Lecture 1 – Introduction & Energy Foundations Flashcards
What are the drivers for Transition of the Electricity Sector?
- Resource Scarcity
- Climate change
- Society
- Technological change
What are some reasons for drivers for Transition of the Electricity Sector under resource scarcity?
▪ Availability of resources
▪ Competition for resources
▪ Dependence on imports
What are some reasons for drivers for Transition of the Electricity Sector under climate change?
▪CO2 emissions to be reduced
▪ Environmental law
▪ Efficient consumption
What are some reasons for drivers for Transition of the Electricity Sector under society?
▪ People are (more or less) informed
▪ Impact through elections and popular votes
▪ Demonstrations
▪ Acceptance important
What are some reasons for drivers for Transition of the Electricity Sector under technological change?
▪ New technology is developed
▪ Innovations in power-generation
▪ Increase of demand for electricity, e.g. eVehicles
What are the 4Ds of Energy Transition and Energy System Transformation?
- Democratization
- Decentralization
- Digitalization
- Decarbonization
What are 4 key physical properties make electricity a unique commodity?
- Electricity can hardly be stored
- The path followed by electricity is difficult to follow
- Disturbances are quickly transmitted and hard to isolate
- Significant voltage or frequency fluctuations are not acceptable
What are the parts of the Electricity value chain?
- Generation
- Trading (exchange and OTC ie. Over the counter trading currently existing)
- Transmission
- Distribution (Trading on consumer level currently not existing)
- Consumer and services
Which part/s of the Electricity value chain are on the grid side?
- Generation
- Transmission
- Distribution
Which part/s of the Electricity value chain are on the market side?
- Trading
Which part/s of the Electricity value chain are on the demand side?
- Distribution
What are the 2 main concepts of portfolio theory?
➢ investor goal is to maximize the return for any level of risk
➢ Reduction of risk by creating a diversified portfolio of assets
Why do electricity producers use financial methods in energy economics?
➢Liberalization of electricity market means: more competition (on production and retail market), more uncertainty sources
➢Market risks – regarding future electricity demand as well as supply, development of electricity and fuel prices
➢Regulatory risks – environmental and energy regulations, market design
➢Changes in power generation mix – increase of renewable energy technologies in power generation
Why do electricity producers apply portfolio theory to power generation assets?
➢ The optimal diversification of different power generation technologies from an economic as well as a resource availability point of view is an important issue for energy planners
➢ helps by reducing the number of alternatives to be considered
➢ Asymmetrical risk measures, such as semi-variance or semi-mean absolute deviation, reflects investor’s real losses and simplifies the calculation
➢ Regulatory change is an important element of uncertainty that has to be taken into account in the investment decision-making process
Why is the smart grid more complex?
• Different distributed resource (DR) equipment
• Sudden line drops when loosing DR
• Safety issues with grid switching and islanding
• Interoperability between different protocols
What are the properties of a traditional power grid?
▪ Centralized generation
▪ Hierarchical topology following “top-down philosophy”
What are the properties of the future power grid?
▪ Decentralized generation
▪ Cellular “bottom-up” approach
What is the voltage level for transmission?
Extra-high-voltage sector
What are the voltages for distribution?
- High voltage sector (60-220 kV, typically 110 kV)
- Medium voltage sector (6-60 kV, typically 10/ 20 kV)
- Low voltage sector (400/ 230 V)
What is the technical problem with low voltage grids?
Coordination of renewable generation devices ➔Technical problem:
− intermittent character of supply
− Supply must equal demand
− Supply independent from demand
What is a technical solution for the problem with low voltage grids?
▪ Decentral storage:
- Batteries at home
- Batteries at the generation device
- Thermal storage (cold storage house, fridge)
What is a economic solution for the problem with low voltage grids?
▪ Flexible Demand:
- Price elasticity
- Customers‘ behavior
- Automated control
- Smart buildings
What is the smart grid concept?
The smart grid concept (intelligent electricity supply systems) includes linking and controlling intelligent generation devices, storage, appliances and network equipment by means of information and communication technology. The objective is a transparent and cost- efficient as well as secure and robust system operation and sustainable and ecological energy supply.
What differentiated smart grid from super grid?
▪ Low voltage grid
▪ ICT to link and control devices
▪ Decentral generation
▪ Demand flexibility
What differentiated super grid from smart grid?
▪ Wide area transmission network
▪ High-voltage direct current
▪ Large generation sites
What is an essential component of a smart grid?
Smart meter is an essential component of a smart grid
How does a traditional meter compare to a smart meter?
• Electricity is “double invisible”
• Limited load information
• No price information
How does a smart meter compare to a traditional meter?
• Price signal enable customer response
• Required for improved consumption control
• Better understanding can result in behavioral change
Discuss the Economic viability of energy investments
➢ Capital budgeting and profitability accounting are necessary for assessing the economic viability of energy investments
➢ The methodology for energy investments does not differ fundamentally from other applications, but there exist some unique characteristics of investment in energy technologies, e.g. long planning, construction, and operation periods that make the result of an investment decision strongly dependent on the discounting of future cash flows
➢ Financial appraisal techniques require a forecast of future flows of costs and revenues over the lifetime of the investment
➢ In this context, only the costs and revenues directly associated with the considered investments should be taken into account
Describe the generation technology for super grid?
Large-scalegeneration:
= Conventional power plants (nuclear, coal)
= Renewables (PV, solar thermal, wind)
Describe the generation technology for smart grid?
Decentralgeneration:
= PV and Wind turbines
= (small) CHP plants
How does the grid structure look for super grid?
≡ High voltage transmission system
≡ Wide area transmission network
≡ Centralized supply model
≡ Highcross-system transmission capacity by HVAC or HVDC
≡ Transmission of electricity from generation centers to consumption centers
How does the grid structure look for smart grid?
≡ Low voltage distribution system
≡ Decentralized supply model
≡ Bi-directional low and medium-voltage electric network
≡ Devices and components linked by ICT, controlling distributed generation and loads
≡ Smart Meter necessary
How does the asset ownership look like for super grid?
≡ Generation units mostly owned by big international companies or investors
≡ Grids owned by large grid operating company (TSO)
≡ Existing large-scale institutions with high investment capacities
How does the asset ownership look like for smart grid?
≡ Small generation unit owned by private household, enterprises and communities
≡ Grid owned network provider (DSO)
How does the organisation of a super grid look like?
≡ Centralized and top-down approach
≡ Mainly existing frameworks, regulations and markets
How does the organisation of a smart grid look like?
≡ Decentralized and bottom-up approach
≡ A digitally enabled grid which acts intelligent with the gathered information of the supplier and the consumer to optimize production and consumption of energy by transparency and direct feedback
Strengths of super grid?
≡ Less power reserve necessary
≡ Security of supply
≡ Cheaper electricity generation
≡ Economies of scale in generation and transmission
≡ Top down electricity distribution is maintained
Strengths of smart grid?
≡ Optimizes the energy consumption (peak leveling)
≡ Many small independent power suppliers (private households/ municipalities) → increased competition
≡ Short transmission distance → less losses
≡ More generation flexibility (if one power plant shuts down)
Weaknesses of super grid?
≡ Extension of transmission network necessary → expensive, less acceptance
≡ Electricity supply of a country may depend on electricity generation of foreign countries
≡ Lack of consumer’s sense of accountability for social and environmental consequences resulting from own energy demand
≡ Interoperability of different systems → Requires high coordination and organization effort
Weaknesses of smart grid?
≡ Increased level of complexity
≡ More generation and storage capacity necessary → expensive
≡ Current funding of Super Grid extension reduces financial benefits of Smart Grid
≡ Restructuring of the distribution grid necessary → bi-directional power flow instead of top-down power flow
≡ Privacy concerns
≡ Higher volatility of electricity generation
Risks with super grid?
≡ Large-scale blackouts
≡ Local resistance against planned transmission lines
≡ Political threats
Risks with smart grid?
≡ Privacy concerns reduces acceptability of smart meter roll-out
≡ Hacker and cyber attacks
≡ Distributional justice: increasing electricity prices for consumers who cannot afford distributed energy resources (DER)
