Reshaping the electric power industry

The electric power industry has entered a period of rapid change — with profound implications for the health of the global economy and natural environment. Many of today's vertically integrated utilities are likely to be restructured or broken up in the coming decade, yielding a commodity market in power generation and transmission, and a competitive services market at the local distribution level. The transformation of the industry is being driven both by broad trends toward privatization and deregulation, and by rapid advances in energy producing and consuming technologies. Devices such as fuel cells, photovoltaics, and flywheels will open the way to a more decentralized power industry in which electricity generation and storage facilities are increasingly located in customers' own facilities — integrated and controlled by new digital communications systems.     

IEEE Power Engineering Review

The electric utility industry in North America is undergoing a transformation unlike anything it has experienced in its history. Disassembly of the traditional vertically integrated utility is taking form in response to pressures to privatize, customer choice demands, competition in the marketplace, improved quality of service, and unfettered access to the transmission network. How will restructuring affect the reliability and quality of our electric power service? Today's world offers the electric utility industry a difficult but exciting challenge to organize itself so that utilities can compete in an open market for customer allegiance, while at the same time preserving a reputation for delivering a reliable, high quality service. Obviously, if reliability and quality standards are not met, the customer base will erode and perhaps disappear, which is an untenable situation. Similarly, if the utilities' commercial interests in the new marketplace are not maximized, company earnings can be placed in jeopardy. However, we have not embarked on this restructuring of the industry to put utilities out of business. We must find the middle ground that ensures we deliver a quality service over a secure transmission network at the best possible price for customers and a fair return to shareholders.     

Deregulation of ESI and privatization of state electric utilities in Thailand

In Thailand, electric supply services have all been taken over by the state and operated under state enterprises since 1968. Under a law empowering its monopoly, state utilities accumulated assets and built up their manpower to expand and operate the power system to serve the whole country. During the time of high growth in power demand in early the1990 s, the government initiated a move to privatize state electric utilities, the pace of which was firmed up after 1997, the year of the financial crash. Engagement of independent power producers (IPPs) through the use of long-term power purchase agreements (PPAs) for supply of electric power into the system operated by state electric utilities was also initiated from the mid 1990s. Total capacity of IPPs and Small Power Producers (SPPs) that sell excess power from cogeneration on to the system) rose and by the late 1990s started to create a constraint on system economic dispatch. In 1999 the National Energy Policy Council (NEPC) approved a recommendation of international consultants to transform the electric supply industry into a structure similar to the system in the United Kingdom. The transformation was proposed to precede corporatization and privatization of state electric utilities. The objectives of deregulation were to revoke the monopoly in ESI, to improve transparency in electricity pricing, to reduce debts of state enterprises, and to improve economic efficiency. Industry participants have voiced strong objection to the industry model proposed. With the change of market structure in UK to the New Electricity Trading Arrangement (NETA), the secretariat of NEPC also proposed a new structure similar to NETA. More acceptance from industry participants have been received for the new structure. However, it has been assumed that the proposed structure would bring improvement in system reliability, drawing investment into power generation in a manner that would be efficient. Tariff has also been expected to become lower because of the competition in power generation and retail trading. The authors argue that, for developing countries, issues of timely investment in new generation and delivery capacity, stable and reasonable price of electricity, reliability of power supply, fuel diversity and security, equitable access of supply and promotion of social equity are important. Maintaining a functioning ESI that meet the broad objectives of providing reliable power supply to serve social and economic development needs could be prioritized over introduction of complete competition in wholesale generation and retailing. The authors examine the present situation of the industry and propose a transitional model that would serve the broad objectives and introduce gradual competition in the industry. The proposed design would unbundle generation from transmission and retailing. It would aso eventually promote intra-regional interconnection and electricity trading.     

Buying and selling power in the age of competition

The American electric power industry is currently in the throes of striving for workable competition. Driven by the converging forces of deregulation, technological revolution, and evolving customer expectations, electric utilities are having to compete as never before at both the wholesale and retail levels. At times, the transition has been particularly wrenching, with some utilities going through painful internal restructuring and others being caught up in external consolidation. Increasingly, the key to success in this more competitive environment is anticipating and actively responding to the forces that are shaping the new markets for electric power. Here, the author describes how such market management is the subject of pioneering research being conducted in EPRI's Utility Resource Planning and Management Program. On the wholesale side, this research centers on the development of powerful analytical methods to support utility decisions regarding new opportunities in the bulk power market. Research on retail market management is concentrated on developing innovative price-differentiated services that can enhance the value of electricity to customers and also foster a utility's long-term financial competitiveness     

Power plant investment in restructured markets

Investment opportunities in electric power generation have changed dramatically since electricity industry restructuring first began. In contrast to regulated utilities adding capacity in line with central planning and regulation, power plant investment is now more often made by independent companies who market power across multiple utility jurisdictions. Because the regulatory approval process is long and outcomes uncertain, developers often plan multiple options for a given development budget. As more information is revealed about the future prospects at different sites, options are abandoned sequentially until only projects that will be completed remain. In this paper we evaluate the decision to build new generation facilities in a changing and uncertain regulatory environment. We estimate hazard rates for new power plant projects using a database of generation projects in North America and examine in greater detail the development patterns in California and Texas, two states with very different regulatory regimes. We find that regulatory uncertainty significantly affects the pattern of development in the electric power generation industry.     

Transmission access raises unresolved economic issues

The electric utility industry is in the process of gradual change from a fully regulated industry to one of partial deregulation. Instead of relying on regulation to achieve a fair and equitable price to the consumer for electric energy, the reliance is placed more and more on market forces, through competition, to provide wholesale energy at the best market price. Clearly, open transmission access is required to create a viable competitive wholesale market for new generation resources. This article describes four unresolved, or at least partially unresolved, issues associated with transmission access for wholesale wheeling. Wheeling has been defined as the use of a utility's transmission facilities to transmit power for other buyers and sellers. At least three parties are involved in a wheeling transaction: a seller, a buyer, and one or more wheeling utilities that transmit the power from the seller to the buyer. This article considers wholesale or bulk wheeling only, and does not consider retail wheeling. The four unresolved economic issues described in this article pertain to transmission access: actual cost of providing transmission services; methodology or methodologies used in evaluating the cost of wheeling; contract path versus the actual power flows of the wheel; and issues associated with the formation of transmission regions     

Distributed generation: Semantic hype or the dawn of a new era?

As the electric utility industry continues to restructure, driven both by rapidly evolving regulatory environments and by market forces, the emergence of a number of new generation technologies also profoundly influences the industry's outlook. While it is certainly true that government public policies and regulations have played a major role in the rapidly growing rate at which distributed generation is penetrating the market, it is also the case that a number of technologies have reached a development stage allowing for large-scale implementation within existing electric utility systems. At the onset of any discussion related to distributed generation, one question begs to be answered: is the fact that electric power producing facilities are distributed actually a new and revolutionary concept? Have power plants not always been located across broad expanses of land? The answer to these questions clearly is that electric power plants have always been sited all across the service territories of the utilities owning them. Hence, the opening question: as with many so-called innovations that have been put forward during the recent past, is the entire concept of distributed generation a simple semantic marketing hype or are we actually at the dawn of a new electric power generation era? We believe that a new electric power production industry is emerging, and that it will rely on a broad array of new technologies. This article sets the stage for distributed generation covering such topics as: the present power production situation; what distributed generation is; capability ratings and system interfaces; market penetration of internal combustion engine generators, fuel cells and microturbines; potential generation mix issues, network considerations including power quality, reactive power coordination, reliability and reserve margin, reliability, network redundancy, safety and accountability; public policy and regulatory impact; and standards.     

Power Conditioning Subsystems for Photovoltaic Central-Station Power Plants: State-of-the-Art and Advanced Technology

Through the combined efforts of governmental agencies and laboratories, private organizations, universities and electric utilities, substantial progress has been made in bringing photovoltaic (PV) systems closer to commercial feasibility. The future availability of central station power conditioner subsystems (CS-PCS) that are efficient, safe, reliable, and economical will play a key role in the acceptance of large-scale PV energy by electric utilities. To accelerate the development of such CS-PCS hardware, the Department of Energy's Photovoltaic Division, as part of its Five Year Plan, has established a goal of a reliable, 98 percent-efficient CS-PCS that in volume production will cost $0.07/Wp. This will help make PV power economically competitive with electric power derived from conventional energy sources. Various governmental agencies and private organizations are cooperating to try to achieve this proposed goal. The combination of a dwindling federal budget for PV research and development (R&D), and the reluctance of American industry to accept the high economic risks involved in its own PV R&D efforts, could shift the leading edge of PV-PCS technology development to foreign competition, in general, and to Japanese industry, in particular.     

IEEE Power Engineering Review

This article highlights the significance for US Federal Energy Regulatory Commission (FERC) orders related to electric utilities, and explains their impact on the US electric utility industry. These orders are direct results of government-enacted laws and range from addressing issues of generator open access to transmission lines to the mitigation of restructuring electric utilities' stranded costs. A brief history and legal foundation of FERC is given, as well as an outline of the major tenets of the orders, which include 888 for open access, 889 for the Open Access Same Time Information System (OASIS), and 2000 for regional transmission organizations (RTO). This article includes the progression of these orders and some of the consequences arising from them, as well as their connectivity to the major Acts of Congress related to electric utility regulation and business structures. The contents of this article reflect the essential knowledge required of utility managers regarding the US government's utility regulatory system and the legal foundations that are shaping the development of electric utilities and the direction of management philosophies and practices.     

Demand response in U.S. electricity markets: Empirical evidence

Empirical evidence concerning demand response (DR) resources is needed in order to establish baseline conditions, develop standardized methods to assess DR availability and performance, and to build confidence among policymakers, utilities, system operators, and stakeholders that DR resources do offer a viable, cost-effective alternative to supply-side investments. This paper summarizes the existing contribution of DR resources in U.S. electric power markets. In 2008, customers enrolled in existing wholesale and retail DR programs were capable of providing ∼38,000 MW of potential peak load reductions in the United States. Participants in organized wholesale market DR programs, though, have historically overestimated their likely performance during declared curtailments events, but appear to be getting better as they and their agents gain experience. In places with less developed organized wholesale market DR programs, utilities are learning how to create more flexible DR resources by adapting legacy load management programs to fit into existing wholesale market constructs. Overall, the development of open and organized wholesale markets coupled with direct policy support by the Federal Energy Regulatory Commission has facilitated new entry by curtailment service providers, which has likely expanded the demand response industry and led to product and service innovation.     

Reenergizing the grid: greater regulatory, legislative certainty needed

The North American Electric Reliability Council's (NERC) new reliability standards are an important milestone for the council and the electric power industry. They clarify existing NERC reliability standards, and they create the foundation for adopting enforceable standards. The grid ensure that the nation's retail electricity customers enjoy reliable and affordable electricity service, and it enables the country's evolving wholesale electricity markets. To support both functions in the future, the grid will require more investment. The nation's shareholder-owned electric utilities recognize this need and are building transmission facilities. Even with this new spending, the continually growing demand for electricity, coupled with the expanding number of wholesale market transactions, means that more investment will be necessary. To encourage it, a number of regulatory and legislative policies should be adopted at both the federal and the state level to improve investor certainty and cost recovery.     

IEEE Power Engineering Review

The natural gas and electric industries are currently undergoing the most fundamental transformation in nearly a century, moving from a heavily regulated monopoly structure to an industry based on competition and customer choice. In this paper, the author describes the distribution company (DISCO) of the Future Forum, which is an assembly of 50 industry leaders, and has focused on the challenges faced by electric and gas distribution utilities, the companies with wires and pipes to homes and businesses, under this new paradigm.     

Utilities’ business models for renewable energy: A review

The transformation of today's electric power sector to a more sustainable energy production based on renewable energies will change the structure of the industry. Consequently, utilities as the major stakeholders in this transformation will face new challenges in their way of doing business. They will have to adapt their business models to remain competitive in the new energy landscape. The present review of business model literature shows that two basic choices exist: utility-side business models and customer-side business models. The two approaches follow a very different logic of value creation. While the former is based on a small number of large projects, the latter is based on a large number of small projects. The article reveals that blueprints for utility-side business models are available, whereas customer-side business models are in an early stage of development. Applying the business model framework as an analytical tool, it is found that existing utility-side business models comprise a series of advantages for utilities in terms of revenue potential and risk avoidance. This study provides new insights about why utilities will favor utility-side business models over customer-side business models and why they also should engage in customer-side business models in their quest for more sustainable future business models.     

电价预测技术综述

电力工业从垄断走向市场,使得电价不再由政府确定,而是在市场机制下产生。电价波动会影响市场参与者的经济利益。对电力市场参与者而言,准确地预测电价具有非常重要的意义。该论文以电力系统短期边际价格为主要研究对象。首先分析了电价的变化特点、影响电价的主要因素,明确电价变化的规律性。然后介绍了一些现有因素分析的方法。并对当前电价预测方法按其工作原理进行分类总结,最后根据各类电价预测模型的特点尤其利用神经网络方法建立的预测模型进行了深入分析和总结。     

Building air conditioning system using fuel cell: Case study for Kuwait

Air conditioning machines in Kuwait consume more than 75% of electric energy generated at peak load time. It is in the national interest of Kuwait to decelerate the continuous increase of peak electric power demand. One way to do this is to install for new complexes or high-rise apartments buildings distributed utilities (isolated small power plants), mainly for air conditioning A/C systems. Fuel cells are among the alternatives considered for distributed utilities.This paper discusses the use of commercially available phosphoric acid fuel cell PAFC, known as ONSI P25 to operate air conditioning systems for big buildings in Kuwait.The proposed fuel cell, which is usually delivered with built-in heat exchanger for hot water, is operated by natural gas and uses a propylene glycol-water loop to recover thermal energy. The PAFC has 200 kW nominal electric power capacity, and produces thermal energy of 105 kW thermal energy at 120 °C, and 100 kW at 60 °C.The performance characteristics for the proposed fuel cell are very well documented. In the present study, it is suggested that the fuel cell operates combined mechanical vapor compression and absorption water chillers to utilize the fuel cell full output of electric power and waste heat. Also, to meet the required A/C cooling capacity system by the limited fuel cell power output, it is proposed to use cold storage technique. This allows fuel cell power output to supply the needed energy for average as well as peak A/C system capacity.     

Electric vehicles charge forward

This article reviews the status of electric vehicles/hybrid electric vehicles (EV/HEVs) worldwide and their state of the art, with emphasis on the engineering philosophy and key technologies. The importance of the integration of technologies of automobile, electric motor drive, electronics, energy storage and controls, and the importance of the integration of society strength from government, industry, research institutions, electric power utilities, and transportation authorities are addressed. The challenged of EV commercialization is discussed. EV is a multidisciplinary subject involving broad and complex aspects. However, it has core technologies; chassis and body technology, propulsion technology, and energy source technology. The electric propulsion system is the heart of the EV. It consists of motor drive, transmission and controller, plus the integration with engine power train in the case of the HEV.     

Experience with digital power system stabilizers at steam and hydrogenerating stations

Test results from installations of digital power system stabilizers (DPSSs) at steam and hydro generating stations by two electric utilities in Western Canada are described. Reasons for selecting digital versus analog PSSs are outlined, stabilizer design objectives are listed, and commissioning and test results are included. It is concluded that DPSS has decided advantages over analog types and should be seriously considered as a replacement for existing analog PSSs or for new installations     

Powering T&D sectionalizing switches with photovoltaics: a lowcost option

A joint utility-industry project which involved the installation of new, or the rebuilding of existing, transmission and distribution (T&D) sectionalizing switches powered by photovoltaic (PV) applications at a number of electric utilities is documented. The sectionalizing switch project is described, and PV and conventional power supplies for the switches are discussed. Utility switch installations are detailed and project results are given     

A trilateral brokerage system for power transactions

In this paper, we design and analyse a brokerage system for buyers, sellers and intermediate utilities of electric power. Specifically, we mathematically characterize the determination of bids by buyers and sellers, the matching process of bids, and the selection of the transmission routes by the brokerage system. Moreover, we analyse the cost/benefit to intermediate utilities from the transmission of transacted power. The two key features differentiating this model from the extant literature on electric power transmission pricing and brokerage systems are: (1) multiple purchase and sale bids from potential buyers and sellers; and (2) the systematic determination of transmission routes by minimizing the total cost to intermediate utilities. The improvement in economic efficiency (measured in terms of cost savings) is demonstrated via a series of numerical examples. ©1997 John Wiley & Sons, Ltd.