ~ ~ c ~ n tFor iy. example, producing 1 kWh of electricity, and a given amount of heat, from hard coal in a CHP system can reduce emissions by almost 30% compared with producin~both s ~ p a ~ a t efrom ~ y the sanie fuel. Using natural gas in the CHP system can reduce e~issions by almost two-thirds compared with generating the heat and power separately from coal. CHP meets energy needs and can save money for a wide range of energy c~stomersincl~dingpublic sector users - and also helps preserve the earth’s precious energy resources, reducing the impact on the environment of harmfbl pollutanls. The GHP shares of European power generation range from about 34% in the Netherlands to about 6% in Sweden, s ~ ~ g e s t i nscope g for large increases in some countries. Energy m ~ k e t deregulation could produce more favourable conditions for CHP, by increasing investmen< innovation and market entry, and decreasing the costs of backup power and natural gas.
structuring and ~
16
capital costs of these systems may deter
consumers’ inter
e
~
~
l
er such i n v e s ~ e n t under s
is fair. In some
renewable energy sources. In Italy, for example, new legislation requires that from 2001 all generators and ~ m p o ~ e of r s electricity will have to supply into the system a quota generated by renewable sources [X 91. The EU directive allows member states to n with public services where this is necessary in the general interest of the vided they comply with Community law. Examples could be an oblig~tionfor to p ~ c h a s ea certain percentage of electricity from r~newableenergy sources or an obIigation for distributors to supply all customers in their area at an equal
s been good value, and now it is even more so, with the UK g o v ~ ~ m e n tdecision ’s to exempt d-quality CHP from the Climate Chan starts in April 2001. This exemp will apply to electricity generated fro CNP and used on site or sold directly to other bus~e§§es.The govemm$nt belie~eswith f a fair and appropriate fiscal and r e ~ i a t o~ ~~ e w o r k ~ other measures such as negotiated ag~eementswith indu ewable genera~ionand efgcient CRP will be ~creased,This should deliver substantial increases in CBP capacity in the coming years. It should en govemment to a ~ ~ o u n cin e , the coming months, a new CBP target of around 10 of the draft Climate Change P r ~ ~ a ~that m would e resent more than ’s CHP capacity. Action by the UK government an essential to provide a market environmen~with incentives and penaiti that the new tec~ologiesbecome available at competit~vecost and in ample quantity. For dis~bL~ted generators, there have been concerns about treatment of ~ ~ s ~ i bgeneration ~ted o ~ i they do not by public electricity suppliers (PESs), especially distributed e n e ~ ~ t i that er the new a~angementsa dis~ibutedgenerat~rowned by a PES will be to formal arrangements with the distribution business in the same w ted generator. The same r e ~ u i r e m e ~tot p u b ~ i ~the h a ~ ~ ~ m minimise the risk of the ~S-ownedgenerator bein treated in a more favourable way than others. The p o ~ ~ t decisions ~ ~ a l set the economic framework in which n e ~ o r k sw311 d e t e ~ i success ~e or failure in meeting the target. Private deve~o~ers will install the CHP and the renewable energy plant if they see a return for their investment, If developmen~sare to happen, unpopular measures will be required, such as ssions, incentives for the deve~opmen~ of s u i i ~ n § ~~~ l a~t i o~nand s ~ the relaxing of restrictions imposed by ~ ~ ~ regulations. ~ ~ i Inn order g to meet the new o b ~ ~ ~ a tai ~uppIier on can either supply the requ~redamount of renewable e l e c ~ i cor ~ buy ~, upplier who fails to meet the obl~gationwill be required to make a government has recently announced the basis for its new renewable energy support mechanism. Suppliers will be able to meet their obl~~ation ~ ~ t h by er
~
chasing tradable green c e ~ i ~ c a t eA s .~ ~ e ~ i a ~ v e ~ y purchas~g~enewableenergy or by of their obligatio~~ able to buy out a ligaticsn and the associated inc e total cast of meet t ~ o to~ the g end ~ user. In addition, the provision of a le sources at p r e ~ ~ uprices m via the NFFO and also the D 's New and Renewable Energy ~ r o g r has ~ iresulted ~ There are a number of le~~slative and policy ~ e ~ ~ l o ~ mc e~net ns ~inl yhand h hat will impact on d i s ~ r i ~ u ~g e d~ ~ r a t i oand n influence its growth. The Utility Bill is aimed at p u ~ the ~ customer g first. The Bill will ~ntrodu~e i r n ~ ochanges ~ t to the I98 Act. These changes will include the in~oductionof new ~ a d i n g and seXling electricity, separation ofthe PES supply and dis~ibuti ion on s u ~ ~ l i etor smeet targets an renewable electricity. AI1 of these c e ~ m ~ l i ~ a t i ofor n s some if not all distributed generator^. In gove for ensunn that energy e f ~ c ~ e n c y d e p a r ~ e has ~ t a ' een ~inister'with responsibi~~~y targets are met. Tar~etshave been set in some ~ ~ ~ a for~ sourc~ng e n ~ene s renewable sources (such as wind) rather than conven~~onal genera~~on.
e~egulatio~ has led the e l e c ~ c i t yi ~ d u s to t ~focus a~entionon the costs of and provides incen~ives ors to reduce their costs and ~ ~ i r n itheir s e ri investing in smaller scale Capital costs, construction time, h e 1 costs, up r n ~ t e n a n c ecosts will d ~ c ~ s i oonn what p~antsare ~
osts ~ e on the ~ s pee c i ~~site ~ as~ well as the s ~ e c i ~ c a ~(size, i o n oper~tiona~ reliability, e n v i r ~ n m performance, e~~~ safety r e q u i r ~ m ~etc.). n ~ , Costs will be ant built an the gr~enbeltCO existing ~ i i f r ~ s ~can c ~ber used. e Plants close oses and avoid costs for CO rent sourc~sas each project is site s-fired plant can vary &om US$300 om ~ S $ 9 ~ ~for~ W e advanced c o a ~ - ~ r e
1
Power System Restructuring and ~ e r e ~ i a ~ o n
corresponding to the replacement of major plant components after 20-25 years, whereas coal-fired plants can reach up to 30-40 years of life. A l ~ o u g hgas-fired tecknology is cheaper in U S $ ~ W eterns there are other factors that should be taken into account. Natural gas is not available in every country and prices are not always competitive. Moreover the i n f ~ ~ ~ c ttou produce re and than the equivalent costs for coal. As discussed more capital ~ntens~ve upstream capital costs are considered in the competitiveness of gas coalfired plants then the capital expenditure associated with both ~echnologiescould be the ~ can outweigh the difference same. The high costs of the pipeline network to t r a n ~ p ogas in capital costs for plant construction. If in place, the electricity generator can benefit from d build cheaper gas-fired plant. However, as d e ~ a n d cture will be needed. It is estimated that to c in Europe (1.7% annual growth from t 999 to i n f r ~ s of~ US$l00-200 c ~ ~ ~ billion will be required [23]. Such inv unde~akeiionly in the fr~meworkof long-term contracts and it i s unc rofitable in competitive electricity and gas markets.
1.9.2
Technology Advances - Clean Coal ~ ~ c ~ n o ~ o ~ i ~ s
Clean coal technolog~esis a tern used for ~ e c ~ o l o g ithat e s achieve a higher effici~ncyand ns for converting thermal energy to electricity than conventio~alpul on (PCC) with subcritical steam and without emissions control. The also u s ~ dto include e ~ s s i o ncontrol systems such as 0, control equipment. Clean coal technol~giesare the way forward for coal as they can ensure compliance with the ~ig~tening env~onmentalstanda . There has been considerable effort to develop these t e c ~ o l o g ~at e scompe~itivecost eserves of coal are large and w i d e l ~~~stributed likely to continu~to be widely used, so more efficient and cleaner coal technologies (CCTs) are an i i n p o ~ a noption ~ in a future energy strategy. CCTs will enable the use of coal. with higher ene~gyefficiency and minimum e n v i ~ o n ~ e ni ~~paa~c t s . types of coal technologies applicable to large-scale power ~eneration: PCC t e c ~ o l o g ~ ewith s emiss control e q ~ i p ~ e(n ~ ng fluidised bed combustion C); pressurised fluidi and ~ntegratedgasi~cationcombined cycle (IGCC) t e c ~ o l o g ~ e s . status of these technologies today and a compa~son technologie~with gas-fired power generation in various c ing and construction of plants using these technologies worldwide (241. CCTs can also be used to repower existing coal-fired power stations a~proachingthe end of their lifetime, instead of buil~ingnew plant, and therefore r e d ~ c eoverall costs. ~ e ~ o f i pollution ~ ~ n g control equip men^ is also important as future and exis~jngcoal-fired plant may need to meet increasingly stringent environmentai standards.
nergy is one of the most critical r e s o ~ c e sfor that energy c o ~ s ~ p ~will i o nat least do facto~of up to five in the next 100 years. At present 1
-
19
Energy Generation under the New Environment
energy poses threats to the climate, with potentially severe enviroi~men~al consequences~ given the levels o f consumption likely in future, it will be an immense chal the global demand for energy without unsus~inablelong-term damage to the environment. This situation has attracted the attention of political leaders across the world, and at the Kyoto meeting of the parties to the UN Framework Convention on Climate Change in D e c e ~ b e rI997 there was agreement to tackle one aspect the amount of greenhous~gases emitted to the atmosphere. The levels of atmospheric CO,, for example, have increased from 285 ppm before the ~ndustrialRevolution to about 350 ppm now. Xt is now generally accepted that there is a strong case for acting to mitigate the threat of drastic clima~e change associated with the unrestrained continuation of this trend. The Kyoto meeting produced pledges by the industrialised nations to cut their GWG emissions, by 20 12, to an average of 5% below the 1990 levels. Deregulation could play a positive role by giving flexibility to different plants or even countries to trade emissions. In this way a generator could have a portfolio of plants including some using renewable energy and therefore meet overall environmen~al requirements. It could also help the development of less costly pollution coatrol technologies. In the single European electricity market, however, where electricity will be traded between member states, it is not yet clear where to allocate emissions. It could be the country where electricity is produced or where it is actually used, This is particularly important in the view of commitments to reduce GHG emissions. US e n v ~ r o n ~ e nregula~ions ta~ have caused a niajor shift in demand for lower sulphur coal supplies. Since the 1990 amendment to the Clean Air Act, there has been a noticeable shift in coal use by ~eneratingcompanies in the USA towards lower sulphur coal. ~ e r e g u I a ~increases i~n the o p p o ~ n i t i e sfor using CEiP, since the power ~ e n e r a ~ ecan d more easily be distributed and sold. GWP units can supply both electricity and heat at the same time, achieving high efficiencies and therefore reducing emissions to th compared with separate generation of electricity and heat. In all c o u i i ~ ~ s economical on industrial sites or community heating schemes where there is heat. In deregula~edmarkets industrial users can set up a small CHP plant on their sites to sup~lyheat and sell any surplus electricity to the local grid. Before deregulat~onthis practice was either not allowed, or at least not encouraged in many countries 1241. There are two ways to reduce GHG emissions. One way is to increase our r e l ~ ~ n cone nuclear power; the other is to develop a wide range of alternative methods of e x ~ a c t ~ n g energy from nature. The nuclear option is clean and feasible but it is hard to See opin~onwould switch from its present hostility to the acceptance of a massive pr of c o ~ s ~ c t of ~ onew n nuclear power stations. The role of nuclear power is ex nce decrease in Europe as the perception of its environmental and economic p e ~ f ~ ~ a has substan~iallychang~d,In the 1970s nuclear power was regarded as a source of cheap and em~ss~ons-free electricity. High costs invoived in decommissionin~nuclear reac~orsand the unresolved issue of nuclear waste have changed the image of nuclear plants. Italy has phased out nuclear generation since the early 1990s after the Chernobyl accident. ~ e ~ a n y decided in late 1998 to phase out nuclear power and is now d~seuss~ng possible ways for ~ nplans t to start phasing out nuclear power in implementation. The UK ~ o v e r n ~has It is clear that the construct~onof new nuclear plants in Europe will cause pubI~coppos~~ion and is unlikely to materialise, particularly in deregulated markets where such ~ n v e s ~ ~ n ~ s are not competitive, as they are too expensive. The contribution frorn nuclear power to the fuel mix is expected to decrease and will be replaced by other sources ~ne~uding coal.
-
Power System R e ~ ~ cand ~ ~i e rn~ ~ u l a t i o n _sl__
power, the power system must evolve to deliver 11 reinfor~ethe need 10 ensure diversity f b m ~ a market ~ ~ thed e n v ~ r o ~ e nimage t a ~ of fuels and t e decisions taken by developers and ~ o ~ ~ ~ ~foc i a n s ~ o m p e t i t ~ oinn retail will certainly create c o n s u ~ to ~ ~influence s ~ ~ v e l o p ~ e nAlthough ts. cost an ~~a~~f a c ~ ao~~f ~ c t i nc g~ ~ t o choice^ ~ e r as e ~ v ~ r o n ~ be ~ n f l u ~ c eby d the e n ~ i r o ~ considera~io~~ e n ~ suppliers are ~ ~ ~ n or~ have j n launched g environm e l e ~ ~ ifrom c i ~r ~ ~ e w a benergy le projects. An opinion poll in the 6% of c o ~ s ~ i ~we ro su prefer ~ ~ to buy e l e c ~ from c ~ ~renewable sources, but only 21% e p r e p a r ~to~pay more for it. In ~ a ~ ~ f o ran n ienergy a supply company has ~nergyscheme which gives eustomers the option to buy a part of or all om r e n ~ ~ a benergy le sources 1251. some c o u ~ ~there ~ e shas been opposition to the cons 1 r ~ a § o ~ §The . poor environmen~lim on. plants of an earlier g e ~ e r ~ ~ iThis erive from the pollu state-of-the-art pl act on new projects. where the r e s i d u ~are ~ re~sedin building ~ a t e r i a l scan ~ o ~ ~ n e ~ the ~romotionof CCTs and their excellent e n ~ ~ r o n m e nperfo ~al a role for coal plants in the re [24f.
f the ge~erating~ ~ n c t i ohave n chan d new capacity, and, if t h e i ~ ~ u d gise ~ ~ ~ t face an additio~al u n k ~ o ~that n is, . To ~ i n i ~their ~ s risks, e they ds and low unit capital CO e, it is expected that ne
ercut c ~ n ~§a ~ l ~u ~~ iicosts ol ~~and ~ have
grid is fin e l e c ~ ~~~ s~ ~l ~set ya of t eg e~n e ~ f i ~ ~ r s of c ~ s ~ o m[28-403. ~r§
Energy Generation under the New Environment
1
any studies indicate that distributed generation (DG) might play a s i g n ~ ~ c arole n t in the future power system structure. A study by the Electric Power Resea (EPRI), for example, indicates that by 2010,25 % of the new generation will be distributed [41]. Owing to variations in ~ o v e ~ m eregulat~ons, nt different de~nitionsfor DG are used in different countries. In England and Wales, the term ‘dis~ibutedgeneration’ is predominantly used for power units with less than 100 MW capacity. In Sweden, DG is oRen defined as generat~onup to 1504 kW.In Austra~~a DG is ofken defined as power generation with a capacity of less than 30 MW. In New Zealand, DG is often considered as generation up to 5 MW. There is no special definition of DG in the Californian and N o ~ e g i a nelectricity markets. A general ~ e ~ n i t i o forn DG could be an electric energy source c o n n e c directly ~~ to the distribution network or load centre. DG is decentralised and located closer eo the point of reater economic and env~ronmen~l sense. Several main reasons have combincd to make DG a technically, commercially, environmentally and, to an extent, politicalIy attractive proposition. Customers benefit from the success of DG because:
of The use of distributed energy will allow improvements in the dispatchab~li~ resources and improve the integrity of the ~nstnissionand dis~ribu~ion systems. Identii~cationand use of alternatives to power generation, transmission and systems controls will ~mproveload levelling, load manage men^ and overall power quality, The system will become more robust in its ability to tolerate natural disasters, suffer less damage and minimise the dependence upon the need for ~ ~ e d i ares~oration te of rhe grid system. Over~llsystem reliability will improve. To get a better unders~ndingof the possible fbture develop men^ of DG in a com~eti~ive market, some examples of typical DG applications are as follows: ~eiiewableenergy technologies, e.g. wind power or solar power. These projects receive certain subsidies, or customers might pay premium prices for renewable en Peak supply systems, based for example on emergency generators or on-site uch systems ~ ~ i c a lsell l y to the wer exchange for only a very short period per year to capture exlremely high peak pri CWP systems, e.g. district heating, whereby a high efficiency can be achieved and additiona~revenue from selling heat can be obtained. On-site generation based on microturbines or fuel cells. Electricity as well as hear are most likely to be used locally.
1.I U.1
Market Regulation
In competitive power markets, DG competes with cenlralised power generation. Hence, market regulatiosls should ensure that DG can act freely within power markets, similar to centralised generation. Tt is, however, often argued that most market ~ e g ~ l a t i ~used ns
Power System K e s ~ c ~ and ~ n~g ~ r ~ ~ l a
worldwide have been designed with large centxalised generation in mind and that, therefore, DG ofien faces significant barriers w~thinthe competi~~ve market.
1.10.2
The Power Pool
The power pool is used to create an efficient marketplace for trading electricity. The power is usually by a c e n ~ a ~ ~ s independent ed, or sation that defines the ards for ele rice bids and the eva~uationof thes s, as well as organising ns the bidding and eva~uationprocedure. The evaluation of power p o d r e ~ ~ a t i o regarding the t r e a ~ ~ofn DC t is a very complex issue. The main difference between various approaches for e l e c ~ c i t y~ ~ r k e ist sthat the trading o f electricity through a power pool (or power exchange) is optional in some a ~ , m a ~ d a t oin~ others, e.g. ~ n g ~ and a ~ d countries, e.g. in Nord Pool ( S c a ~ d ~ a v i and ~ a ~ ase well s as in the National Electricity Market in Austra~ia.In ~ a l i f o ~ i the a, ation in the pool market is optional, except for three large private utilities. They trade through the power exchange until the year 2002. The rea~onfor a regulator to set up a m a n ~ t o r ypool system instead of an op~ional market is usually to achieve a high market transparency~e.g. to prevent some large ~ ~ n e r ~ tfrom o r s gaining market power. In ge~eral,all market pa~icipantswill b e n e ~from t arent power market however, other options are also possible to prevent large rs g e ~ ~ market ng power, e.g. by splitting up the generators as was done in New The disadvan~ageof a mandatory pool approach is that all market p a ~ i c i p a n ~ have to join the pool. That leads to various fixed costs, e.g. members~ipfees, and or energy fees. Both fees are a way to recover the cost for the operation of the power pool. The me~bershipfee is usually a fixed annual fee and the energy fee is based on the energy a c ~ a l l ytraded via the power exchange. These costs may be a major b ~ndepe~dently owned generation companies that focus on DG to enter the electricity market. Therefore, exception§ to the mandatory rule were incl~dedin the re ~ n ~ l a nand d Austra~iafor small-scale generation. The exce~~ions depend on ~ n s ~ l l e d ver, there is no obvious reason for a capacity (30 to 50 M ~ of)the DG source. N source with a capacity of 25 MW to be treat fferently from one with a capac~tyo u ~ h e ~ o rtechnical e, limitations in a distribution n e ~ o r kmay aural iand an urban distribution network. Mence, regulations based on a certain installed capacity influence the way certain market pa~icipan~s to behave. The cost problem for p a ~ ~ c i p aint ~the g pool market, however emains, even if certain capacity limits are removed, This issue is of particular interest €or 6 concepts that aim at power generation, probably for only a few hours r year. To c a ~ ~the re ing e ~ ~ ~e o ma ~~p peaks, ~ c e these dis~ibuted~eneratorsmust p ~ ~ i c i p a t e change. Therefore, high annual fees can be seen as a major barrier for nerators to participate in a power market. As a solu~ion,the cost recover for o f the pool e x c h ~ g eshould mainly be based on energy fees, In additio~,it oned that within the national electricity market in Australia d i s ~ ~ u t e d to sell all generated power within the d ~ s ~ b u t i no ne ~ o r k[ i~cantlyreduces the market o ~ p o ~ n i t of ~ esmall-scale s gene~ation.With e treatment of the individual imbalance of each market ~ ~ i c i p isa ~ t ant for fluctuating power sources, such as wind or solar power. Such
Energy ~cnerationunder the New E n v i r o ~ e n t
t e c ~ o l o ~ i have e s the d ~ ~ a ~ that v the ~ ~power g e output during an upcornin urs, can only be pre~ictedwith some ~ c e ~ afor i ne ~ are three main ~ r o b l associated e~~ with the pool price:
ts effectively bypass the pool. a1 price is paid to all, it i s ~ a t h e m a ~ ~ c a l l ~ 3. Average pool prices bear no relation to any real price p hence of gene ratio^ has been falling steadily since 1990. until about 1994, s t e a d ~ and e ~ ~now seem set on an U
Figures 1.3 and 1.4 show the pool and an er at ion, but most renew cen~ra~ised low (33 kV or below) voltztge networks. So c l e c ~ i c i ~ wholesale prices, w h is wrong. The c h ~ a c t e ~ s to~ c s c o ~ p l eof~ bids i~ 001 capacity ~ a y ~ ~ These nts. lack of tr~sparencyin contracts for onsumer c o n ~ ~ e n c eAs . a result, n Contracts for
re I.
001
a
needed reforms
Energy Generation under the New Environment
5
e n f ta sv o ~ renewable and CWP enerators, are c o n c e ~ e dsince the a ~ ~ ~ e ~will and those gene~torswith ~nflexibl tors with flexible and predic~ble redictable o u ~ u will t face ill b e ~ from ~ ~thet oked at in a wider context. er d i s ~ b u t e dgenerators are likely to grow s coming years and the government has, therefore, paid cmfbl attention to t the economics of DC. It is i ~ p o ~ aton t new e l e c ~ market c ~ ~ that may adversely CHP, obtain access to the el e n s ~ r ethat ~ i s ~ b ~enerators, ~ ~ e d inch META, a ~ ~ g e i ~ e that n t s wil d ~ s ~ i b umarket ~ ~ o on ~ fair terms. As p to ana age their risks and achieve fair osals too, to deal with the needs of generators.
A n ~ i ~s l~a~~i care e sthose
nctions ~ e r f o to~ s~u pdp o the ~ basic services of c a p a c i ~energy ~ supply and power delivery. The costs for ancillary servic s i ~ n i ~ c a nfor t ; e x ~ p ~ine the , USA the total costs for ancillary services are about
and mark^^ ~ a ~ i c i p a nthat ~ s we able , the ancillary services are split up i
erat~onof ~ l e c ~ i yc ~istrib~ited i~ ~eneratorswith~ndistri issues concerning real and reactive r qua~ity[ 1 ~ , 3 0 , ~ 4 ] .
ution networks operate on a radial or open-r designed broadly on principle that load reduces along the I of each distr~~utor. d i s t ~ ~g~~ t~ ee r~a t effectively reverse th point on a distributor or interconnected network and this could affect c o n v e n ~ ~ Q ~ ~ 1 automatic voltage control schemes which cater only for conveneio the design of protect~verelaying systems i s much more complic going both ways. buted generators, such as the majority of wind gene~atorsa d sma1I”s~a~e ased on induction ~ a c h i n e which s have no stead~-sta~e reactiv generation c a p a ~ i ~There i ~ . is a need to import react~vepower to provide Geld exci ators, partic~lar~y s ~ ~ c h r o n ogenera~ors, us can lead to localised increases ich can potentially exceed the sho~-timeratings and ~ a ~ i ~n tg i n o~f s
~ o t e pn r ~o ~ l~arise e ~ ~with systems us create h a ~ o ~disto ic s y s t e ~ ss ~ b ~ etoc trap
inversion (e.g. PVs
erspective, the effect of DG is that networks will be~omemore active in le in behavio~r.From a g e n e ~ ~ o r ’perspective^ s althoug~it may to overall capacity, the c h a r ~ c ~ e ~ s of t i cge~erators s and tible, and network c o n s ~ a ~ could n ~ s result in ~enera~ors
I n c r ~ a s ~use d of CMP and co-generatiQn will result in lower usage of the ~ e ~ in? o r ~ terms of energy ~ a n s ~ o ~ ~ aand, t i o ntherefore, po~entiallylower lev~lsof income. The e to i n c r ~ s rather e ~hanr e ~ u c~ ae p ~e~ l olling a more compl~xand increasingly ~ ~ e r a t Qsuitably rs located may also offer benefits to a d ~ s ~ i b u t oby, r for ex o f f s the ~ need ~ ~for~ re~nforcementor provis~onof other s e ~ i c e such s as voltage ayments to generators will be s u ~ s t i ~ t i nfor g other ex~enditur
1.10. uppose t
is a need to replace a circuit breaker as the fault level. It is i ~ p o ~ a to n ts~ress
Energy ~ e n ~ ~ tunder i o nthe New E n v i r o ~ ~ n t
7
installed because of all ge~erators.The contr~butionof each generator can be re~dily onventional short-circuit analysis tools. These con~butionsto the s h o ~ ate the cost of replacing the circuit b such as there would not be a need to ear, cannot be credibly used to re entry to recover all system reinforcement cost. In this case, the distri rep~acesthe circuit breaker, and in the following price review peri system charges accordingly to all generators with respect to their con~ibutionin order to recover the system investment. The der~vationof charges for assets that provide the connection of a discre~eplant to the system should be differentiated from those for the use of the system. In the former case the asset i s provided for a sole user and could have been financed directly, and even owned, by that user. In this instance charges should be based on the histo~ccost of the asset and a fair return on the cost of the capital provided by the d~stributioncompany. In the latter case the assets are used by a number of system users, past, present and fbture, and charges should be on the basis of a tariff differentiated by voltage. The d ~ ~ arises c as u ~ to how reinforce~entcosts of the infrastructure of the system should be treated when a new user joins. There is also a d i ~ ~ with u 1the~ costs of s ~ r ~ d iend~ a s ~ c t u assets re when an existing user departs.
In regions where renewable energy resources are abundant but usually situated in remote locations, connection to the central power grid is expensive and in many cases ~ ~ ~to ~ c provide. Small-scale, autonomous generation schemes, on the other hand, are both economical and practicable. They utilise the energy resources available and supply the consumers in the local regions. The system cost can be reduced by using c a g e - ~ e sdf, excited i n d ~ c t i oge~ierators ~ (SEIGs) [47-521 since these machines are cheap and r ~ a d ~ l y available. ~utonomouspower systems often employ single-phase g ~ n e ~ t i oand n dis~bution schemes for reasons of low cost, ease of maintenance and simplicity in protect~on[53]. When a three-phase SEIG is used to supply single-phase loads, however, the stzator c are s e r i o ~ s ~unba~anc y causing degrada~ion in generator perfo o v ~ r c u ~ e novervoltage t, efficiency and machine vibration. These xtent by the use of the Steinmetz c o ~ n ~ can be alleviated to a c the excitation c a p a c i ~ c eand load are connected across different phases. For isolated operation, however, perfect phase balance cannot be achieved when the load is purely resistive. The objective of this case study is to introduce a modified ~ t e i n m ce o~ ~ e c ~ i othat n a s ewhich supp~iessingleenab~esperfect phase b a ~ a ~to c ebe achieved in a ~ e e ~ ~ hSElG phase loads. A general performance analysis is presented and experimental results are given to validate the princip~es.
~
~ ~ r ~ ~ ~ i ~t and ~
~
~
n ~
~~
~~
~~
l ~
Figure 1.5 shows the mdified Steinmetz connection (MSC) for a ~ ~ l ~ - c o n nSEIG, ~ted which supp~~es a s ~ n g ~ e - ~load. ~ a s eIt is assumed that the rotor is driven in such a d~~ection that it ~ ~ v ~the ~ stator s e swinding in the sequence A-B-C, i.e. in h e same direction as the positive-sequence rotating field. Hence, if A-phase is taken as the reference phase, B-phase is regarded as the lagging phase. The main excitation capaci~nceG2and the auxiliary load t e dB-phase (the lagging phase), while the ~ u x i ~ i a ~ r e s ~ ~ ~ a nRL2 c e are c ~ ~ ~ across excitation Gapacitance 6, and the main load resistance R,, are connected across A-phase (the reference phase). Compared with the original Steinmetz connection [54],it is no that the auxiliary load r ~ s ~ s RL2 ~ cand e a u x ~ excitation l ~ ~ capacit~ceC, have introdu~ed.These circuit elements provide additional current components that result in the flow of bdmced line currents into the SEIG. In a practical aut~nomouspower system, the auxili load resistmce RL2 cm be local loads such as lighting, storage heating or battery charging Alternatively, it could be a portion of the remote loads. For the purpose of analysis, all the circuit parameters in Figure 1.5 have been referred to the base (rated) frequency hose by introducing the per-unit frequency a and the per-unit speed b [55]. Thus, each voltage shown in Figure 1.5 has to be m~ltipl~ed by a in order to give the actual value and the per-unit slip is equal to (U b)/a. Besides, the motor convention has been adopted for the direction of phase and line currents. The ~hase-balancingcapabiIity of the MSC for a three-phase S E E may be studied by re€erence to a ~ o l t a g e / c ~phasor ~ n t diagram. It is assumed that the values of C,and C, are su~cientlylarge so that the SEIG has built up its voltage and is supplying the loads. Figure S.6 shows the phaasor diagram for the SEIG under balanced conditions. Because the is delta ~onnected,the line currents I,, I, and I3 lag the c o ~ ~ o phase n d ~ ~ voltages V,, V, and V, by (ld, f d 6 ) rad, where lli, is the positive-sequ~nceimpedance angle of the S E E . The line current 1, is contributed by the current Ia through C, and the current lR2 through RL2. ~ ~ e a n w h ithe ~ e line , current I, is contributed by -Icl(where Ictis the current through 6 , )and -IR,(where IR,is the current through RLl). It can be shown that the angle y between 1, and I, is equal to (4 2 d 3 ) rad, while the angle Sbetween -IR,and I , is (5x16 bP) rad. The phasor diagram in Figure 1.6 can be drawn only when la leads 12,which implies that perfect balance can be achieved for values of #p ~xceeding2x13 rad.
-
~
-
Energy Generation under the New E ~ v i ~ o ~ e ~ t
_/_3__
a
~~g~~~1.5 Modified Steinmetz connection for three-phase SEIG
From the current phasor triangles in Figure 1.6, the following relationships can be deduced:
For a given total output power, (1.1) to (1.4) can be used to determine the values of the load and phase converter elements required for perfect phase balance, provi and a of the SEIG are known. Equation (1.2) shows that B, vanishes when 53, = 5n/6 rad, which innplies that the auxiliary capacitance C, can be dispensed with. When #, exceeds 5a/6 xad, B, becoines negative, i ~ p l y i n gthat perfect balance can be achieved with an auxiliary induc~ance. In practice, however, the full-load power factor angle of an SEIG ranges from 2 d 3 rad to 4n/5 rad, and hence it is very likely that an inductive element need be used.
B Phasor diagram of SEIG with MSC under balanced conditions
A general analysis of the SEIG with MSC can be carried out using the method of be ~ o n s t a ~ t s ~ ~ e ~Gompone i c a ~s. All the equivalent circuit parmeters are as nce air gap except the magnetisi reactance, which is a fbnction of the posit voltage. With reference to Fig. 1.5, the following 'inspection equations' E561 may be w~~en:
where,
1 = G1+ J y ,=Z1
and
~ q ~ a t (1.6 ~ oj nimplies that z ~ r o - s e q u ~ voltages ce and Gu~entsare absent in the SE1 solving (1.5) to (1.8) in terms of the delta system of synmetrical ~ o r n p [57], o ~ the ~ ~ ~osi~ive-se~uence volta~eV, and nega~ive-sequ~nce voltage V, c m be d e t ~ ~ i n e a :
1
Energy ~ e n e r ~ tunder i o ~ the New Enviro~ent
Y,+-Y2
A
v,=&v.
(1.11)
Y2 -t- Y p + Y,,
v,=J?v.
(1.12) Y2 +
Yp+ Yn
where Ypand Ynare the positive-sequence and negative-sequence admittances of the SEIG. The input i ~ p c d ~ Zc, e of the SEIG when viewed across stator terminals 1 and 3 (Figure 1.S) is given by
Yz + Y p + Y n 3 Y pY , -iY p Y2 + Yri y2
(1.13)
Appiying ~ ~ c ~voltage o f law ~ tos loop 1345 in Figure 1.5,
For successful voltage build-up, I, f 0; hence L
+
z,, =0
(1.15)
Equation (1.15) can be solved for the excitation fkequency a and m a ~ e t i s i n greactance X,. d X, have been d e t e ~ i n e dthe , positive-sequence air gap voltage is found from tisation curve. The generator performance can then be comput~dusing (1.5) to (1.12).
The input impedance Z,n as given by (1.13) involves the generator admittances 5 and Y,
whose real and i m a g i ~ parts a ~ are high-order polynomials of a X,. As a result ofthe algebraic manipulations involved, both R,, and &,! in (1.13) are extremely complicated functio~sof the above ~ W Ovariables. Serious difficulties will be encount~redwhen solving (1.15) using conventional techniques such as the Newton-Raphson method [47] owing to the lengthy mathematical derivations required. To overcome these d ~ ~ c u la ~function ~ ~ s , minimisation t e c ~ i ~ is u eemployed in this case study for solving (1.15). This is based on c ebe ~ o ~ the o b s e ~ ~ t that, ~ o n€or given values of a and X,, the input i m p ~ ~Z,~ can readily. The following scalar impedance function is first defmed:
x,>=
z(a,
(1.16)
~
Power System Restructuring and Deregulation
32
and X , are respectively the equivalent series resistance and reactance of&. olution of (1.15) is next formulated as the following opti~isation
For given values of load resistances, excitation capxitancm and speed, determine the values of a and X, such that thefunction Z(a, XJ is minimum. It is obvious that Z(a, ) has a minimum of zero and the corresponding values of a and X, also satisfj (1.15). Any o p t ~ ~ ~ s a talgorithm ion that does not require the evaluation of ~ ~ c t i do ~nv a t i v e s may be used for the above problem. In this study, the pattern search method 1583 is used for ~ n c t i o n~ ~ i m i s a t i o The n . method employs two search strategies, namely exploratory rn moves, in order to a r b e at the optimum point. A ~ n c ~ i evaluation on is required each time an expioratory move or pattern move is to be made. For normal opera~ionof an SEE, a is slightly less than the per-unit speed b whilst X, is less than the u n s a ~ a t e dmagnetising reactance Xmu. A c ~ o r d i ~ ~bl yand , X,,,could in general be chosen as initial estimates for a and X, for starting the search procedure. In practice, it was found that a smaller initial value for the variable a (say 0.97b) would give more rapid converge~ce. To simplify the calculations and for easy comparison, all the machine p~ameter$are expressed in per-unit values using the rated phase voltage, rated phase current and rated power per phase o f the induction machine as bases. TabIe I. 1 shows typical computed results for the $xperi~en~al machine. The hnction minima obtained imply that very accurate so~utionsare possible. Over a wide range of load, the number of hnction evaluations Nrequired to reach a solution varies from 350 to 450. ~ a b 8.1 ~ eComputed results for SE16 with MSC
RL,
xtn
U
(P.U.1
1000 10 5 2 1
0.5
N
(P.U.)
0.977 193 0.975 109 0.973059 0.9672 18 0.958454 0.944063
-z,,,
1.2021 1.2205 1.2404 1.3084 1.4576 1.9230
z(Rm @.U-)
412 402 345 377 401 449
9.94e-6 7.73e-6 2.09e-6 3.5Oe-6 4.48e-7 1.88e-6
b = 1.0;ail= 0.97b: X,,, C, = 47 PF;Cl
= 2.48 p . ~ . 146 PF;R u = 2.3 P.U.
To illustrate the phase-bal~cingcapability of the MSC, ex~erimentswere c 2.2 kW, d e ~ ~ - c o n n ~ c induction ted machine whose equivalent circuit data i s given in the Appendix. The speed of the S E E was m a i n ~ i ~ eatdrated value (b = 1.0>and the values of RLi9C,, RI.2 and C, were carefully adjusted until perfect phase balance was obtained. ical results are given in Table 1.2, The good ~greementbetween ~ o ~ p ~ and ted
neration under the New Environment
33
results confirms the principle o f phase b a l ~ c i n gfor a three-phase ~ondi~ions for perfect phase balance in three-phase S E E with MSC
v
Zph
YP
@P
@.U,)
@.U,)
@.u.)
0.918
0.967
1.053
(deg) 130.8
0.835
1.037
1.214
134.7
0.805
0.954
1.186
135.5
0.796
0.789
0.992
133.8
RL, @.u.> 0.59 (0.56) 0.51 (0.49) 0.52
c, ($1
RL2
c 2
@.U*)
@.U*) 146
50
2.73
(0.50)
(49) 49 (46) 44 (4%)
(2.82) 1.78 (1.87) I .64 (1.83)
(146) I68 (167) 161 (160)
0.62 (0.61)
41 (39)
2.26 (2.
136
Normal: experimental values; bracketed: computed values
~iguresI .7- I ,9 show the steady-s~atep e r f o ~ a n c eof the SEIG with elements fixed at the following values: C, = 47 pF, C2 = 146 pF and RL2 seen that the SEIG i s balanced at a load current (experimental value) of 1 co~espondsto a phase voltage o f 0.86 p.u. and a phase cunent of 0.92 electrical power output is 1.63 p.u. (1940 W, or 88% of rated power), of which 80% is delivered to the main load RL, while 20% i s consumed by the auxiliary load RL2. Under the above conditions, the p e r ~ o ~ a n cofe the SEIG is the same as if it were excited with balanced capacitances and supplying a balanced load. For loads close to the balanced opera tin^ point, an experimen~alefficiency of 80% can be obtained. Very good c ~ ~ e l a t i o n between computed and experimen~~ results is obtained; hence the validity o f the a1 component analysis and solution technique is verified. 1.7 and 1.8 show that, when the values of the phase converter elements are ents and voltages in A-phase and B-phase may exceed the rated values when the load is reduced, particularly when the SEIG has been balanced at heavy loads. m e t h o ~to alleviate this unde§irable effect i s to balance the SEIG at part load (say 80% o f full-load current). The ~ e r f o ~ a n of c ethe SEIG will then be § a t ~ s f a c t oetw ~ we^ this load and full load. Another method is to balance the SEIG again at smaller loads, which involves ~ ~ l t i ~ vphase a l uc ~o n~v ~ ~elements er controlled by a s ~ p s w ~ i e~ h i n gs ~ a t e ~ .
Power System Restructuring and ~ e r e ~ ~ a ~ i
4
volt
4.1
igure 3.7 Phase voltages of three-phase SEIG with MSC
Phase ciurents ofthree-phase SEIC with MSC. P,: output power to main load RLI:P,: output power to auxiliary load R,, 2 1.6
1 0.6
re 1.9 Output power and efficiency of three-phase SEIG with MSC
Energy ~ e n ~ ~under a ~ the o nNew ~ n v i ~ o ~ e n t
1.11.6
5
~ i m ~ i P~a~e-balancing i~~d ~ ~ ~ ~ r n e
In circumstances where it is not pract~cableto provide auxiliary loads, or when a u x i ~ i a ~ loads need not be supplied, the simplified Steinmetz connection (SSC) shown in ~ ~ g be employed. In this case, all the electrical power output o f the $E to the sing~e-phaseload &,. The phasor diagam for the MSC (Figure 1.6) and ondiiig equations (1.1)-(1.4)may be used to identify the conditions for perfect phase balance for the SSC. Since the auxiliary load resistance R,, is absent, in (I .3) is forced to a s s u ~ ea zero value. Accordingly the posit~ve-seque angle bpo f the S E E must be equal to 2n/3 rad for (1.3) to be satisficd. F and (1.4), the values of the load conductance and phase-conve~ers in a b a ~ ~ c oepde r a ~ i ~ofnthe SEIG are: G,= 3 YJ2, B , = 43 YJ2 and
T ~ j ~ p iSteinmetz i ~ e ~connection for three-phase SEIG
The a u x i ~ i ae~x c i t a ~ ~capacitance o~ C, is thus one-half of the main exci~a~ion y s e l ~ c t i ~proper g values of C, and C,, perfect phase balance can be of stator current. with the SGG is simiIar to that for the SE1 ow equal to (0 +&). Figures 1.11-1.13 s e x p ~ r i ~ e n pt ae~~ o ~ a n of c e the SEIG with the SSC at rated s excitation capacitances fixed at 110 pF and 55 pF re at a load c ~ e n( te x p e r i ~ e nvalue) ~l of 1.13 P.u., whic voltage of 0.985 p.u. and a phase current of 0.77 p.u. Under this p.u. (1320 W) is delivered to the load and the efficiency o f the SEIG is 79.6%. Again very good agree~entb e ~ w e ~the n c o ~ p u t e dand experimental results is observed.
1. 1”
0.
El. 0.4
I
-/
4 Phase vohges of t ~ ~ ~ p hSEIC a s ewith S
hase currents of ~ h ~ ~ - p hSEIG a s e with S 1
1.
0
0
Fi
3~
upowe~
~
t
7
Energy ~ e n e r a under ~ ~ ~ the n New ~ ~ v i r o ~ e n t
1 ~ ~ a c h has ~ nthe e follow~ngpa~icula~s: .4 A, four-~ole,50
~
three-phase, d e l t a - ~ o n ~ e ~ t e
e ~ i a c ~p ia ~r ai ~ ~(in ~ eper-unit ~ s values) are:
_I
-
-
-
0.0844 0.112 0.0~2 1 0.098 1 0.1 22 0.013
(1.17)
de A l m e r ~(PSA) ~ in Spain, xi@ and success. The key c its sea§ona~cycles. This results in s i the collector f X d and the plant a
set of system p~ametersoptimised for a prescribed range of operations have proved to cently, fuzzy logic control (FLC) schemes, which enco like approach of processing and handling of information, have been of n o n - ~ i n pe ~l a ~ with ~ s pKomising results. However, early studies show that in such FLC schemes the optimis~t~on of the ‘if-then’ rule base is often a c ~ b e r s o and ~ e la~orious rocess ~ ~ v o l v i‘trial n ~ and error’. Genetic algorithms based on the i i a t u r ~law ~ of volutio~lend themse~vesas an ideal op~i~isation tool to be used in c o n j ~ n c ~with i o ~ FLC syst~ms.This s ~ is one ~ of y the first of its kind to show the d e v e l o ~ ~ eonft a scheme aimed at o p t i ~ ~ s i the n g response time of a solar power plant to input power and t e m ~ e r a demand. ~r~
The solar power plant under investigation, Plataforma Solar do Almeria (PSA), in Almeria, Spain
Figure 1.15 shows the block diagram o a d i s ~ ~ ~collector ~ t e d field called the solar collectors a r r ~ gd in 20 rows foming 10 p long. The oil is pump d through the receiver tub the receiver tube walls. The storage tank is filled with oil in the far end. The oil is heated and then in~roducedinto the storage tank to be used for e l e c ~ energ c~ plant [64]. The system feeding the heat exchanger of a desa~~nation three-way valve located in the field outlet that all its outlet t e ~ p e r a ~ Kiseadequate for entering into the m in a dis~ibutedcollector field is sired level in spite of disturba level, cloud ~ ~ v e ~ emirror n t , reflectivi~or inlet oil te
Energy ~ ~ n ~ ~under a t the i oNew ~ ~nviron~~nt I
I
1
4
Steam Generato
Steam turbine ///*
ACUREX Collectors
I--
I I I
Distributed Collector Field
!
(20mws, 1 D loops)
j
Pump
Storage System
A
-
1
Power Conversion
1
System
-
Cooling
tower
Block diagram of the solar power plant
1.12.3
~ o n t r~~t lr ~ c t uorfethe Plant
ed to the plant with shows the overall control bloc diagram of the FLC ted that the o ~ t ~ e ~ the proposed GA optimisa~ionscheme. For this solar plant, it t e ~ ~ e r aof~ the r e field depends on other variables such as solar r a ~ a t i o nI and the inlet ~ has an influence but ch tempera~reto the field 7;.,. Mirror r e f l e c t i v ~also that it may be co~s~dered constant. Hence dynamically the out1 e ~ ~ ~ e sass ea dn o n - l i ~ ~e ~n c ~ if oofn oil flow U,solar radiation al (of the ch The linearised model is based on p a ~ ~derivatives ATo with respect. to changes Au, dl and AT,,):
(1.18)
The ~ a ~ de~vatives i a ~ can be co~isideredas transfer fitnctions re~a~ing the var~a~ion in outlet t e m ~ e r a ~AT, ~ e to variations in oil flaw Au, solar r a d i a ~ i o ~ ATin, res~ec~vely. The mathemat~~a~ model which accoLin~s B ~ ~ f l u ies ncomplex. ~ ~ ~ To approximate these effects, in series with the FLC s shown, has been develo
Uf
=
0.78691 - 0.485(~- 15 1.5) - 80.7 U-Trl
where !,is
the oil flow
U i s the t e ~ p e r a ~set r epoint,
(1.19)
radiation
Tin
1.16 Control structure of plant
‘ i f - ~ ~ e mles n ’ in
where aj, pi
xi ,6 i ,E, E
ase ofthe FLC as
[Q,I],
~0000 I } , Rule 1 is not s i g n i ~ ~ a nwher~as t; as . It is found that using a higher number of r o v e ~ e n ~ins ~ e r f o ~ a but n ~ ei ~ c r ~ a s ~ i ~ n ~ ~ The ~ a entire ~ t i ~y h. r o m o s o ~ Xeis o f the f o ~ a ~
e there~orehas a total of 245 bits of i n f o ~ ~ a t i o n .
icai ~ ~ o r n ~ ~
Energy ~ ~ n e r a t under ~ o n the New Environment
a
~01010101000Q0101 1101Q1Q~0101010~01 1110101010~01Q111~0~01012 1111110110000 11100011100101111Q10101010l000000000000101~11101100111110 11 1Z 10001 1 111 I 1000110000~00011111Q0 I1 ~ 0 0 0 1 0 0101 1 ~ 110001I1 0001I 100 1000111101110111111001010~
The chromosome
Rule base consisting of 49 rules
7 ~ ~ r o ~linked o ~to rule ~ ~base e s
re~ro~uction, crossover 1.18. Firstly, the GA r nto an ini~~alisatio~
Power System Restructuring and ~ e r ~ g u ~ ~ ~
2
Step 1:
Initiaiising pool by randomly. (size=30)
geiierating chromosomes
Step 2:
run = run i1 ;/*mn = 0 initially */ Ben = gen + 1; /*gen = 0 initially" / /*Reproduction*/ Calculating fitness of individual chromosome fram initialisation or mutation pool. Copying high fitness chromosomes to reproduction pool. (Roulette Wheel method) /*Crossover*/ Selecting chromosomes randomly from mating pool and crossover. /*Mutation */ Copying new chromosome into mutation pool, mutation probability is 0.001.
Step 4:
Step 6:
If gen = no-gen Goto step 3 If run = no-run Goto step 2 End
~ s e u d o ~ c €or o ~ the e GA
~ x p e r ~ ~results e n ~ on l the simulator of the plant have been taken to verify the proposed GA-FLC s c ~ e ~Ine .Figure 1.19, the effect of GA o p ~ ~ ~ i sofa ~thei orule ~ base on the e r f o ~ a n c of e the plant is illustrated. The upper graph shows the eiTor versus the number of generations. The error, an index of the fitness of the c h r o ~ ~ ~ ois~seen o ~ to e , decrease as . The middle graph show bottom one shows the corre emcnt of the dynamic response o scheme on a day wh tional PI control s c h e ~ e .It is the plant's robustness when external . Since there is only on u n ~ ~ u ~d~fferen~ ly in any time interval, we concurr~n~ly in real-time. The validity of the comparison ~ e ~ e the e nPI and GA-FLC ~ 0 ~ s ~c h ~e ~0e slies 1 in the fact that the simulator is a proven ~ o of the ~ plant e [63] ~ and ~s one can ~ ~ pthe~ solar r eradiation in a particu~arperiod and use it as one of the i n p ~ to the simulator. The simulator's output is then compared under different control schemes. The current ~nvestigationis based on this principle.
Energy ~ e n e ~ a t i ounder n the New E n v i r o ~ c n t
35000 30000 25000 j
-
20000 -
isaoo 10000
5000
300 -
0
300 1 25Q
1
00 150
I----
100
~ ~ f c con t sthe ~
e
et point
~of thef planto by the ~ GA ~optimisa~~on ~ ~
arison of GA-FLC with PI scheme un er extreme external dynamic c
~
a
~
neration under the New ~ n v i r o n m ~ n t _ I _ _ _ p
such as l a r ~ e ~ s expen ca~~ e ~ ~ s t cannot o ~ be~ sec ~ s
Energy Generat~onunder the New E n v i r o ~ e n t
4
_ l _ l *
shnell and S.S. Qren, ‘ idder cost revelation in electric power auctions’, J o ~ r n uof~ ory Economics, Vol.6, 1994, pp.5-26. o and R. Wilson, ‘Priority service: Pricing, investment, a d market organization’, Anzerieun Economic Review, Vo1.77, 1987, pp.899-916. ‘Priority pricing of ~ n t e ~ p t electric i b ~ ~ service with early [S] T. Straws, and S.S. notifica~ion’,Energy ,V01.14, 1993, pp.175-196. [9] A. Midtun and S. Thornas, ‘Theoretical ambiguity and the weight o f historical heritage: a c o ~ n ~ a r a ~study i v e of the ritish and ~ o ~ c g i electricity an l i h ~ r a l i ~ a t i EmerB o ~ ~ , Policy, V01.26, 1998, pp.179-197. aas, N.Auer, C. Huber, and M. Tranger, ‘Limits for competition in restructured electricity ~ ~ k e- tthe s European pe~ceptive’,19th annuui North Amer~cunCon~erence,United States Association for Energy Economics and International Association for Energy Economics, 1998, pp.103-112. [I I] IEA, World energy outlook: I998 edition, Paris, France, QECDIIEA, 475pp, 1998. [I21 C, Singh and N. Gubbala, ‘Reliability evaluation of interconnected power systems including jointly owned ~enerators’,IEEE Transactions on Power Systems, Vo1.9, No.), 199 412. an, ‘Evaluation of the reliability and production cost of i~i~eKconnc~~ed ems with jointly owned units’, IEE Proceedings, Vol. 134, No.6, 1997, pp.377-382. nt contracts: The case of coal’, ~ ~ ~ r qfLaw n u l and Jaskow, ‘Price a ~ j ~ s ~ine long-term ~conomics, Vo1.3 1, 1998, pp.47-84. [ 1151 IEA, rroje~tedcosts o ~ g e ~ e r u t ielectricity, i~g Update, Paris, OECD/ IEA, 243pp, 1998. Vol.6, 1998, pp.25-29. [ 161 J. Lane ‘Sweeping thc board’, Power EngineeringInt$~u~ional~ on Embedded Generation, IEE, 28 February 2000. utanto, ‘Battery storage plant within large load c e n ~ ~ s~9 , E E ~ terns, Vol.?, No.2, May 1992, pp.762-767. [ 191 Gmzettu Uficiule delta Republica Italians, Decrelo legislatho 16.3.1999 n. 79, Attuazione comuni per il mercato in afico e Zecca dello Stato [20] EC, ‘Guide to the electricity directive’, available from: http:J/www,~uropa.eu.in~en/ c o ~ ~ d g ~ ~ / e l e c . m e i n oBrussels, r . h ~ , Belgium, European Com~ission,D ~ r e c t o r a ~ ~ ~ ~ e n e r II ( ~ n ~ r g yIOpp, ) , March 1999. E211 P. Baruya and D. Goidsacks, ‘European coal issues - European tibcralisation af coal’, ~ o ~ l d Coal, Vol. 7 (10); 1998, pp.29-34. road ben^, ~ G o ~ p e t i ~ i v eof n ecoal s ~ - the evolution of price’, CS/05, London, U Goal Research, 20pp, [23] UNEGE, ‘Security supply in a changing European natura1 gas ~ ~ P . 3 / ~ ~ . 4 / 1 9 9Geneva, 6 / 6 , Switzerland, United Nations Economic C o ~ m ~ s s i o n for Europe, Committee an Sustainable Energy, 17pp, June 1999. E241 Couch G., ‘OECD coal-fired power generation - trends in the 199Os’, IE esearch, 83pp, April 1997. [ E ] Modern POWCK Systems, ‘World digest: Green power launched,’ Modern Power Sjwterns, VoI.19, ~ e 1999. ~ ~ a ~ lobal Private Power, ‘Own coal?’, GIobuE Private Climate, report, The ociety and The Royal ~ c a d e of ~y
hugar, 'The value of grid-sup T r ~ n s ~ coiz~ Energy i o ~ ~ o n ~ e r s iVol. o ~ ,10, 1995, eloping CHP in the public sector and beyond' up Ltd., April 2000, pp.2-22. Ilan, Pcter Gaossley, Daniel icks, Fuel Cell Systems ~ x ~ ~ Q i n hluture far ~ i s t ~ ~g ~ u nt eer a~~ ~ oEniq ,e c ~ ~ i ~ ~ ~
~ a n a g ~ ~ ~ n t IiwM.w.nemmco.com.a~aulne
ket
9
Energy Generation under the New E n v ~ r o ~ e n ~
. Wa~son,J. Arrillaga and T. Densem, ‘Controllable d.c. power supply from wind driven se~f-excitedinduction m~chines*, 1EE Procee~ings,Vo1.126, W0.12, 1979, p p . 1 ~ ~ ~ - $ 2 4 ~ . [SO] T.F. Chan and L.L. Lai, ‘Phase b a l ~ c i t ~forg n se~f”exc~~ed ~ n d u c g~ e~n oe ~~~~t o~r r’ ~o ~ e e ~ i n g s of the In~erna~ional Conference on Power Utility De lation, ~estructuringand Power ~ e c ~ n o l o g i2000 e s ( ~ ~ T 2 0 0 0City ) , ~niversity,London, TEEE [SI] T.F. Chm and L.L. Lai, ‘S~eady~state analysis o f a thr~e-phase co~iection’,IEEE Power Engineering Review, V01.20, NO.10, [SZ] T.F. Chan and L.L. Lai, ‘A novel s i n ~ ~ e - ~ she~l € s e- r e ~ ~ lself-excited a~~d i using a ~hree-~hase machine’, IEEE ~ r a n ~ ~ u c ~on i QEnergy ns ~ o n v e r s ~ oVol. n , 16, in ~ e v e ~ o ~c ~o n~ g~ ~ eZEE s’, ropriate technology - rural electri~ca~ion evzew, Vo1.35, No.7, August 1989, pp.25 1-254. E541 T.F. Chan, ‘ P e r f o ~ ~ a n cAnalysis e o f a three-phase induction generator se~f-e~cited with a ~~E~ Power Engineer~n~ Society 1998 ~ ~ n~ t e e e ~ t ~i a~p ~~ ~r single capacitan~e~, 0 ~ 8 ~ ~ C - 0 - 1 0~~ e~ 9b ~r 71-5, u, ~1998, Tampa, Florida, U.S.A. nt ~ ~ c h i n eLondon: s, Pitman (EL S), 5th Ed,, 1983, p ~ . 3 ~ ~ ~ ~ 3 method o f analysis o f 3 ~ ~ h a ~nduc~ion se ~ o with~ ~ Proceedin~s,VoI.~OOA,PI. E, 1953, o f a 3-phase induction motor connected to a single~ r o c e e ~ 1959, ~ n ~Vol.l06A, s~ 1959, p ~ . 1 8 3 ~ 1 9 ~ ” 1W e i ~ I ~ n t rao ~d u~~ ~to i ~~n ~ ~ i m i ~~ uh t ei oo ~ , L.L. Lai, T.E. Tong, ‘ A opt~~isation o f rule base in a fuzz plant’, ~roceedings ox the I n ~ ~ r n a ~ i o n~a l ~ n ~ ~ on r ~ Pno w c ee~ Utilip ~ ~ ~ e~ e~ s ~~ a~ and ~~ Power ~ ~~ roTechnologies ~ ~ n ,g 2000, City University, London, IRE]E, p d 2000, p p . 2 2 ~ - 2 2 ~
A. ~
~‘Experience ~ of ~using thea neural i
-
and genetic algorithm €or fault secdon estimation’, P E PrQceeding~ ~ e n ~ ~ f f ~ ~ r a ~ ~and~ ~ ~ ~ . $~ ~s rvol. ~ ~o145, ~~ No.5, u ~ ~~ eo ~ ,~1998, e ~p ~~ e . s ~ ~ ~ - ~ 2 ~
Miss Vee Shan Uuen Prof. Mwok Lun Lo i ~S The University of ~ ~ a t ~ c ~ ~ d e The U n i v e ~ §of ~ l a s g o w~ ~ c o ~ l ~ ~ ~ a s ~ ~ocwo ,t ~ a ~ d
The success tisation o f the airline, teleco ~ e r e g u l a ~ ~ ~tructming of the electricity ers in ~ r i v a ~ ~its~ vertically ng i n ~ ~ g r ~el~ e d ~o~lowed in 1990 and 1996 ~es~ectively. The d Norway has encouraged other countries worldwide at have been ergoin in^ energy ~ e r e ~ i l a ~~ i c~ n~ ~ d e ain, Taiwan and ~ a l a y s i a . s used to refer to what one wouM regard as ‘ d e r e ~ u l aof~ ~~~ ~ l ~~ utiliti c ~ c le the two words are d ~ f f e r e~iteral~y, ~~ Ironically, neither is th ~ e ~ t 2.5, i o none ~ of titi ion or o ono^^^^. It i s ther~fo sive exercise of rn
~ e ~ ~ ~afaElectric t ~ oUtiliti~s n
1.
v an
structuring and ~ e r e ~ l ~ t i o n
the details of der
latiara of Electric ~ $ ~ l i t i e ~
2.4. I
exercise market power and control the price of e l e c t r ~ ~ i ~ . itions where the providers of a service can c ose that would be established by a coinp~ti~ive mark actual prices and the prices that would arise from the assumption that the generators are priceta en a major impediment to price reduction in the Engl Pool. Efforts are being made to eliminate market ~ a ~ ~ c u lhere a r , will be a d r a ~ a ~reform ic of the energy market the year 2000.
Access to the ~ansmissionsystem is one of the main issues in energy open acces and sound r~gulationsare required to facilitate ~ransmiss~on ng, TOA refers to the regulating construct such as the rights, obli dures, economic cond~~ions9 etc., enablin~two or more parties to use a transniission etwork. With equal rights of access to the transmission network, it has become ~ ~ a s i b l ~ or loads to arrange transactions with each other and hence c o ~ p e ~ i t i o n is am on^ the key elemen~sfor facilitating competi~ionin the ~ ~ e r g y on will look at the details of the two issues.
2.5.1
it^^^ in the ~~~e~~
~ o m p e ~ is~ the ~ ~main o n goal of energy p r ~ ~ a ~ ~ s a Ideally, t i o n . from view, perfect ~ o ~ p e tis~the ~ ~iiiost o i desirable ~ market structure. cmre ~hara~terised most notably by a situation in whic are p r i ~ e ~ a ~and e r sthere is freedom of entry into and exit from ih ng to these three criteria: inde~endence,product s ~ i ~ s t ~ t u ~ a b i l i wever, in any real markets, it is rare that all of the Considering also the te ints caused by the intrinsic properties can be d ~ d u ~ ethat d etition does not exist in the e n e r ~ ~ by its social welfare. Social we~farei d the benefit of the energy to socie for it. ~ a x i m ~social m welfare i s ~equentlyoperates at a s ~ i b o p t ~level. ~al been introduced in most deregulated m their own s u ~ p ~Retail ~ ~ r ~. o m ~ e ~ i t i o n c u s ~ o m ~ rare s abie to select their ated by the issue of direct access tec~nQlogy.In some countries9solid regul costly for res~dent~a~ customers t
e issue of e n e r g ~subsid~es the depos~t~on of s~randedcosts have also c o m ~ ~ ~ c efforts a ~ e d on energy ~ ~ v a ~ i sne aform ~ ~of~energy ~ subsidies refers to those given to generators to purchase highly priced coal in order to sustain the Iocal coal industry. Generators receive s ~ ~ n i ~ c a nfewer ~ i y subsidies after
e r ~ ~ l a ~OS i oElectric n Uti~i~~e~
that time were su
e less WQ~hy and i ~ v e s t o could ~ s end up b e ~ ba n~ n involves the d e t e ~ ~ ~ a t of i othe n degree of recove e ~ a l i f o ~ Pool, ~ a n the 8 in the e ~ e c ~ ibill. ci~
a price and the ~ a x i IIU~ u ~ tted offers are r ~ e lowest d
, each seller i ~ ~ ~ i asub lly are w ~ ~ ltoi ~make i ~ avail
om a seIler 10 a buy ed ~ a r k ~the ~ sQ,
~ n s u f ~ c ~because e ~ t ne
r ion ~acilities~ henever each whee
~ ~ r e ~ l a of t i Electric o ~ i Utilities
o f the line is now res~aine by its t h e ~ alimit l (Fi per€ect~yinelastic ( e ~ a s t i c ii~s zero) mand which is no generator 61 is met when 6 1 is forced Buy some of its el ~heoret~cai~y raise its price as hi as ~ossib~e. ~enerator6 2 is said to have a c ~ ~ i r e d ~ i i I ~ ~m~ t w e d~ o~w e r~. ~
Transfer L
i = 1~
~ 0 / ~line ~
~
~
olution
~ l ~ ~ s ~ r aoft im o n~ kpower ~ t caused by congestion
~ i g ~2.3e ~ l l u s ~ a t e s iflerent ~ongestion pricing ~ ~ t h o d o l o c l a $ s ~ ~ ~ a t iPriva~~sation on. a s is ~ ~ n e (e.g. n t diffe coordination betwe Europe and different states in e$sential to alleviate congest co~gestiofl~ ~ c i n ~ . calculated as dual ~ u l t i p ~ ~from e r s optimal po ons. These we based ~ ~ c iIn~places g . where nodal pricing is adopte~,differences in nodal prices c m ~ e s uin ~t arket ~ a ~ ~ c i ~can a n hedge t§ cong congestion contracts which are also and give their holders ~ a ~ s m i s s ~system, on
[9, Z 51.
Q e r ~ g ~ l ~oft Electric i o ~ Utilities
a h a ~ f ~ h o u basis. r ~ y Many customers will pay for electric power based on this price^ e~ther irectly ~l~rough their distribu~~on utility or t ~ o ~ ag private h power supp~y e Pool price. The IS0 can also operate markers for a n c ~ l t a ~ wer, spinning/non-spinning reserve and losses. The roles of the
2.6. I
~
~ and i
~
~
~
g
n Section 2.5.2 ~ifferentkinds of auction ~ e c h a n i ~ r were n s discussed. T uty to set the e l e c ~ c i ~price. y Pricing is done essentially in eith ex ante or ex post. An ex ante market is one in which the price o f the CO is set prior to its del~verywhile an ex posl marke~is one in which the n the e d time o f delivery. In an electricity market, a c o m I ~ i o d iis~d e ~ e ~ ~ at is like a b~~ateral con~rac~ market in which ~aders/pa~ic~pants agree on the a ~ ~ o ~ ~ electricity to be delivered at a certain time in the future at a certain price Nord Pool combines ex ante and ex post pricing. In its spot market, syst prices are set up the day prior to delivery. Any differcnce in the forecast wi delivery results in a discrepancy with the pre-set price and the spot price. This is c o ~ p e n s a ~ cby d the presence of the ex post mechaiiism. In the ord Pool, there is a buy~ackmarket to make up for this difference. ~imilarly,genera~orbids are also s u ~ i ~ i ~ e d on a o ~ ~ ~ ~ a y basis - a lin~the ~ ~ England d and Wales Pool, and participants are paid at the end of each day for their transactions plus CoInpensation. The England and ~ a ~ Pool e s is the~eforealso an ex ante market with an ex post mechan~sm.Ex post markets also exist and examples are the New Zealand and Australia markets. In the New Zealand e l e c ~ r ~ ~ i ~ mar~et,ge~eratorsand loads are aflowed to change their bids until 2 hours prior to d e l i v e ~ and the market is cleared re larly d u r i ~ gthe bidding process. Ex post prices are c a ~ c ~ ~ a t e using arke et-c~ea~ng software with the latest offershids and the actual r n e ~ demand ~ r ~ ~ of ex a m and t?x post p r ~ c i nfor ~ together with losses. Figure 2.5 illustrates the ~n~eraction e i e c ~ r i cmarkets. i~
~ ~ ~ all particip ts Rave to bear a certain degr As in any other c o m r n Q market, rket. The $ys~emo~erator o has a share o f the risk rep an^^ of the forecast wi chal demand. The degree IS0 depends on the pricing ~ ~ c h a n i sof m the market. For ex sate s of market p a ~ ~ c ~ ~ina ~ n ti s~ a tceo ~n ~~alc ~depe s stem price in the future. In a ~ ~ m ab~ k elike ~~ ~ d ior to delivery, and any real-time power imbalan xhibiEs the ex post m ~ c ~ a n i ~ i ~ is therefore much more susc y financial comrni e a serious issue w h ~ nc~ngestionis comm
Power System ~
~
s
~ and c ~ e~ r en~ ~ gl a t i o ~
-
',
LOSS
'..
\
Compensation
actual demand
I
-
1
~_____-
final clearing price I e.g. Nord Pool, E & W Pool
1
~ ~ r e ~of Electric l ~ ~ Ui ~ iol i t~i ~ s
3
tier prov~ders~ play an nine years after the e s t a b ~ ~ s ~of~ Be n ~ c o n s ~ e r rather s than be c B ~ t u 11c o ~ s u ~ eshould rs have access
is a type of b i l ~ t e r ~ l
I
eregulation of Electric Utilities
5
to meet forecast demand. It is a ma
By 10.00 am. every
=3
+ 0 . 0 2 and ~ ~ ~
.7(a) The network; (b) unconstrained dispatch; (c) constrained d i s p a t ~(Source: [151)
h is shown in Figure 2.7b Wh (~igure2.8a). A § § that ~ ~ e ex ante price the day tice during real-time opera
costs of u ~ ~ and constrained ~ ~ dispatch s ~ ~ e nare t ~listed in Table 2.1.
a
~
~
~
~
Deregulation of Electric UtiIities
67
(a) SMP; (b) G1 cost function and adjustment; (c) G2 cost function and adjustment (Source: 1151)
Me 2.1 Gmerator payments and demand charges (Source: [IS]) Demand Payments Demand Charges (PSP) (Eh)
L1
Total Charge (E/h)
1464
~eneratorPayments
G1
62
G e n ~ r a t i nCosts ~ (Light-shaded Areas) (Eh)
616
487
Generating Payments from Pool (Ou~ut*PFF)(E/h)
952
340
Adjustments (Dark-shaded Areas) (E/h)
25
147
Total Payment (Sum of Generating Payments and Adjustments) (f/h)
1464
308
L2 1156
has been a significant drop in electricity prices in ~nglandand Wales this price drop does not hlly emulate the cost reduction of g are not passed on to customers entirely but are partially r es in the form of higher profit. Also, there has not yet been a decrease of price in the retail market. A possible reason for the i n e f ~ c ~ wholesale market is that the three largest generators could game and m ~ ~ p u l a the te w h o l ~ s amarket. l~ The market lacks small IPPs which could potentially f ~ v o ~ u o~~ p e t i t i o n and reduce the market power of the large generators. In view of the existing problems of the pool, the director of the Office of Gas and ~ l e ~ ~Markets i c i (~ ~ f published ~ ~ mthe~NETA [$I, for England and Wales in 1898. The reforms should commence in 2001 and should lead to significant chang~sin the exis market. First of all, a d ~ ~ ~ ~ m iauction n a t owill ~ replace the uniform auction. Sec d e ~ ~ a n d - sbid i ~ edin^ is allowed so the market will transform into a bila~eralrn reform§ are designe~in such a way that pa~icipan~s can choose over a i f f e ~ ways e ~ ~ they ate in the market. In a different time frame before actual delivery ~ a ~ c i p a can n~s choose to trade in the following markets:
Forwards markets: these are optional and are operated by i n d e ~ ~ d e on tr ~ ~ i s a ~ ~ 5 ~ sign~ bilateral contracts that are up to sev~ralyears ahead as desired. P a ~ i ccan i ~ ~ S h o ~ - t bilateral e~ market: this is optional and open from 24 to 4 h ~ u r sahead of the period, All trades will be organised by a market operator (MO). s is also optional and it is open 4 hours ahead to he SO obtains full control of the system after the close market. 4t would engage in trades to ensure that generation and d ~ ~ a nared balan~cd, into a c c o ~and t resolving any constraints on the ~ansmiss~on network. al-time power ~ ~ charges~are imposed a on ~p a ~ c~ i whose p ~ ~~ c o ~ ~ ea c ~ e d ~ o u nist different from the actual metered amount and they could be based on the costs 0 to settle the imbalances. The r ~ f o feature ~ $ full dem bids and simple offers and bids, and they aim to higher flexibility over different ways of tradin , Neve~he~ess, many eptical about the proposed r e f ~ and ~ sbelieve this is not the solu~ion to get rid of market power and reduce prices [20,21], Moreover, there i s concern^ under the sed reforms, over the possibilities of exploitation of generators’ market power in the ing r n a r ~ ethrough ~ the incremen~and d ~ c r e ~ ebids. n t Inerement bids r e p r ~ s e the ~t p a ~ i c i p ~wish t s to be paid for an increase in output or are willin increase in demand. ecrement bids represent the prices they are willing to pay for a d e c ~ e in ~ output s ~ or wish to be paid for a decrease in demand.
d eration e o m ~ e n c in e ~Norway two years a&er the pass d from the former ‘ C optional pool was sufficient because o f the la~gen Norwegian power system ha ission n e ~ o r k which , w tatnett, which is also ket. The ~ o ~ e spot g market, i ~ the Nord Pool or Elspot, is icipants are free to trade in the bilateral contract power is in ~ a l ~for c eg e n e ~ ~ o rlarge s , custo~ers land and Wales Pool, the Nord 001 utilises ex ante pricing to set the or to delivery and compens s power i m b a l ~ c e susing ex post generator offers and ahead of actual delivery, the Nord Pool acc our of the following day. The system pric emand curve meets the ag price auction by paying all generators the last en bidding areas d ~ r i n gthis process, reas. In the s u ~ area, ~ ~thes area price is by an amount equal to the line capac y the right shifting o f its supply curve
Deregulation of Electric Utilities
9
price in the su lus area is set up in such a way that it should demand which has a quantity equal to the capacity of the c o n s ~ ~ ~ ~ e hand, in the deficit area, the area pkce is set encouraged to supply an ~dditionalamount equal to the capa p a ~ i c i ~ a incur n ~ s an ad itional cost and this charge is called the ' is the dif~erenceb e ~ e e nthe system price and the area price. (A iilus~atethis m e c h a n ~below) s~ on is broadcast to pool participants by 2.00 p.m. on th power imbal~ncesare compe~sa~ed in a separate rators can submit buyback bids after the d a ~ - ~ e amd is ~ ~ i s ~These ~ e dbids . reveal how much a generator is willing to pay to buy surplus power and how much a g e n e r ~ ~costs o r to produce the deficit a ~ o u n t . system operator selects the cheapest a v a i ~ a ~generators le to buy or sell in case Q and c ~ ~ g e s ~ ~i o~na g e m e nand t , all in-merit generators are paid the price set by the h i ~ ~ ecost s t block. S ~ ~ ~ e misedone n t ~ s ~ ~ ainl W l yOweeks.
~ ~ Q I t ~e ~ Q ~~the s ~, area c
situation. This is reflected in the area prices. Also, because of the physical flow of 10
Power System ~ e s ~ c and ~ i ~i ei r ~~ ~ ~ a t i o
7 Area 1
Sumlus Area
I
DCftClt
Area
140MW
(a1
16MW
2
LI
2
LI
1b0MW
40MW
@>
116.8MW
(a) Unconstrained Dispatch; (b) Constrained Dispatch (Source: [ 151) EMWh
EMWh
f,l/MWh
61, Ll: surplus area
G2, L2: deficit area
5.8
4.6
MW
80
(b>
(c)
.I0 (a) System Price; (b) Surplus Area Price; (c) Deficit Area Price (Source: 1151)
Various Prices and Settlement Capacity Fee in Surplus Area, C, Capacity Fce in Deficit Area, C,
= P, -Pi = 0.72 f M h
Settlement Price
P, = 6.52 E/IMwh
Charge Credited to Ll and G2 (Mc) ebited to C1 and L2 (Md)
= PLl*C,
Net Income o f Grid Company
=Md-M, = Capacity * (Ph - PI) = 337 E h
I
= PI, - P, = 2.65 f/&W?h
+ PG,*Cd = 73.32 51% = PGI*Cs+ PLZ*C,= 410.32 E h
The ~ o ~ e g i energy an markets have been a successful example of energy ~ e r e g u ~ a ~ i o n . ket power has not been an issue, ~ e v e ~ h ~ lthe e s management s of power im~a~ances arouse^ concerns since it costs the SO money to resolve bo~Ienecksin the regulating market. ~ o ~ n a it~has $ ~only y contributed to a sniall amount of S tmett operating ~ u d g e t SO f a [I cong~stion~ ~ a g e ~will e nbet costly when con~est~on becomes more serious. er, the selection of ~egulatingbids using merit order, which is easily c o m ~ ~ ~ ~ ~ by n s participants, ible does not necessarily result in the lowest cost to alleviate co~gestion.
Deregulation of Electric Utilities
2.8.3
71
Galijhiu
The ~ n e r g yPolicy Act PACT) of 1992 clarified the d e t e ~ n a t i o nof the USA for a com~etitiveenergy market. It is not m a n d a t o ~to implement a whole§ale c energy market in the nation. Individual states pursuit difl'erent policies an ending on their electricity prices. States with relatively high California, New York, Massachusetts, etc., arc more aggressive in implemcnting reforms. In 1998, California embarked on a four-year transitional period of deregula~ion. ~ t r a n d ecosts ~ have com~licatedderegulation in California. The state gov solved this problem by issuing bonds to inflicted companies to compensate for thei Customers' bills include a small amount of charge (e.g. 4 cents~Wh),the so-calk competi~ion~ a n s f e charge r (CTC), to account for stranded costs. During this transitional period, participation in the pool is optional, ap large private utilities, which have to trade through the PX until March 2002. One ~i§tinct d i ~ ~ r e n cb ee ~ e e nthe Californian Pool and the England and Wales Pool i s that in the former case market clearing and bids matching are under a separate entity, the PX, rather than embedded in the duties of the ISQ, as in the England and W C a ~ ~ ~ o r ntwo i a , types of bilateral contracts exist: Contract for Access Contracts. The fact that CFDs are tied to pool prices has 1 game the market using their market power, The idea of Direct Access Contrac~sis to c o ~ t e ~ athis c t problem: Direct Access Contracts are not bonded to the PX and pa~icipan~s only have to request their transactions through the ISd).
ge (CalPX) is responsible for holding auctions for the competitive forward markets (day-ahead and day of markets). Th,e day-ahead market is similar to its c o u n t c ~ ain~ Norway and England. Market pa~icipan~s provide hourly supply/demand bids to CalPX one day prior to physical delivery. MCP is actually the equivalent of system rice in Norway or system marginal price in England and Wales. ~ n ~ ~ pricing o r m is adopted and all pa~icipant§are paid or debited the market provides pa~icipantswith the chance to make up for system imbalances by ~ o l d ~ g auctions at various times during the delivery day. Zonal pr~cingis cm~loyedfor congestion ~ ~ a g e m e nMarkcl t. p ~ c ~ ~ acan n tsubmit s the so-called schedule a d j u s ~ e n ids (SABs) which are similar in nature to the r e ~ l a ~ ~ g bids in the Nord Pool, The S represents the desire of the ~ a ~ i c i ~to a nadjust t its price varies. When there i s congestion, the region is ~ ~ v i d einto d zones ates the zonal prices using SABs. The PX uses this i n f o ~ a t i o nto work out the final prices for participants so that upon settlement the PX remains revenue n e u ~ a l
P31. tion stage in California and it is premature to c o on the ~ various markets. However, there is concern over the operation of the spinning and non-spinning reserve markets. ~ e n e r a ~ ohave r s to reserve a c e ~ a i na m o ~ n tof their c a p ~ c in i ~order to bid in the reserve ~ a r k e t s ,They are not
72
Power System ~ e s t ~ c ~and i n~g e r e ~ ~ a ~ i
e n c o ~ a ~ to e ddo SO unless they can make more money in the reserve markets than in the ecause of that reason, generators submit very high bids to the r e s e ~ e markets, resulting in n o n ~ c o ~ p e ~ i treserve i v e prices. ~on~spinning reserve has a relatively higher price than spinning reserve because there are insufficient pa~cipantsin the noninning res~rve~ a r k e For ~ . maintenance of system security, the IS0 has certain amount o f both reserves. Since non~spinnin~ res spinnin~reserve, the consequence is a higher price for a 10 r e s ~ is ~ not e as ‘worthy’ to the system as spinning reserve is). These exemplify ~ ~ k e t ine~~ciencies caused by unapt market rules.
Scotland, u n ~ i ~ e Since the commencement of energy privatisation in 1989 in the ~ n ~ l a nand d Wales, has not acquired a competitive and e f ~ c ~ e n t sale m a r ~ ~Also, t. for various reasons, Scottish customers have benefited much less than their counte and Wales, despite the fact that the England and Wales PO mar~inalgeneration COS& in Scotland, even after into ac~ountthe smission losses, interconnector access charges, r transmission and distribution are regulated using the ‘price-cap’ c o n ~ o l which depends on the inflation rate and electricity prices are set based on the pool ~ r i c e in s ~nglandand ales with a d j u s ~ e n t made s after ~ i n into g account the ~iffe~ences of the markets. land is chara~te~sed by a surplus of generation capacity on c a p a c i ~almost two limes the total maximum demand [2 g e n e r a ~ types o ~ inch ing dual oil and gas, coal-fired, hydro, pumpe~-storageand nuclear. The two ~ e n e r a t i o c~o m p ~ i e s , Scottish Power and S c o ~ ~ s~h y ~ o - ~ l have e c ~ c ~ n t e r c o ~ e c ~grids e d and Scottish Hydro-Elec~iccan access the grid in Eng~andvia i~ cottish Power’s transmission system. Even ough these two d o ~ i n a ~privatised ~ e ~ e r a t i o~no ~ p a n iremain e s ~ vertically inte~rat after ~rivatisation,they are re~uiredto keep separate accounts for separate busine s, i.e. tr~smission, d i s ~ i ~ u t i oC n .o ~ p e t i t i obetween ~ the two companies is made possible t h r o ~ g‘$econd~ tier suppliers’ who are autho~isedto supply ~ ~ e c ~toi customers c i ~ ou~sidetheir supply areas. ent trading in Scotland. Firstly, the ~ W Q otential obstacles to e ondly, the market is loo small to be ertically integrated. eneration capacity indicates that there i s compe~i~ve, Moreover, the substantial surplus no need to build new generators in the coming hture. Finally c ~ o c to ~ ~ ~with e t e Scottish Power or Scottish ~ y d r o - ~ l e c etween the two countries. In view of the above, and ~lectricity~ a r k e ~will s , focus QXI reforms for the Scottish markets which will remove the obstacles and be consis~en~ with the NETA [25].
The voluntary wholesale electricity market in New Zealand c o ~ ~ e n c eind 1996, but before that there had already been limited competition in the supply sector. It is operate^
73
etplace Company L (M-COLtd) which has recently b s in the C a l i f o ~ Pool, i ~ market p ~ c i p a n t sin New outside the pool through bilateral contracts, provided that the system o p e r a ~ is r ~ f o ~ e d of the ~ansactions. In New ~ e a l a n d~enerationis d o m ~ ~ a t by e d hydro power, which is located in the Island. The load c o n ~ e n ~ a t on e s the North Island which is connected to the ~ o u t h~sland by an HVDC interconnec~or.Even though the three gove~ment"ownedgeneration ~ o ~ p a n i ~ominate es the wholesale market, the market remains s spa rent t ~ o u g hthe broa~castof predicted prices and load forecast. Effort was spent only on i n ~ o d ~ ~ ~ i n g co~petitionin the retail sector between distibutor§ and the state-owne~generation c o ~ p a n ybut , it was soon realised that retail compet~tionalone was not e n o u ~ hto re elecwicity prices and hence the wholesale market was developed subsequently. The New Zealand spot market: is an ex post market featuring nodal pricing. Nodal on the theory of spot pricing [26].Under nodal pricing, if the arke et is s h o ~ - t eprice ~ signals so generated should enhance the efficient . ~owever,there have been ongoing discu§sions on effe~tive opera~ionof the m als and the management o f the losses and ~ o n s ~ a i n ~ .Expost pricing in the physical spot market is acco using the latest supply and demand bids and the actual measured plus losses actual demand is vital and it is one of the main roles of onciliadon Agreement. Final prices are published a few actual dispatch.
and debate, The Council for the European ~ n i o neven Afler years o f negot~a~on adopted Directive 96/92/EC in ~ e c e m ~ e1996 r to liberalise the e l e c ~ i c ~ tin8 y According to the ~~rective, members of the EU are required to open their y the year 2006 at least one-third of the EU-wide energy market will h rent European countries can liberalise their markets at their own pace, as long nts set by the directive are met, Apart from i n ~ o d u competition ~~g in the wholesale and retail sectors, the directive also features U . ~ o u n ~ ate sthe forefront of liberalisation include Spain and the Netherlands the existing one in England and Wales, will be developed hourly supply and demand bids, while in the N e t h e r l ~ d sthe Elec m ~ d a t e sa complete l ~ ~ e ~ ~ l i s aoft ithe o n generation section by the year 2 0 ~ However, ~ . there are also coun~ies,like France, Italy and Belgium, which keep their l~be~alisation ess to the minimum level requ~redby the direc~ivebecause o f domes~icpoIi~ica~ reasons. e ~ a n opened y its market to all suppliers and end users. As it is n ely few natural resources, two-thirds of the energy con~umedis imported from other countries, Effort in deregulation is therefore focused on the ~8intenanceof security of supply. Under the Energy Law A~endmentnet owners are required to provide o en access to facilitate competition. However, only 8 few out of about 700 net users have so far published the charges for using their networks [29]. At present, and nmst net owners also operate the grid; t~ereforethe issue of se~arationof owne~sh~p
7
Power System R e s ~ c t u ~ xand ig ~ere~lation
opera~ionwould need to be looked into, Also, practically small custo~er$have not bcen able to change their suppliers easily under the current legislation. The ~ e ~ project a n group on the energy market is ~ r a ~ an poten~~al g project sketch and it is likely that concept for the pote~~tia~ energy ark et will be similar to the EX [30] (European Energy Exchange). It is envisaged &at the d ~ v ~ l o p ~ofe n t ill be done step by step. The first step will be the ~ e v ~ l o p ~of e natfutures market where bilateral contracts can be traded ahead of time. Then a spot market will be founded for physical and short-term power trading. efore reaching that step, Gemany has to work on the i n ~ a s ~ and ~ ~r er~ e~ a t i o nfor s fast and rel~ab~e w ~ e e l ~which g is essential for efficient ~ ~ i ofnthegspot market.
Energy Information Administration,~ t t p : / / ~ . e i a . d o e . g o v / e m e u l ~ e ~ e l e c ~ c i . BTM consult Aps, hnp://www.btm.dWArticle~~ed-globaf/Eed-glo~al.h~. Stefmo Zamagni, Microeconomic Theory: An Introduction, Basil Blackwell, Oxford, 1987, John Bernard, Robert Ethier, Timothy Mount, William Schulze, Ray D, Zimmerman, Beqiang Gan, Carlos Murillo-Sachez, Rober J. Thornas and Richard Scbuler, ‘Markets for electric power: Experimental results for alternative auction institutions’, availablc via h ~ t p : / / ~ ~ . p s e r c . w i s c . e d ~ i n d e x ~ u b l i c a t i Proceedings o n s . ~ ~ l , of the Hawaii ~n~ernation~l Conjerenceon Sysfern Sciences, January 1997. John Bernard, Timothy Mount, William Schulze, Ray D. Zimmennan, Robert J, Thoinas and chard Schuler, ’Alternative auction institutions for purchasing electric power’, available via bttp://www.pserc.wise.edulpsercbin/tcsl/, 1998. Frank A. Wolak, and R. H. Patrick, ‘The impact of market rules and market structure on the price determination process in the England and Wales electricity market’, selected paper presented at the POWER Conference, March 1997, University of California, Berkeley, Berkeley, California, February 1997. Tim Mount, ‘Market power and price volatility in restructured ~~~e~ for electricity’, available via hnp://~.pserc.wisc.edulindex.gublications.html, November 1998. NETA, New Electricity Trading Arrangements for England and Wales, are based on proposals published by OFFER, Office of Electricity Regulation, July 1998, available via ~~:/t~.ofgem.gov.~~ lielix F. Wu, ‘Coordinatedmultilateral trades for electric power networks’, 12th Power Systems Compu~a~ion Conference, Dresden, August 1996. K.L. Lo and Z.Q. MO,‘Methods for determining wheeling rates’, submitted to the special issue o f International Journal of @stem Science on the Beslnicttmring of the Electric Power Industry, 2000. lgnacio 3. Perez-Arriaga, Hugh Rudnick and Walter 0.StadIin, 'international power system transmission open access experience’, IEEE Transactions on Power Systems, Vol. 10, No.1, February 1995. Young-Moon Park, Jong-Bae Park, Jung-Uk Lim and Jong-Ryul Won, ‘An analytical a ~ ~ r o a c ~ for transmis5ion costs allocation in transmission system’, IEEE Transactions on Power Systems, Vol. 13, No.4, November 1998.
Deregulation of Electric ~ t i ~ i t i e s
75
[13] J.W. Marangon Lima, M.V.F. Pereira and J.L.R Pereira, ‘An integrated f r ~ e w o r kfor cost
[14]
[lS]
[16]
[17]
a~locationin a mu~~-owned transmission system’, IEEE Transuct~onson Power ~ s ~ e m s , V01.10, No.2, May 1995. J.W. ~ a r a n g o nLima and E.J. de Oliveira, ‘The long-term impact o f transmission pricing’, IEEE ~ ~ n s a c t j o nons Power Systems, Vol. 13, No.4, November 1998. K. Lo, Y.S. h e n and L.A. Snider, ‘Congestion management in d e r e ~ l a ~ eelectricity d Conference on Power Utility ~ ~ r e ~ ~ a markets’, Proceedings of the I~~erna~ionul ~ e s t ~ c ~ u rand ~ nPower g T e c ~ n o l o ~ 2000, i e ~ City Universiw, London, IEEE, April 2000, pp.47-52. Michael D, Cadwalader, Scott M. Rarvey, William W. Hogan and Susan L. Pope, ‘Coord~~ation congestion relief across multiple regions’, Harvard Energy Policy Papers, available via ~ . k s g . h a r v a r d , ~ d ~ p e o ~ ~ e / w h o g a i ~October, ~ d e x . h1999. t~, R.S. Fang and A, . David, ‘Qptimal dispatch under transmission ~ontrac~s’, IEEE T r a n s a ~ ~ ~ oon n sPO Systems, Vol.14, No.2, May 1999. sco Galiana, Lester Fink, Power Systems R e s t ~ ~ E~i ~~~ i~n e~e rnand i r~~ ~: r Academic Publishers, 1998. ie and Ivar Wan~ensteen,‘The energy market in Norway and Sweden:
Energy Institute, September 1999, available via http://www.ucci.berkeley.edu/ucei.
[22] The Nordic Power Exchange, ‘The spot market’, available via w~.nordpool.com. [23] For derails and examples refer to, ’Zonal clearing market prices: A tutorial*, available via h~:/lwww.calpx.comtnews/publ~cations/in. [24] $ c o ~ i has ~ d 10,000 MW generation capacity against maxim^ demand of around 5,750 data taken from ‘Review of Scottish trading arrangements: A c ~ n ~ u l ~ adtoi cou~~~e n ~The ’, Office of Gas Electricity Markets, October 1999, availabIe via http://w.ofgem.gov.uW. [ZS] Details of future proposals can be found in the latest documents publishe~by O f g e via ~ its web site: h ~ ~ .ofgem.gov : l t ~ .uM, t261 Fred C. Schweppe, Mchael C. Caraminis, Richard D. Tablors and Roger E. Bohn, Spot Pricing o ~ ~ l e cKluwer t ~ ~Academic i ~ ~ ~ b l i ~ h e r1988. s, associated with a discussion of the losses and c o n s ~ ~ isurplus’9 n~ Marketplace Company Limited, July 1999, available via
[2S] Greenpeac~,G e ~ ~ a n *y ,S ~ r o ~inaDeutschland: r ~ Vom Monopol zum ell', ~ o v e ~ b ~ r 1898, a v a ~ ~ ~via b I h~://www.greenpeace.de. e [29] ~ n ~ o ~ a tobtained i o n in the ‘Strombijrsen’section at: h ~ t ~ : / / ~ . s t r o m . d e .
Un~versityCollege Dublin Ireland
Prof. Chen~ChingLiu Universi~of ~ashingtQn Seattle, USA
~ l e markets c throughout ~ ~ ~the world ~ ~are undergoing major chan es 111. These changes are varied in their nature but h e uiiderly~gtrend is towards a more CO and this results in electricity being traded as a c o m ~ o d ~ ~ e markets to facilitate this trade. Political forces [a33 are driving these changes. A compe~~tive electricity market is one in wh (ge~~erators) are c o m ~ e ~ i ntog sell their e l e c t r ~ cto~a~ number (loads). Here we are concerned with c o ~ ~ e ~ i tin i oanwholesale electricity ~ a r ~where e t the c~istomersare lap consumers or a retailer who will resell the e l e c ~ i to c ~th~ co~s~~ers. A l t ~ o ~ electric gh energy can be stored in batteries it w tities and hence ~ l e c t ~ is c ia~ r ~ a l - t i ~corn e i~stan~ly. The electrici~demand d also has a significant random Id in an ~ ~ ~~ ~c ris~energy, ~ ec t iTh ~ active ~ o w e rand au~omaticgen~ratorcontrQ~ Er that the electricity system can need to be ~ r o v ~ d eand d an e$ec~icitym of t ~ e s eservices [ 6 ] . The g ~ e r a t o ~ ically and K ~ c ~ olaws f ~ s system. The consequence o ystem and altering the s u ~ (g~~ierator ~ l ~ ou~uts) iates this c ~ ~ ~ ~ e s[7]. tion y, a n ~ ~ lservices l a ~ and
Competetive Wholesale Electricity arke et§
77
with the real-time stochastic nature o f the electricity deman makes des~gningan arket a great challenge. s in a wholesale electrici~market will be connected to the highsystem as opposed to the Iow-voltage distribution system. This ~ansmissionsystem an sports the electricity. In some markets single entities generati~gunits, transmission systems and supply the customers directly. These are ~o~ as vertically integrated utilities (VIUs) and can be monopolies. Where opol~esexist or where a ~ o ~ i n market a n ~ position is held in one part of the ~ n d u s t r ~ , c ~ i ~ agenera~ion, rl~ au~oritiesare implementing new market s ~ c ~ r toe es n c o u r a ~ ~ corn~et~tion [2,3]. It is ~ i f o accepted ~ ~ y that the transrnissi~n sys n ~ o ~ o p oand l y in this new environmen~it should be regulated to ensure open market [9]. Here it is assumed that all other aspects of the w market are competitiv~,a it is recognised that many who tive. For example, in Norway redefined limit are compensate limit are not [no]. Co~sumerdemand is largely inelastic but demandc o ~ p e ~ ~ t~i av ~ e k ei st tse c ~ i c a l l yfeasible and is becoming more CO In a monopo~istic ~ameworka re lated VIU makes pl isions based on a least cost objective, subject to constraints ( ~ ~ ic ~l ~ ti e~~ r 1~ ~a ~ 1This 3 1 . p ~ a ~and i ~operationa~ g process f scheduling algorithms, each one s roblem over a distinct time frame. ~nvo~ves econom ch ~~gorithms which achieve a real-ti and demand in a least cost manner. More advanced economic e consider the optimal the optimal ~ o w e rflow c o n ~ ~ a i n~ncluaing ts transmissi e limits, voltage levels, e frames unit commitment (UC) ~~~~~
s which are limited by these type
replaced by ~robabilisticmodels [IS]. Ln this ns are made. This planning and o ~ ~ r a t i o n e time for delivery approaches, the sc~edulesand ~ ~ s ~ aare tch to current circu~stan~es.
7
Power System ~
e
~ and ~
c
~
these markets result in cost m~nimisationin the short tern but their CO aspect should in the long Tun serve to reduce these costs even further. In the c o m ~ e ~ i t ~ v e market situation ~here€orea set of markets need to be developed that mimic the VIU least cost objective, subject to opera~io~al and re~iabi~~ty constrain~s.In p ~ i c u l are being replaced by markets for energy, transmission and Just as with scheduliiig algorithms these markets have di The real-time or ba~ancingmarkets are run very frequ~ntlyto main~hn~alance~ e ~ e e n supply and demand and to ensure system security and are similar to economic d~spatchand OPF al~orithms.In many markets there may be a need to run day-ahead ~ a r k e t that s will be like the unit ~ o ~ i t m eprocess nt [22]. L ~ n g - c~a ep a~c i ~markets may also be a feature hn some systems where €or reliability reasons generators are compensa~edfor keeping available capacity 1231. ~ o m p e t i t ~ velectricity e inarket design is a highly complex exercise not only by economic and engineering considerations but also by histo social cons~aints.Many of the current designs have ~ecQgnisabIe flaws ibutcd to both technical and non-tec~icali ~ ~ u e n c e s . to be assessed with these factors in mind. Lessons can be generally every market has particular c i r c u m s ~ c e swh ity market designs in di~erentcircums~ncescan be e q ~ i a ~e ~f yf ~ ~ ~ i v ired result, an efficient and reliable electricity supply. Different rna ~ i r c ~ s ~may c e also s roduce the same desired results. There i s no i ~ ~ k de ~ t olution to the complex problem o f e l e c ~ c m ators will agree that competitive e ~ e c t r i cmarkets i ~ ~ will resat1 society there are some very s i ~ i ~dif€erenc~s c ~ t of op~nionon some issues, These differe~cesof opinion can be d o ~ ~ ain~nature i c and s to cloud the issues. Each regiodcountry should choose a design tha ition but suits their particufar social, e c o ~ o and ~ ~political c e re a broad o ~ e ~ i eofw wholesale elecbi on of the independent system operator in which describes wholesale e~ectricitymarket charact~r~st~cs follows in ~ e c ~ i o n c~arac~erist~cs incl~deauctions, b i d d ~ nprici~ig, ~, fo~ard ential markets, congestion man ary services, physical and ~ n a n c ~m al s are given to illustrate these cha ty markets Section 3.4 describes le e ~ e c ~ imarkets c i ~ are still an active area o f rese the challenge^ in the design and opera~ionof these A c ~ o ~ ~ ~ d are g eInmSection e ~ ~ 3.6 and a CO S e c ~ i 3.7. o~
~
C o ~ ~ ~ t e~~hi vo el e Electricity s ~ ~ Markets
79
As more and more regions/countries open up their electricity markets to competit~on,the ~uestionof how to des~gnthe market in the best interests of the consumers and s u p p ~ i is e~ of prime importance. Central to this are the energy, transmissio and ancillary services markets and how they are coordinated. The competitive market demand ~ n c ~ ~ effect~vely ons in many markets, e.g. stock market delivery of a product is required by a stock market whereas in an electricity market a p r o ~ u must c ~ e v e n ~ a ~be l y de~iveredins~ntly(i.e. no storage) and its ower system. The closer we get to physical delivery th the operational and reliability constraints. These basic principles are n many ~ ~ c ~ i o nmarkets i n g and it is universally accepted that e i~dependen~ system opcrator (ISO). Although an accepted pri market structures require a large role for the the IS0 is a hotly debated topic. S w h ~ others l~ require roach. This operator disc rim in at^^ to all e market hence the operator. In general responsible for tasks such g of load for all users and e n s u ~ n gcom standards. The IS0 will o ~ ~ r the a~e , open access to the transmission grid to all users gestion and constraints on a n e ~ b o ~ ~ system reliability the IS0 should also hancements, The I S 0 may also pro led basis and perform the s e # ~ e ~ e ~ t of aspects that need ~ ~ a g i n ranging g, from c o ~ e c ~ i o~no l i c ~ econ~est~on s, management and the a ~ i n i s t r a t i o nof ene n po~iciesare an ~ m p o ~ a naspect t of the ESO res~onsibili~~es. and charges that all participants must meet in order to connect to the grid and in the marke~.The trans~ssionsystem is made up of a e n e r a ~ r sand cons~mersare located, and these buses are lines. These lines transport the electrical energy around the hi t r a n s ~ ~ s ssystem i o ~ and have limited capacities, which for security [26], When a line is at its limit the system is congested er inj~ctionsat every node in the system. Relieving th generator^ andfor consumers to alter their quantities. ~ ~ e f o congestion r e puts a c o ~ s ~ r aon i ~the t e n e r markets ~ and in many instances may render them non-compe~itiv~ [27]. Losses on an e l e ~ ~ i grid c i ~are u n a v o i ~ b l eand can be substantial. A market nt’s p~ysicallocation on the transmission system, i.e. portan ant factor in wholesale electricity markets. Th ~ d ~ e n of~ establishing a ~ s the instantaneous Iocati of electricity. For e x a ~ p i e a, generator that is injecting p o w ~ r location at one i n s ~ nin t time can cause substa~tiaIlydifferent losses and c o n ~ e ~ tthan i o ~a similar i n j e c t ~ oat~another ~ location andlor time. The cost of these loss sm~ss~on s y ~ t ne ~e to~be~~ l ~ o c ain t esome ~ manner to the
Power System ~ e s ~ c and ~ ~ n g
electricity market and this is not a trivial task [29]. The revenues collecte~by the TSO from the ~enera~or§ and loads for these ~ansmiss~on s e ~ ~ c e(co~ection, § age, ay for the ~ a n s ~ i s s i o§ ny s t e ~in tbe short an
In the VHU environ~entthe least cost objective ~ p ~ c a rl e~~ye ~ ~e idi l yto the cost of a n 6 i l l a ~services such as r ~ s e and ~ e vol~dge~ o n t r owere ~ ~ e a t as e~ opt ~ ~ is atioprocess n and their cost may not have been e x p l i ~ i ~ ~ y illary services is costly, and the ~ u a ~ ~ ~of ~ ~ ~ reserv~are services that generat~ngunits provide they have significant costs associated wit11 them D23. ~ ~ ~ will~ a not provide these services unless they are ade~uatelycompensa~ed[33]. In s o ~ cases, e howev~r,g ~ n ~ r a ~ may o r § be obliged to provide these services in order to be all~wedto arket. Ancillary services can be self-~~ovided by the e ~ ~ r g y nsible for a ~ q u the ~ ~ n ce. ~ ~ h y s i c a ~selfly ~ r o ~ i s i af Q nthese s ient and ener~y~~k~~ these services from others. Therefore in c o ~ p e t i t whole ~v~
a state where load shed and reserve that must rocess, then the ex
~ncentiveto ~ a i n t a units i ~ [41]. A strong ar fines are not n ~ ~ e s sasa pure ~ , market forces in the competitive enviro the event of a shortfall in gen
In a ~ ~ o ~ eelectricity s a l ~ market ~ u l t i ~ l e being traded over d ~ $ ian~e li e~~ ~ r i ~ i ~ number of choices a t ebasic c ~ a r a c ~ e ~ s t i c s s ~ s model ~ e ~is used to i ~ ~ u s ~ the
ity markets are used here to illus refe~encesto existing wholesale ele eneral these exist in^ m characteri§ti~s but it should be no ecul~ar~t~es which do not allow them to be c lso be noted that even at the time of this writing rn re a v a ~ ~ a bthel ~ relevant web sites are giv the r sh
3.3.1
~ r nTest ~ ~~ yl s ~ e r n test system c o n s ~ s ~ ~ofnag supply si d a simple ~ ~ e e - bnetwork. us
~ i n i ~ uand mr n a x ~ gen ~u~
tors have quadratic production cost con§~aintsgiven by
are the power outputs in MW of generator #1 and
ic utility curves and
n i m ~ mand max~mum
Power System ~ e ~ t ~ a ~d ~ i n g
2
Line A
(3.5)
Line AC
(3.6)
The coef~cientsof P, and Pzare the line sen~~~ivities of the respectiv~lines to inj~ctionsat buses r~spectively[27].
us A
Line A us
s ~central s ~ auction istinct ~ a d ~ ~n g~ c h a n ithe iers and ~ustomersboth s u b ~ i t the market clears, i.e. d e t e ~ i n ~ § m [46]. In their simplest forms these centralised auctions to a §im~le merit order economic ~ s p ~ a~l gc oh~ i [12]. ~ h ~ The d auction for auction m e c ~ a n i s ~ ~ ~~~~~~
Competetive Wholesale Electricity Markets
3.3.3
3
~ddin
idding into a simple central auction i s similar to the process of each generator submi~i cost data and each load submi~ingutility ( ~ l l i ~ ~ e s s - t o - pdata a y )to the used by the VIU to dispatch the system. In an ideal world with a electricity market the bid data should be the same as the ~roductioncost (utility) data or o p p o ~ n i t ycost, wRicRever is eater. The o p p o ~ n cost i ~ is the r~venue p ~ i c i p would ~t expect to get by selling in a different market. This price assu~ptionin a competitiv~market is an optimal strategy for a market particip n the The p ~ c i nmechan~sm ~ i an important factor in this p r i c e - ~ i n ga s s ~ ~ p t i oand to the seminal paper by Vickrey [49]. The fixed costs are not d ~ u a n ~ i t yi.e., clearing the market. The incrementa1 costs (ut~~ities) are all that are needed to clear the market. Here it will be assumed no opportunity costs and that all market p ~ i c i p a n t sbid at ~ c r e m ~cost n~l case where bids vary from incremental cost (utility) is dealt with later in the section on ~ S e ~ t i o3.3.9). n The cost (uti~ity)curves and the increme~talcos small test system are given in ~ ~ ~3.2r and e 3.3 s respective~y. T (utility) curves result in linear increnienta~cost (utility) curves. 20
w
0
100
200
300
400 500 BOO Power (MW)
Cost ( ~ t i lcurves i ~ ~ for the small test system
700
5 n u
0
100
200
300
400
500
600
7
3 I ~ ~ r e ~ e icost i ~ a(utility) l curves for the small test system
C o ~ ~ e t e ~Wholesale ive Electricity Markets
Profits for the ~ e n ~ r aare ~ ~c ar ~s c u ~by a ~t ea ~~ i the n ~di~erencebetween the r e ~ e n ~ ~ e cost. The cost in t h ~ calcu~ations §~ is taken to be the i~nore§other fixed costs such as eapit ce ~ e ~ e the e nutility p r ~ c~i~~c h~ a n i sisi npay as you bid w h ~ pra~~ i c i ~ a pn ~ s is prQ~osedthat this type of d i s c r ~ ~ i n a ~ opricing ry wi
ts (3.11, (3.2), (3.3) and (3.4) and (be load balanc~c o ~ s ~ a ~
roce~§ (a ~ ~ a d r a ~p ir co g ~ a ~ i n g ils of solution) the no-load and fixed et in h i s m ~ n e with~ut r amb ~ ~ c r e a s ~[ndg~ c r e a s ~ ~ g ~ ,
Power System R ~ s ~ c and ~ ~n e rge ~ l a t i Q n
constraint (3.9) and the assumption of a lossless system, the pool (central auction) is revenue neutral, i.e. what is paid in by the loads is paid out to the ~enerators, le 3.1 Market clearing, transmission uncQns~ained G e n ~ ~ ~ Q r / Quantity ~ Q a ~ (MW) Generator #I 313.6 ~eneratQr #2 409. I Load #\ 522.7 Load #2 200.00
3.3.5
Price ( 18.3 18.3 18.3 18.3
$
~
~ Profit ) ( S u ~ l ~($A) s)
683.7 21 10.3 437 1.9 4345.5
~ a rTiming ~ ~ t
to the stochas~icnature of the demand [ and the need to s c h e d ~ e~ e ~ e r a t i o n resources in advance, electricity markets can characterised by timing. Forward s are run in advance of the delivery time. This enables suppliers to e~erationto meet the demand and for the IS0 to coo~dinate~ a n s r n i ~ s and i~n ervice needs. The forward markets also perform a very important financial ants by locking in prices an ractice [SZ]. In power I-time (spot) markets and is systems with large themal plants that are in unit constraints these 1. There may be a m u ~ t i ~ of d ef o ~ ~ ~a r kd e at ~s ahead, month ahead and day ahead. In C a l i f o ~ i athe power (PX) m s three different types of forward markets [53,54]. The day-ahead lishes prices and quantity of electricity for delivery d ~ each ~ how n of ~the . The day-of~our-aheadmarket o erates similar to the day ding closer to the delivery hour. pa~icipantscan buy and sell energy months in ad order of min~tesin ance of delivery are deeme a ~ p r o ~ ~ real-time hes markets are needed to ensure supply and adapt to unforesee~c~rcumstances.These real-time markets are in d Norway the respecti~elSOs operate market for real-time a d ~ u s ~ [55, e n ~101. The p r e a ~ -basis ~ i ~but~ this is set to change with the ~ t r o d u c ~ i oofn a binding day-a~ead~ a r ~ e t E567.
The core product being soid in electricity markets is energy. U l t i ~ a ~ e the l y coordi~&ti~n of units (sc~eduling)and of the ~ransmissionand a n c i 1 1 services ~ enables its seque~tia~ e l e c ~ c market i~ structure is one in which the energy t ~ a ~ ~ d ndently of the transmission and ancillary services. The provision of the e ~ e r g y~ a d in~ an ~ tlal trans~issionand ancillary services needs follows sequentia~~ ~ a n n eIn r . ~ a l ~ f oforward ~ i a energy ~ a r k e t are s con real-tinre energy, congestion management and ancillary services a l i f o ~ ~[58]. i a There i s a strong physicai coup1
7
Compete~iveWholesale Electricity
s e ~ i c e and s congest~onmanagement and this is reflec~ed some markets where cbre is one in which ded s ~ ~ u l t a n ~ o u sAl ys~muItaneo~s . electricity market a n ~ ~ u s lwith y the transmission and ~ c i l l a r ys ania, New Jersey, Maryland, USA) ~ n t e ~ c o ~ e [60] c~~on this simultaneous c ~ a r a c ~ e ~ § t i cThe . i ~ t ~ ~ r n r pool is to use a hybri se~uent~a~simul~aneous arket structure in Alberta may also be a h y b ~ $as the the energy market and the ancillary services markets as eously [56]. In the uncons ined m a r k e t - c ~ e ~ n g the ~ a n s ~ i s s i line o n power ws are given in Table 3.2. le 3.2 Power flow, market clearing, transmission ~ n c o n s ~ ~ n e d
Line AC (PAc) Line BC (PBc)
-100 200 400
337.5 385.2
The line c ~ n ~ e cbus t iA~to~ bus C is overloaded by 137.5 M with this ~ o n g e s ~ is o nto clear the ~nergyand transmission mar h the e x a ~ that ~ ~ will ~ e be given here will deal with ~imulta~eouslyit c to deal with energy smission constraints in the ed line. This can be a c ~ ~ e v e d social welfare (3.8) subject to unit const~aints(3.1), (3.2), (3.3) a ons strain^ (3.9) and the transmission ~ons~raint (3.5), (3.6) and hic that illus~atesthis arke et-clea~ng m e c h a n i s ~ ~ c o n s ~ a ~ nen€~rced ts Table 3.3 gives the ~uant~ties, prices and p the power flows. Market clearing with transmission constraints
Generator #2 h a d #I Load #2
467.0 378.0 200.00
20.0 22.9 22.9
2871.1 228~.0 3419.1.
Power flow, market clearing with ~ransmissio~ cons~aints Line
Line flows (MW)
Line limits &IW) -100
Line AC (PAJ
200.0
200 400
structuring and Deregulation
ce the ~ n ~ o d u ~ tof i othe n ~ o t i c that e in Table 3.3 the price at each bus is differe price at each bus is the term locationa~marginal pricing or nodal 1 cost of the next ~ ~ g a w aoft t po I is active then typically the price at each bus ipants at different buses receive (pay) a d~f~erent price and this is the ~ c r e ~ e n tcost a l i s different at d~fferentlocat~~ns, ~o~ational the appropriate price signals regard in^ their location. ~ e n e ~ t o r #l is poorly located in co~parisQnwith generator #2 as it is
~ e ~ thee ~oe buses. ~ ain as the revenue for the generators will be les
and New ~ e a l ~ ~
can r e a ~ a n gthe ~ result of the ener
~ o m ~ e t e t i Wholesale ve Electricity Markers
~ q ~ a n and t i ~price) ar is trading ap~roachhas the ut the cheapest generators. ot c ~ e n t l y~ e ~ i in~ e d must be traded through the cen is set to change in Engl may be net inject~onswhich may c n management process these If these transacti m have been changed as se bilateral trade transmission c o ~ $ ~ a i nfor t s the central auction: Line A
ine A Li
(3.12)
arket clearing with transmission constraints and bilateral ~ ~ ~ s a ~ ~ ~ o
~ e n e ~ a#It o ~ ~ e n ~ r a tfc2 or Load #I Load #2
92.6 472.2 364.8 200.0
13.9 20.2 23.3 23.3
-214.3 2945.3 2129.6
Power System Restructuring and
9
Table 3.6 Power flow, market clearing with transmission constraints and bilaterals Line Line AB (P&) Line AG (PAJ
Line Rows (MW) -97.4 200.0
Line limits (MW) -100 200
The bilateral trades have altered the central market result. In order for be allowed they need to pay for the tran§m~ss~on service. The ~ ~ s ~ i s b i l ~ t e ~W1 a l is the product of the q u ~(10t MW) ~ ~by the i n c r e m ~ ncost ~ l of ~rans~ission between bus A and bus C ((23.3-13.9) $ i.e. 94 $/h. The ~ ~ s m i s § i charge on for product of the quantity ntal cost of ~ansmi§sion d bus G ((2~.3-20.2)$ / ~ i.W ~ ~ ~ ilatera~trades re in a d~rect~on that relieved congestion the price diff~rential~ would be negativ ~ ~ ~ s m i s s charge i o n would be negativ~,i.e. the bilateral trade would be re estion the bilateral trades can be ~Qnductedindep stem becomes c ~ n g e s ~ ethen d there to pay the ~ a n s ~ i s s ~ charge o n these ilatera~~ a d e have s been eEe central auction. This concept is r e c o ~ n i s ~indNorway where zonal ement ~ u ~ o § bilateral es trades b e ~ e e nzones c e ~ ~auc~ion al [20J P ith locarional (nodal is mandatory partic
able to match the p a ~ [67]. e ~ It is ng schedul~from a central a~iction
Competetive Wholesale Els&icity Mmkets
1
scheme in the ~ a l i f o ~Pi a [54]. It is interesting to note that this iterative bid~ingscheme proposed for California proved impractical and has not been In the VIU envi~onmentgenerators were typically This UC a ~ g o ~uses th~ cost ts and accounts for the inter r a m ~ ~ nrates g [l5]. In so need to be ~ n t e ~ a l i s eind the bids of the p a ~ i c i p ~16 ts the prices in advance [69] and bid so that the pro~table. This self-schedu~~ng approach is in existence in the ~ a ~ i f o r n ~ ~ and Norway [70]. Bilateral trades are by their nature self-s security reasons, self-scheduling may be subject to approval by the IS0 "711. a central auction process can also involve a firm that owns mui~pleunits submitting portfolio bids. These bids represent an aggregate offer. Afier market clearing the firm can then decide how it will schedule its own units to supply the q u ~ t i t i e s ,The CalPX allows portfolio bids. An alternative to self-scheduljng is centralised scheduling where a UC-type algorit i this auction m e c h ~ i s mis very is used to clear the market [41]. ~ i d d i n gi n f o ~ a t i o iin ~ e t ~ ~ ~n ~~ e~ ~all u 9dcost ~ gdata and a p p r Q ~ ~ atechnical te cons~aints.In the clearing examples above the optimisation problem variables were which are of social con~inuo~s.In a centrally scheduled system the objective is th welfare, subject to ~onstraiiits9 but the variables are both continuous (quan~ities~ and discrete (turn a generator on or off) [72]. In PJM some units can choos scheduled while others with bilateral contracts can self-schedule. In the e n e r market ~ i s a centrally optimised UC process but this is set to change
In perfectly competitive electricity markets the most profitable swate p ~ i c i p a n tis to act as a price taker and bid at incremental cost [48]. a s s ~ p t i o nassumes an infinite number of competitors so the bidding beh player cannot affect the markets, i.e. influence prices. In the real world, however, there are only a finite number of market participants and each participant has to some degre to increase their own profits. There is a mu power, i.e. they can bid s~a~egically possibilities for this type of gaming behaviour in ellectricity markets [73,74]. De bids from ~ncremen~al cost can also occur because a p ~ i c i p a n wants t to en schedule [66] or it knows it has another opportunity in anorher market incremental opportunity cost. As an example consider generator #I in the constrained market above. i n c r e m e ~cost ~ ~~ e n e r a ~#oIr is making a loss (Table 3.3). In this: case ge alter its bidding strategy so as to avoid this loss. Table 3.7 gives the result for one strategy wbere gen~ratQr #I ~ncrease~ the linear part of its bid (3.1) from 12 ~ ~ to W 14 h
Power System R e s t ~ ~ and ~ n g
--
atkec clearing with ~ansmissionconstrain~§and ~ e n ~ s a tktoltbidding strategically, i.e. the linear coefficient is changed from 12 $ Mto 14 ~$MWh ~enerator/Load ~enesator#I Generator R Load #1 Goad #2
Quantity (MW) 106.3 48 1.3 387.6 200.0
Price ($/NIwh) 16.1 20.4
22.6 22.6
Profit (Surplus) ($/h) 25.2 3075.1 2403.2 3480.4
erator # I by a~tenngits bid away from ~ n c r e m e ncost ~ l has tu le 3.3) into a profit of 25.2 $/h (Table 3.7). ~enerator## 2 incre~ingits profits from 2871.1 $k(Table 3.3) to 3075.1 $k(Tab 3.7). Load# 1 and 2 have both also gained as their surpluses have increased. y b ~ d d ~above g its ntal cost generator # 1 has increased its price and reduced s quantiw and most are a balance betureen ~ c r e a s price ~ g and reduc q~antity, ~ i t inelastic h e is more scope for driving up prices w~thoutexcessi ads can also bid strategically. The price differenti bus B: has reduc~d(T 7) and hence the loser in this g revenue from the c ~ ~ g e s t i o n ment has reduced from 23 15 ties and these exist in here pa~icipan~s are in collusion 176,733. Cen the market power. ~ o w ~ v e tr r, ~ ~ ~ i s s i o n mall pockets with very few ~ ~ i c i In p this ~ ~ . s with little market power ~ l o b a ~cl y ransmission systems that are prone to tive electricity market difficult. S their nature [26] pose s i ~ i l adiffic r ed that must run for r e ~ ~ a b i lreas ~w R) generators are ~ o ~ p e n s a t outsi ed market results [8OJ. In the example above it should be noted that the strategy of g~nerator# I is not op~imal. i n ~ re~u~es ptirnal s ~ a ~ e g ican e s be found, however [S1,821. Successful ~ a ~behaviour ts to have good information about other p a ~ i c ~ pbi~ ~ and s ’ to consider the n a ~ r of e the p r o b ~ [83]. e~ onstra~~ts and g a ~ i n gbehaviour act to reduce social we~fare. Table 3.8 below the social welfare for some of the ex sion c o n s ~ a ~and t s all ~ a ~ c i p ~ t s social welf~reis a ~ a x i m u m .With the ~ a n s m ~ § lace of cheaper power and the social we1 are bi~dingaway from ~ n c r e ~ e n tcost a l ( ~ t i l i then ~ ) the social we~fareis her r~duced,
Coin~etetiv~ Wholesale Electricity Markets
Social welfare
3.3.10
Market
Social welfare ($h)
No t ~ ~ s ~ i s sconstra~nts iQn tab^^ 3.1) ~ r a n s ~ i s s ~constraints on (Table 3.3) Gaming and transmission constraints (Table 3.7)
11,511
10,715 10,711
A n c ~ i Services ~u~
s e ~ i c e sare required for the reliable operation of the power sys s ~ n ~dre d~ n i ~ of ~ othese n services is not globally accepted. AGC, resesve (s s t a ~ d b yload ~ , fo~~owing, v o ~ ~ control ge and b ~ a c ~ - sct aa~p a ~w~ oi u~ be ~~ ised services. The generat5rs ically provide these ~ n c ~ l ~ a can also provide some. New these s e ~ i c e are s not term contract. Some of ~ ~ k eInt ~. J AGC ~ is, se ~ the IS8 operates a they are L ~ w i orl ~ ~ ~then acquired by cons~aining e process of a c q u ~ this ~n~ energy and ~ansmi§s~on congestion manageme~tmarkets. Consider the simple test system. Assume that the IS spi~iingreserve is required for system r e l i a b ~ and ~i~ advance by acquiring it in a ~ o ~ amarket, r d e.g. day ahead. Spinning reserve is the a~~~~~ of an on-line erator tor (bad) to increase (decrease) its output (c period of time. The time per~odwill be d e t e ~ ~ by e dthe s y s t e ~ t for smaller s y s ~ e ~ s the time period is nemlly smaller in order to avoid large ~ e ~ u ~eviati5ns e ~ ~ c[38,86]. ~ Assume that gesler r # 1 and generator #- 2 can ramp up by 25% and 50% respectively of acihes in the s ~ ~ ~reserve i n gtime period. It is also ass loads are ~ncapableof p r o v i d ~ spinn~n ~ ~ reserve. Therefore the ~ e ~ ~ ~ e
1I- 0 . 5 ~ ~ 0-0P2)2 200 Table 3.
(3.13)
the r e s ~ of ~ ~clear s the market with the above constraint (3.13) m~ssionc o ~ s ~ a i n t s
Power System ~ e s ~ c ~and ~ ~i ne rg e ~ I a ~ ~
Market clearing, reserve constraint, transmission un~ons~ained _ _ . I I _ .
G e n e ~ a ~ o r ~ oQuantity a~ (MW) Generator #1 3 16.9 291.5 Generator #2 Load #I 408.4 Load #2
200.00
Price ($/MWh)
Profit (Surplus) ($h)
21.9
1842.4
21.9
2969.2 2669.3
21.9 21.9
3614.1
The first thing to notice about Table 3.9 is tkdt in comparison with Table 3.1 the quantities have altered substantially. In order to meet the reserve c o n s ~ a i n(3.13) ~ g e n ~ a t o#2 r has had its quantity reduced and loa is largely unchanged and load #2 is unchanged. Although generator reduc~ionin quantity it i s more profitable than the unc~nstrainedcas reason for this is that the price has increased. Although generator #2 cannot complain about its profits. The biggest gainer out o f this si whose profits have more than tripled. This high1 with ~ e c ~ i cparameters, al i.e. generator # 1 has It should be noted that if both generator #I and #2 had the ability to ramp up to m a x ~ ~ u m output within the s p ~ n i n greserve time period then the market would clear at the same price and q ~ ~ ~asi int Table y 3.1, i.e. the reserve constraint (3.13) will not be ~ ~ n d i n g . Here the binding reserve constraint has caused the social welfare to reduce to 11095 $/h from 11511 $/h in the ~ c ~ n s ~ i case n e (Table d 3.8). It shou~dalso be noted that in the event o f this reserve being used then generators # I and #2 woufd be paid the real-ti~e price for their energy. This scenario, where both g e n ~ r ~are t o bettcr ~ off because o f the ~ c ~services, ~ l i sanot~always the case and eref fore if a constraint causes a red~ctionin profits a p ~ i c i p a n tshould be compensated for its o p p o ~ n cost i ~ [60]. The ~ y b r ~ d approach in the New England Pool requires the ca~culationof this o p p o ~ cost n ~ for ~ An alte~ativeapproach for the provision of ancillary services is to set up m ~ ~ k e t In s. a competitive e n v i r o ~ e n the t bid curves for reserve and other ancillary services should reflect a pa~cipant’sexpected o p p o cost. ~ ~ Expected ~ o p ~ o ~ ~ ncost i t ywill require f o ~ e c ~ s tofthe i ~ g energy spot price [69]. In C a l i f o ~ i the a ancillary services markets fo in sequence after the energy and congestion management markets. In this way capaci progressive~ya s s i ~ e dto the various tasks 1551. In New Zealand the ~eservem ~ k e is t cleared simul~neouslywith the energy and transmission markets. With ~ a n s ~ i s s i oand n reserve constrai~tsthere may be a need to account for the interact~Qn between the two, i.e. in the event that reserve is needed it will require ~ a ~ s m ~ s s[87]. ion
3.3.11
ieal and Finan~ialMarkets
~ a r k e can ~ § be physical or financial. If the markeE is physical then the quantities are to be physic~llydelivered in contrast to a financial arke et where no p ~ ~ s i c da le ~ i v eis~ reqMired. In advance of physical d e l i v e ~the IS may well receive i n f o ~ a t i o nthat is ~ndicat~ve of the physical deliveries. However, at some point in time the I ~ n f ~ of~ the e dbin~ingphysical c o m m i ~ e n t sso it can c o o r ~ i ~ athe te
C o ~ ~ e t eWholesale t ~ ~ e Electricity Markets
security and reIiabi1~~.Deviations from these binding c o ~ i ~ are e n ~ with by buying or selli the differences at the real-time price. In C a l i f o ~ submit binding schedu and any imba~ancesare adjusted in the real-time m ~ k e that t is operated by the CAISO. ecause of price volatility many ~articipantsin a central auction rocess may wish to acquire financial contracts which hedge their position. In Alberta effectively hedged against the pool price. Alberta currently has only and this has been possible because of the large-scale hedging w p a ~ i c i ~fiom ~ t sprice volatility, This situation is set to change wi being introduced in the near future 1561. teral trading is one m e c h ~ i that s ~ can be used to hedge the vola~lityin a central a load that are participating in a central auction can ~iavea a price P,,. If the pool market has a uniform price of P, then and the load pays the same amount. his can be ach~eved at zero price and the load requesting MW and i n d ~ c ~ t ~ g he market price P, is higher than oad. If the market price P,, is lower than the P, - P,) to the generator. The net effect is W at a price P,,. The two that thc ~eneratorand load h of the uniform price. The s bil~teralc o ~ ~ aare c t perfectly hedge is known as a Contract for Difference (CFD). ~ o w e v e r ,this hedging mechanism is u n d e ~ i n e din a system that congested and has a ~ocationalcongestion ~ a n a g c m e nsystem. ~ If are at the same bus then the hedge is still perfect. If, however, the I different buses they will have to pay for transferring Q MW from the gen ~ be revenue depending on the price d~fferenti load bus. This p ~ y n i e ncould and the generator split this payment (revenue) between them is their own business. There involved: the IS0 which collects the charges for co~ges~ion ~ a ~ i o nprices a ~ can be very variable and ~ e n c ethe price of ly voIatile. A solution to this difficulty is the conc ~ r a ~ s ~ i s srights ion ~ ~ where T pa~icipants ~ ) can in advance ~ ~ r c h a fr se right to collect the ~ a ~ s ~ i s scharge i o n for Q MW between two buses [63]. load and generator are again hedged. If these transmission rights are compe~~tively traded then their price should reflect the expected price ~~fferential b ~ ~ e the e n load an generator buses. The IS0 must also ensure that these ~ a n s m ~ s s ~rights o n are feasible9i.e. its t r a n s ~ i s s i ocongestion ~ income in the physical market covers the p these rights. Trans~issionrights may also be subject to gaming behav~our ex~s~ence of ~ u l t i p l etrading o p p o ~ n i t i e (bilateral, s spot market, forwar to optimise their portfcdios the wholesale electricity market ~ a ~ i c i ~ win a n ~endeavour s [89,90].
From the el~ctr~city arke et characte~sticsde§c~~bed above it is eviden~that there is a esign choices for electrici lco r n o ~and ~ l the ~ i ~ a t e r a l sion and ~ ~ c i ls~e ~ai rc e~s
pool and bilateral aspects with
rates all ~ h y s markets ~ ~ a ~ forward
and cost ( u t ~ inform i ~ ~ ~
p a ~ c i p a n self-schedule. t~ This model oflers all the ~ e n ~of~ co~prehensive t § CO icipa~io~ in the cen c ~ ~ i coif sthis ~ type of ically not ~ i q u and e the is very sensitive to algorith~p ~ a ~ e t e which rs could lead consequence of the i~tegern opti~~§ation proce dificulty the prices are set by lex algorithm whic
oach should m i ~ i ~ i any se
~ l e ~markets ~ c are i ~highly complex systems that consist of a number of ~ t ~ e l a t e d m ~ k e t sfor different commodities (energy, ~ansmissionand a n c i ~ services) l~~ and different time frames (real-time, hour ahead and day ahead). There are still man lems in the design and operation of e l e c ~ ~ i tmar~ets. y when the pure economic theory is applied to a power syst e economists want the electricity markets to embrace the laws d with simply ideal examples they can show the benefits af such a . The real-time nature, physical constraints and reliability issue all act to make the development of an ideal market impossible. It should be noted that it is well accepted that all markets, even those for simple c o ~ o d i t i eare ~ , not ideal. T h e ~ e f o r ~ the goal should be to develop a market that is a bestfit to the ideal. Several wholesale electricity markets have been established around the world and most of these are in a con~nuousprocess of change. This evolut by the need to address some of the outstanding issues in the these markets. Here some of these challenges are outlined.
3.5.I
~ a rPower ~ ~Evulualion t and ~itig~lion
e t valuation of market models can have many differe~tv i e ~ o i n ~ sThe . ~ a r ~ must dmction in a reliable, efgcient and fair manner. The generators will want to maximise their profits t ~ o u g hthe markets. The consume^ will seek the best value for the service they receive which may conflict with the aims of the generators [SS]. This will ne~essitate analysin~the social benefit that the market offers and the prices that are charged. It will also be dent to ensure that market power and gaming do not exist and that m ~ k e t are s not overly volatile. on there are some a v a i l a b ~simuiat~on ~ and a ~ a l ~tools. ic simulation model that considers the market s ~ c t u r and e estimates and ~uantities.Kumar and SheblB [93] have dev~lopedan auctio~ s et al. @ I ] have developed a framework to in market simulator. supply Green when all p ~ c i p a n t are s maximising their own and ~ e w b [94] e ~investigated the UK market using the supply curve T h ~ is~ little e doubt that market power is bei exercised regularly in many electricity rices, which are well above co~petitive m ~ r k [95,96~. ~ ~ s This practice is characterised ~ y profitable for the ge~eratorand ult~matelycostly for levels, The result is ~ i c a l very s power can be exercised in many ways. aerators with global market power can manipulate the marginal (spot) price as in the gland and Wales p o ~ e pool r [96]. ~ransmissioncongest~~n can give p ~ i c i p a n t slocal market power and they can ~ a n i ~the ~ Iocational ~ ~ t e marginal prices 1971. Some possible solutions to this problem i n c ~ u dthe ~ following [76]:
Competelive Wholesale Electricity Markets
99
Better market design. Some markets have experienced difficulties, which could be resolved by better design [24]. The congestion management process in California has a gaming problem and the Federal Energy Regulatory Commission (FEW) appears to be encouraging the adoption of locational marginal pricing as a solution [3,64]. reaking up the large generating companies into smaller co~petitiveWI oliticd issue, which may not fully solve the problem. In the perceived that the two dominant generation companies exercised their market power to raise prices above competit~velevels [96]. ~ u ~ more ~ ~~ansmission n g so as to avoid creating o p ~ o ~ n i t i efor s local m a r ~ e t power. Over-building transmission may seem wasteful but with this ~ a n s r n ~ s ~ ~ o n capacity in place local market power can be removed and generators may act more e ~ ~ v e [8]. l y This additional ~ansmissionwill also increase the r e l i a b i ~ oi ~f the system. There is, however, significant environmental concerns related to b ~ ~ d i more ng transmiss~onlines. n here the load is Making the load more responsive to price. In the examples responsive (3.3); however, this masks the reality where in mo markets the load i s largely inelastic. Any generator hoping to find that a responsive load will reduce its quantity and reduce . For domestic customers this may be very difficult to i e customers may be capable of ~ n s t a ~ ~equipment ing that can respond to the m a r ~ e t e. In the long run new technologies may make distributed generation (e.g. fuel cells) more prevalent and this will reduce the need for further investment in transmission [%I. It will also combat market power, in particular, if this type of generation is owned by groups of consumers (i.e. if the market price is too high they will generate themselves). If this does happen then the electricity market will become part o f a larger energy market. In some markets if the price rises above certain levels the prices are capped; however, this distorts the price s a1 and may have long-term negative consequences~ Price capping has been used at one time or another in most wholesale electricity markets. For e x ~ ~ ~theI California e, ancillary services markets have had price caps i m p ~ ~ [79]. ed
3.5.2
~ y s t Capacity e~
The issue of p l a ~ i n gin generation and transmission must be a d ~ e s s e dwith a view to ma~ntenanceand enhancemen~sto meet increasing demand. On the generation side these functions are generally left to the market, the assumption being that energy prices will signal the best times to maintain units and when to build new plant. The energy price spikes in the Mid West (USA) in June 1998 highlight this issue. A market for generating capacity over a fonger time frame (more than one year) may provide the necessary market rs signals h ensure that the system will expand according to the needs of the c o ~ s u m ~1233. The concept of marginal cost pricing [99,100] for electricity is based on ~ndamental microeconomic principles [50]. In an ideal market bidding at ~ n c r e m e ncost ~ is an optima^ strategy [48]. However, the resulting schedule may be unprofi~ablebecause of costs such as no-load costs, startup costs and fixed costs (Table 3.3). In the VRJ environment with spot pricing Schweppe et al. (281 introduced the concept of revenue reconci~~a~ion where ~ a r g i n apricing ~ may not be sufficient to cover all costs and give a
Power System R e ~ ~ ~and ~ Dere r i n ~
1
reasonab~eprofit. ln competitive markets revenue reconciliation shou~dbe redun that m ~ ~cost~ pricing a l will in the long i-un resolve this issue. In the lon not suf~cientto cover business. However, this i in the ~ n g l a arid ~ d Wales power pool ere are c a p a ~ pi ~ a~ents p ~ i c i p a n t sreceive in addition to the market spot ~ a l i f o no ~ ~such a st in the energy market but there is ctures would appear to fail in in new trans~ission [8,102]. This may be a p r ~ a ~ r e tra~smissio~ i n v e s ~ e is n ~a long-term issue [30 d the markets have only been recently i n t r ~ ~ u c e dAlso . it could be argued that the tran sion system was over-bu~ltin the past and the excess capacity is only being utilised rec , In addition environmenta~c o n c e ~ s are also a factor in the lack of investment in the tran§~issionsys i n v e s ~ e n in t transmission does not keep pace with the increasing de there will be ~ o n g - t eeconomic ~ and reliability problems. The when transmiss~oncapacity is needed the market &I ction delays etc. this could lead to periods of u ~ e l ~ a b i ~and ~ty i~ef~c~encies.
.5.3
Reliability
W h ~ it~ is e desirabIe to encourage co~npetitionin the e l e c ~ i c arke i ~ et to reduce the costs e quality for consumers, also v ~ ~ ai~ml yp o ~ tot ~ a i n ~the in . In an operational envir ent, an important re~~ability ~ e a § u r eis em security refers to system’s a b i l i ~to w ~ ~ h l is~ et l y~ ~ A system is said to be in a secure state if it is able to meet the Load d c y ~ as a line or without viol at^^ the erating constraints in case of a like c o n ~ n ~ e n such with re spec^ to a set of next In other words, s e c u is ~ defin ~ g ~ ~ e r aot uo ~ g e11 ies that are likely to occur. Gatas hic failures of power c ~ c a d e devents that are co~binati n a ~ r acl a l a ~ ~ t i(e. es q ~ i ~ m e ~n at l ~ n c t ~ odesign n s , flaws andor h ~ a en~ o r s[ security assessment is to reduce the likelihood of catastrophic failures. uch effort in the past decades has been devoted to the develop~entof c for s y s t e ~§ e ~ ~ r i assessment. ty These tools include state estima~ion, select~on contingency evaluation, external network equivalents and 10 ustry evolves into a competitive environ~ent,system securi ~ n c t i o n .In this new env~ronmen~, the p~~~ responsible or a similar entity. Since the e n v i r o n ~ ~isnm~ ical challenges. For example, the level of unce as increased s i ~ i ~ c ~ tThis l y .is due to the fact that ~ e n e r a ~ patterns on and the market outcome may not be easily p r e ~ ~ c ~ ~Cbo lne~.e q u e ~ ~al y , s y s ~ eng~neer e~ at the IS0 who studies system security may find it d ~ ~ ~to upredict l t the eneration and load conditions for evaluation of system security. is defined fo city market ity Gouncil nes ATG as triC
Competetive Wholesale Electricity
1
‘the Total Transfer Capability (TTC), less the Transmission ~eliabil~ty Margin ( T ~ less ~ , the sum of e ~ i s ~~ansmission in~ c o ~ ~ t m e n(which ts includes retail customer s e ~ ~ can e) 11061. Note that ATC is d e ~ n e dfor a ~ c t ~ t ~ o u presents the amount of power that can be Van ng the ~ a n s ~ i s s i osystem n con§traints~such as line flow limits. ing condit~onof a power system; the syste de thermal, voltage and stability limits. the effect o f various unce~intiesin system condi~ionson ATC, smission ~ a n s f e rcapability reserved by load-serving entities to ensure ~ h e i ~ erations from interco~ectionsto meet the system r e l ~ a b irequirernents. l~~ e x a ~ p of ~ ethe d e t e ~ i n a ~ based ~ o n on power flow c ~ ~ ~ ~ l can ati~i~s in Bergen and Vittal [ To determine the ATC for a path from X to Y, one can ~nject an a ~ o ~ofn power t at node X and remove the same amount of power at Y and calculate the i n j e c t e ~ r ~ ~ o amount v e d i s increased to a level that c the power flows. h its capacity, the amount can no longer be increase ~ansin~ssion line en wer ~ a n s ~ise rthe TTG. hen a iven line cont~ngencyis ~ a ~ in flows of the post-continge~cy operating conditions also nee transmission line conskaints. ~onsequeiit~y~ the ATC may not be as high the ~oiitingencyconditio~i s not considered. The s ~ e a d y - s ~power te flow m e t h o ~can be exte~dedto include s y s t e ~d y n a ~ ~ cTime s ~ domain simulatio~scan various levels of power ~ a n s f eto r evaluate system stability including vo s y ~ c h r o n i so~f the ~eneratorrotors. When dynamic security is considered in ad~itionto the steady-state operating cons~aints~ the resu~t~ng ATC may further be the availability of ancillary services such EIS reactive power sources can
e aware of the ~im~~ation§ of the path-based ATC concept [ 1081. The existence of the multiple transactions is a reality in the market environment. When the ATC of a path from X to Y is being evaluated, one needs to consider other t r a n s a c ~ ~ that ns have to be ~ccommodated. For the power flow method, other transactio wer inject^^ into and removed from other areas of the system. These taken into ~ccountsimul~~eously when the ATC for path X to U i le kansact~on~ a ~will e lead ~ to s differen~values of illustrates the concept of multi-dimension ower transfers over tie lines 1 , 2 and 3 re projection of the thr~e~~imensional region on the P,,-P, plane resern describe the secure power transfer point inside the ~~ree-dimens~ona~ re ot violate the security conska~nts. The projec~ionon other similar manner. Now suppose the power 1 P,, is at the value of P,,,, the maxi eases to the value o f PTIZ, Waisfer level for P,, increases to Pn2. NQWit is not difEcult to see th p o ~ e~r a n s ~level e r P,, increases fro^ the zero level. To s u ~ a r i s ethe , parameters of the operating con the other ~EIn~~ctions. , represented by a tie line in F on the levds of other ented by other tie lines.
Power System R
T3
Illustration ofa power system security region
~
$
~ andc
~
~
n
~
Comp~te~ive Wholesale Electricity Markets
3.5.4
TechveicalIssues
~ e g ~ d l e of s s wholesale electricity markets power system p l a ~ i n gand opera~~on has many technical challenges. With the advent of wholesale electricity markets new and d~fferenttechnical challenges may arise which need to be addressed. The comp~~ationa~ aspects of the electricity markets are one obvious area of interest [l09]. There are also interesting technical challenges related to the management of a large number of transactions [I 101. The OPF algorithm which i s at the heart of the marginal cost pricing paradigm [ZS] and of power system security analysis will have to meet ever-~cr~asing challenges [ 1 1 17. In the m ~ ~ m a l iIS0 s t model with ~elf~schedu~ing the UC a l g o r i t ~is being implicitly solved in a d i s ~ b u t e dm a ~ e by r the market particip~ts11121, which may or may not produce results which are as good as conventional UC algorithms. In the interest of efficiency these decentralised UC approaches need to be analysed. In the r n ~ ~I S ~0 ~ ~ model a cen~alisedU ~ / ~ ~ F - t yalgorithm pe is required [1131, Although s e c ~ t y constrained UC afgori~msexist [ 16,171 a UC algorithm with a full QPF formulation for a practical-size power system is still a significant computational challenge. The UC algorithm itself is still a very active research area with many issues unresolved [114,14]. In particular, solutions are invariably suboptimal and not robust [92]. In the short-term, regulators, system operators and market ~ a ~ c i p a nwill t s have to face the challenges described above. However, any actions need to allow market forces to push the indusfxy towards possible long-term competitive solutions.
.6 The authors would like to thank ESB National Grid, UCD President Res~archA w ~ d and s Fu~brightfor their financial support. This work is partially supported by US ~ a t ~ o n a l Science Foundation through Grant ECS-9612636 with matching funds fiom Alstom ESCA Corp. The authors would also like to thank Prof. Richard Christie, Universi~of Washington, and Mr John Kennedy, ES National Grid, for their useful c~mmentsand insights.
.7 [I] [2] [3] 141 [5]
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10
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