Electric Power Value Chain

Question 1

Upstream function in electric power

Answer 1

Generation - Produced power using for example solar or nuclear energy at the generations station

Question 2

Downstream functions in electric power

Answer 2

Transmission: transmit power over long distances throug the transmission wires and substation
Distribution: Deliver power locally to customers through distribution wires to the customers

Question 3

How was regulated the earning of an integrated utility years ago?

Answer 3

There was a monopoly franchise that guaranteed reliable service at reasonable rates the integrated utility had the obligation to serve and the customers the obligation to pay prudently the incurrent costs

Question 4

How is the current power value chain?

Answer 4

It is “unbundled”. There are a technical system, a physical system and a business system and the national and European regulations are responsible

Question 5

The 5 power value chain activities are:

Answer 5

• Generation: operation of power plants to convert fuel into electricity
• Trading: optimization of risk return radio
• Transmisision: transport of electricity on super high voltage grid
• Distribution: transport of electricity over the high-to-low voltage grid
• Retail: sales of electricity to end customers, billing and customer requests/ handling

Question 6

Describe the trading key activites, challenges and players

Answer 6

Key activities: Fuel sourcing, asset-backed trading, propietary trading, structures products/ origination

Challenges: Geographical and time flexibility, volatility of prices, new commodities

Players: power generators, banks, fuel suppliers, power retailers

Question 7

Describe the generation task key activities, challenges and players

Answer 7

Task: convert fuel into electricity and operation of power plant

Key activities: planning of the plant portfolio, plant development and engineering, operations and maintainance

Challenges: Environment protection and trading emissions, decentralisation of power generation, nuclear discussion, cost pressure

Players: former integrated utilities, and independent power plant producer

Question 8

Describe the transmission task, key activities, challenges and players

Answer 8

task: to tranport electricity at super high voltages

key activities: asset management, network development, operations and maintenance and tariff setting

challenges: cost pressure, facilitate expanding trading, integrating fluctuating output of the renewables based technologies, geographical expansion of the synchronised system, level of unbundling,
players: TSO = national or regional transmission system operators,

Question 9

Describe the distribution task, key activities, challenges and players

Answer 9

Task: transport electricity over high to low voltage grid

Key activities: Asset Management, network development, operations and maintenance, tariff setting and metering (sometimes)

Challenges: cost pressure, decentralisation generation, unbundling, demographical shift, energy efficiency, smart grid, metering.

Player: DSO = regional or local distribution system operator

Question 10

Describe the retail task, key activities, challenges and players

Answer 10

task: sale of electricity to the end consumer, bill and request handling

key activities: electricity sourcing, customer acquisition, pricing, customer service, metering and billing, marketing

challenges: price pressure, market opening, development of individual products for business and ind. customers, smart metering
players: var. types of companies