Understanding the dynamics of electricity supply,resources and pollution: Pakistan's case

To meet the compelling demand for electricity, the government of Pakistan introduced reforms in 1990–1991 that provide incentives for private sector investments, particularly in the electric power industry. In response to these incentives, most of the independent power producers (IPPs) offers included oil, coal and/or gas power plants. Hydroelectric generation, despite its rich resource base in the country, did not gain much attraction. This research provides an assessment of the existing policy subject to the constraints of environment concerns and available, but limited, resources. A dynamic simulation model that captures the dynamics of the sectors underlying the electricity system is built using system dynamics methodology. The policy assessment has been carried out in a three-dimensional context: the electricity supply; the resource import dependency; and the evolution of CO₂ emissions. This research finds that the unchanged prolongation of the existing policy seems to effectively attract IPPs investments but not without potentially adverse consequences for the environment and the economy.     

Power sector reform in Maharashtra,India

In early 1990 the power sector in India required an initial set of reforms due to the scarcity of financial resources and its deteriorating technical and commercial efficiency. The Indian power sector is now going through a second stage of reforms in which restructuring of electric supply utilities has taken place. The Maharashtra State Electricity Board (MSEB) initiated reforms in 2005 by dividing the state electricity board into four separate companies. In this paper, the situations that led to the reform of the MSEB and the scope of the work required for an action plan initiated by the state electricity distribution company in the context of the proposed Key Performance Index are discussed. The post-reform status of the distribution company is analyzed with selected key parameters. The study also analyzes the electricity supply model implemented and the effect of a multi-year tariff plan as one of the key milestones of the tariff structure. The various new projects implemented by the distribution company to improve consumer services and the reform experiences of the other states are discussed, along with the future scope of the present reform process.     

Competitive energy markets and nuclear power: Can we have both,do we want either?

In 1987, the UK Conservative Party was re-elected promising to transform the electricity industry into a privatised competitive industry and to promote an expansion of nuclear power. Fulfilling both objectives was not possible. The nuclear plants were withdrawn from the sale and plans to build new plants were abandoned, but privatisation proceeded. In 2007, the Labour government began a new attempt to build nuclear plants to operate in the competitive electricity market, promising that no subsidies would be offered to them. By 2010, the utilities that were planning to build nuclear plants were beginning to suggest that ‘support’ in some form would be needed if they were to build new plants. More surprisingly, the energy regulator, Ofgem, cast doubt on whether a competitive wholesale electricity market would provide security of supply. In 1990, the UK government opted for a competitive electricity market over expanding nuclear power. Now, the option of opting for a competitive electricity market may not exist. However, this might not leave the way open for new nuclear plants. The expected cost of power from new nuclear plants is now so high that no more than one or two heavily subsidised plants will be built.     

Regulatory reform of the electricity industry in Japan: What is the next step of deregulation?

In Japan, competitive bidding for new generating capacity (IPPs) is in progress since 1996. Retail competition was introduced for large customers (contract demand over 2 MW) after March 2000. Although the liberalization is limited in part by the fact that the retail power market has only about 30% share of total electricity demand, the eligible customers now have a choice among the nine major utilities and ten new entrants. Since November 2001, the electricity industry committee has been discussing the next step of liberalization, including the opening of the market for medium-size industrial and commercial high voltage (6 kV) customers from 2004 and 2005 on. This paper presents the experiences so far acquired and the technical issues for further deregulation. The process includes the creation of nationwide power exchange and of a neutral organization to coordinate the transmission system by 2005. The paper deals with the characteristics of the new regulatory reform of the electricity supply industry in Japan during the period of 2003–2007. We show that it is important to understand the complexity of market behavior and design the market reform carefully.     

US electric industry response to carbon constraint: a life-cycle assessment of supply side alternatives

This study explores the boundaries of electric industry fuel switching in response to US carbon constraints. A ternary model quantifies how supply side compliance alternatives would change under increasingly stringent climate policies and continued growth in electricity use. Under the White House Climate Change Initiative, greenhouse gas emissions may increase and little or no change in fuel-mix is necessary. As expected, the more significant carbon reductions proposed under the Kyoto Protocol (1990—7% levels) and Climate Stewardship Act (CSA) (1990 levels) require an increase of some combination of renewable, nuclear, or natural gas generated electricity. The current trend of natural gas power plant construction warrants the investigation of this technology as a sustainable carbon-mitigating measure. A detailed life-cycle assessment shows that significant greenhouse gas emissions occur upstream of the natural gas power plant, primarily during fuel-cycle operations. Accounting for the entire life-cycle increases the base emission rate for combined-cycle natural gas power by 22%. Two carbon-mitigating strategies are tested using life-cycle emission rates developed for US electricity generation. Relying solely on new natural gas plants for CSA compliance would require a 600% increase in natural gas generated electricity and almost complete displacement of coal from the fuel mix. In contrast, a 240% increase in nuclear or renewable resources meets the same target with minimal coal displacement. This study further demonstrates how neglecting life-cycle emissions, in particular those occurring upstream of the natural gas power plant, may cause erroneous assessment of supply side compliance alternatives.     

Expanding electricity capacity in Thailand to meet the twin challenges of supply security and environmental protection

Rapid growth in electricity demand in Thailand is a major challenge for electric utilities trying to ensure adequate supply. Continued reliance on natural gas for power supply makes the supply mix non-diversified and exposes the country to supply risks while a diversification to other fossil fuels imposes additional environmental burdens. To find an acceptable solution to this twin challenge, this paper assesses four scenarios of electricity capacity expansion planning for Thailand for the period between 2011 and 2025 under two different assumptions of fuel prices to reflect the case of international high oil price affecting cost of fuels for power generation in Thailand. It is found that the lowest environmental emissions are obtained from the scenario where power generation is highly dominated by natural gas. In contrast, the least cost electricity generation is achieved from the case if nuclear power plant is added into the Thai power system. Reliance on natural gas for power generation increases the spending on gas purchase as a share of the gross domestic product (GDP)—between 2.38% and 3.61% of (GDP). In addition, fuel import dependence, particularly for natural gas and coal, increases exposing the country to possible price volatility.     

Nigeria's electric power sector reform: what should form the key objectives?

Nigeria's electric power sector requires substantial reform if the country's economic development and poverty alleviation program is to be realised. This understanding is behind the reform programme recently initiated by the Nigerian government with the goal of privatising the national electric power monopoly, NEPA. Currently, the country faces serious energy crisis due to declining electricity generation from domestic power plants which are basically dilapidated, obsolete, unreliable and in an appalling state of disrepair, reflecting the poor maintenance culture in the country and gross inefficiency of the public utility provider. Building on an analysis of the major shortcomings of the current electric power company, this paper presents the central issues that should form the key objectives of the proposed reform. This include corporatization of the electric power industry, increasing access and power delivery capacity, constraining the costs of the power industry and increasing efficiency and share of renewables in energy generation, as well as minimising environmental damage. We conclude with the observation that efforts at reform will not yield the desired result if the current end-user inefficiency is not constrained. As Nigeria implements its national utility privatisation programme, it is hoped that this review will benefit policy makers and emerging managers and providers of electricity service in the country.     

Welfare impacts of electricity generation sector reform in the Philippines

This paper reports an empirical investigation into the welfare impacts of the introduction of private sector participation into the Philippines electricity generation sector, by liberalizing the market for independent power producers (IPPs) during the power crisis of 1990–1993. This study uses a social cost and benefit analysis. The main benefits came from IPPs, who contributed to resolving the crisis, and promoted economic and social development. Consumers and investors were net gainers, while the government lost and there was an air pollution cost. The paper concludes that the reform with private sector participation increased social welfare.     

The role of a paper mill in a merged district heating system

Recent studies have shown that there is great potential benefit in utilities collaborating around heat supply. Analyses based on an extended system boundary clarify the advantage of mutual co-operation in the district heating markets. The purpose of this study is to show how far a local paper mill affects the degree of co-operation between two utilities. Current and future electricity prices and existing and potential plants are considered in the different scenarios in the study. The results in all the scenarios clearly show that the paper mill plays an active role in an integrated heat supply system. The scenario where co-operation, new plants and future electricity prices are considered, gives the lowest total system cost. A new back pressure turbine with a higher electricity-to-heat output ratio in combination with high trade prices promotes increased electricity and heat generation in the co-generation plant. The proportion of combined heat and power in district heating would increase if co-operation between the players were encouraged.     

The changing role of the State in the expansion of electricity supply in Latin America

Throughout the history of the electricity industry, regulatory reform has been driven by the pursuit of tools able to create conditions that would favour infrastructure investment and, generally, to surmount the obstacles that hinder system expansion. This article addresses the interaction between regulatory schemes and electric power generation investment, with a review of the changing role of the State in the expansion of electricity supply in Latin America. It contains a critical assessment of changes in the regulatory framework since the outset of electric power market reform, describing the successive approaches to regulation adopted in the last three decades. The aim of this analysis is to help identify the key factors underlying the evolution of energy policies and to contribute to the formulation of a prospective view of the direction this evolution may reasonably be expected to take.     

The price of independents: an analysis of the independent power sector in England and Wales

This paper presents a focused analysis of the role of entrants into the electricity generation market since privatisation. It examines subsequent developments in the market and in the industry's structure and performance. The analysis draws heavily upon new information gained from telephone interviews with many of those involved with the so-called “independent power producers” (IPPs), as well as information in the existing literature. Our key finding is that IPP entry has not significantly increased competition and has adversely affected the future viability of the electricity system. We attribute these failures to the very policies that encouraged the initial entry of the IPPs.     

Electricity tariff design for transition economies: Application to the Libyan power system

This paper presents a general electricity tariff design methodology, especially applicable for transition economies. These countries are trying to modernize their power systems from a centralized environment (with normally, a public vertically integrated electric company) to a liberalized framework (unbundling electricity companies and, eventually, starting a privatization process). Two issues arise as crucial to achieving a successful transition: i) ensuring cost recovery for all future unbundled activities (generation, transmission, distribution and retailing), and ii) sending the right price signals to electricity customers, avoiding cross-subsidies between customer categories. The design of electricity tariffs plays a pivotal role in achieving both objectives. This paper proposes a new tariff design methodology that, complying with these two aforementioned criteria, requires a low amount of information regarding system data and customer load profiles. This is important since, typically, volume and quality of data are poor in those countries. The presented methodology is applied to computing tariffs for the Libyan power system in 2006, using real data.     

Distributed generation: An empirical analysis of primary motivators

What was once an industry dominated by centralized fossil-fuel power plants, the electricity industry in the United States is now evolving into a more decentralized and deregulated entity. While the future scope and scale of the industry is not yet apparent, recent trends indicate that distributed generation electricity applications may play an important role in this transformation. This paper examines which types of utilities are more likely to adopt distributed generation systems and, additionally, which factors motivate decisions of adoption and system capacity size. Results of a standard two-part model reveal that private utilities are significantly more inclined to adopt distributed generation than cooperatives and other types of public utilities. We also find evidence that interconnection standards and renewable portfolio standards effectively encourage consumer-owned distributed generation, while market forces associated with greater market competition encourage utility-owned distributed generation. Net metering programs are also found to have a significant marginal effect on distributed generation adoption and deployment.     

对电价再度上调的分析

本文针对我国电力市场供需形势,对国家关于电价再度上调的原因做了分析,指出此次电价再度上调的目的与作用是:国家运用价格杠杆,缓解电力供需紧张状况;解决电力企业经营中存在的困难和问题;加速产业结构调整;营造电力市场化改革的良好环境。文中还提出了国家要抓紧电价的总体改革、研究并及时出台稳定电煤价格、保证电煤供应的有力措施、电力企业要注意提高企业内部科学管理,进一步制定开源节流措施等建议。     

Poland and the EU Electricity Directive

Poland has entered the preaccession phase of the integration process with the European Union (EU). The Polish electric power sector is proving its capability of meeting the challenges posed by the accession and, in the process, may facilitate unavoidable transformation in other areas of the Polish economy. The currently implemented legislation related to the electric power sector in Poland conforms to the IEM 96/9UEC Directive. As a consequence of Polish electric power sector restructuring, separation of generation, transmission and distribution was introduced in 1990. The generation subsector consists of over 30 generation companies, with a total installed capacity amounting to 34000 MW and with gross annual electricity generation amounting to 142 TWh. The transmission subsector is represented by the Polish Power Grid Company as transmission system operator (TSO) and is preparing itself to play the role of the operator in the balancing market. The focus is on a phased opening of the internal electricity market for internal competition, restructuring and privatization of the electric power sector, and fuel supply sectors     

Optimal utilization of renewable energy-based IPPs for industrial load management

Share of power generation from renewable energy sources has been steadily increasing all over the world, mainly due to the concern about clean environment. Cost of renewable power generation has reduced considerably during the last two decades due to technological advancements and at present some of the renewable energy sources can generate power at costs comparable with that of fossil fuels. In this paper, application of renewable energy-based power generation is proposed, for load management. The formulation utilizes non-linear programming technique for minimizing the electricity cost and reducing the peak demand, by supplementing power by renewable energy sources, satisfying the system constraints. Case study of twenty-two large-scale industries showed that, significant reduction in peak demand (about 34%) and electricity cost (about 14%) can be achieved, by the optimal utilization of the renewable energy from independent power producers (IPPs).     

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.     

The politics of power: Electricity reform in India

Ongoing theft, corruption, and an artificially decreased pricing structure have made it nearly impossible for the state utilities in India to improve power service. As a result, industrial consumers across India exit the state-run system and rely on their own on-site power generation in order to ensure a consistent and reliable source of electricity. The 2003 Electricity Act encourages further power production from these captive plants through its open access clause. By encouraging the growth of these captive power plants, politicians in India set up a dual-track economy, whereby state-run and market-run production exist side-by-side. This strategy allows politicians to encourage private sector involvement in the electricity market, without jeopardizing the support of key political constituencies at the state level.     

Pricing of electricity in China

In China, the State Power Corporation (SPC) was the dominant producer and supplier of electric power. Our price estimation results based on published data of the SPC indicate that short run cost factors, like fuel costs and investment expenditure, were more important in the price determination process. Although the power purchase prices paid by the SPC to independent power producers (IPPs) have already covered capital costs, capital costs of generation and transmission assets owned by the SPC were ignored in the process. Our studies indicate that electricity prices in China were highly subsidized and below the average total costs of generation and transmission.