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The Electricity Industry Flashcards

1
Q

The history of evolution of energy industries

Beschreibe die Geschichte durch Nennung von 4 Evolutionsschritten mit der jeweiligen zeitlichen Einordnung

A
  1. Highly competitive markets
    –> End of 19th century
  2. Integrated, monopolistic industry (1920)
  3. Reforms and restructuring (1980)
  4. Re-emergence of government interventions (Late 2000s)
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2
Q

Ab 1980 Reforms and restructuring:

  • ?(1)? deintegration of the power industry
  • competition as a means to deliver ?(2)? and ?(3)? electricity
A

(1) vertical

(2) reliable

(3) cheaper

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3
Q

siehe Folie 4

A

…

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4
Q

Utilities historically have been integrated across upstream and downstream functions in electric power

  1. Generation (Upstream)
    -> Produce power
  2. Transmission (Downstream)
    -> Transmit power over long distances
  3. Distribution (Downstream)
    -> Deliver power locally to customers

–> Folie 5 ansehen!!

A

…

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5
Q

Utilities historically have been integrated across upstream and downstream functions in electric power operating as ?(1)? and earning ?(2)? under cost of service tariffs.

A

(1) monopolies

(2) regulated returns

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6
Q

Name the obligations included in this relationships:

1) Integrated Utility -> Customer

2) Regulator -> Integrated Utility

3) Customer -> Integrated Utility

4) Regulator -> Customer

A

1) Obligation to serve

2) Monopoly franchise and fair rate of return

3) Obligation to pay prudently incurred costs

4) Guaranteed reliable service at reasonable rates

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7
Q

Utility restructuring has ?(1)? the electric power value chain and ?(2)? many activities.

A

(1) “unbundled”

(2) deregulated

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8
Q

Technical System

Physical System

Business System

–> Folie 7

A

…

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9
Q

Name the 5 steps of the business system

A
  1. Generation
  2. Trading
  3. Transmission
  4. Distribution
  5. Supply/Retail

-> National and European regulations involved

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10
Q

The full competition model means the breaking up of the value chain (-> also quasi “unbundling”)

Wie wurden die 3 steps (Generation, Transmission und Distribution) entflechtet? (Nenne die 5 Steps)

A
  1. Generation
  2. Wholesale trading
  3. Transmission
  4. Distribution
  5. Retail / Supply
  6. Customer
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11
Q
  1. Generation
  2. Wholesale trading
  3. Transmission
  4. Distribution
  5. Retail / Supply

–> gib jeweils die Marktform an

A
  1. Competition possible
  2. Competition possible
  3. Natural monopoly
  4. Natural monopoly
  5. Competition possible
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12
Q

What are the primary objectives of regulation for the sectors “Generation” and “Wholesale trading”? (2)

A

Ensure competition

Ensure compliance with market rules

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13
Q

What are the primary objectives of regulation for the sectors “Transmission” and “Distribution”? (3)

A

Regulate tariffs and remuneration of operators

Ensure non-discriminatory access to grids

Ensure compliance with performance standards

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14
Q

What are the primary objectives of regulation for the Retail/Supply sector? (3)

A

Ensure competition

Ensure compliance with market rules

Protect certain categories of customers

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15
Q

There are different types of unbundling

–> FOLIE 9 ansehen !!!

A

…

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16
Q

International development

Liberalization of wholesale and retail markets

Overview Folie 10

A

…

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17
Q

Status of market liberalization worldwide

Globally the status of market liberalization varies - wholesale market that are fully competitive comprise ?(1)? % of global demand, with further ?(2)? % having some form of hybrid competition (e.g. unbundle generation)

A

(1) 40%

(2) 47%

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18
Q

Status of market liberalization worldwide

Retail markets are liberalized higher than wholesale markets

True / False?

A

FALSE

LESSER !

(22% of global demand and 45% partially competitive)

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19
Q

Status of market liberalization worldwide

Which country/region has the greatest degree (wholesale-wise)?

A

EU (93%)

(America (48%), Asia (18%) -> China dispatch reform 2019 and Middle East & Africa 0%)

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20
Q

Market liberalization process in EU: energy packages in a nutshell

What did the first package include (Dir. 1996/92 (E) - 1998/30 (G)?

A

Unbundling of Generation/Supply

Accounting Unbundling of DSOs/TSOs vs Generation / supply

Retail market opening: Progressive, starting from large consumers

NRAs -> no provision
(NRAs: National Regulatory Authority)

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21
Q

DSOs (Distribution System Operators) = was im deutschen?

A

Verteilnetzbetreiber

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22
Q

TSOs (Transmission System Operators) = was im deutschen?

A

Übertragungsnetzbetreiber

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23
Q

Market liberalization process in EU: energy packages in a nutshell

What did the second package include (Dir. 2003/54 (E) - 2003/55 (G)? (3)

A

Functional Unbundling of DSOs/TSOs vs Generation/supply

Retail market opening:
- Since 1/07/04 all non HH costumers
- Since 1/07/07 full opening

Creation of independent NRAs

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24
Q

Market liberalization process in EU: energy packages in a nutshell

What did the third package include regarding the Unbundling process (Dir. 2009/72 (E) - 2009/73 (G)?

A

Unbundling:
- three alternative models for TSOs: OU, ISO e ITO
- EU Grif Development Plan (TYNDP by Entsos)

(OU: Ownership unbundling)

(ISO: Independent System Operator)

(ITO: Independent Transmission Operator)

(ENTSO-E/G: European Network of Transmission System Operator of Electricity/Gas)

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25
Market liberalization process in EU: energy packages in a nutshell What did the third package include regarding retail market opening and NRAs (Dir. 2009/72 (E) - 2009/73 (G)?
Retail market opening: - Consumer protection measures - Vulnerable customers NRAs: - EU Energy regulator (ACER) - Greater powers to NRAs
26
Market liberalization process in EU: energy packages in a nutshell With the III package the Commission wished to complete the liberalisation process with what? (2)
more stringent rules on unbundling greater powers to regulators
27
At a global level, ?(1)? is the dominant fuel for power generation, however its share fell 1.3 to 35,1% in 2020.
(1) coal -> Grafik Folie 14
28
Electric generation mix varies widely according to "home" resource -> regional electricity generation by fuel (FOLIE 15!)
...
29
Generation (1.Step of the Business system) focuses on what?
building and operating a portfolio of power plants
30
Generation (1.Step of the Business system) Tasks: ?(1)?
Operation of power plants to convert fuel into electricity
31
Generation (1.Step of the Business system) Key activities: ?? (4)
Planning of power plant portfolio (where, when, type, size, ownership) Plant development and engineering Operations Maintenance
32
Generation (1.Step of the Business system) Challenges: ?? (4)
Environment protection and emissions trading Decentralization of power generation Nuclear discussion Cost pressure
33
Generation (1.Step of the Business system) Players: ?? (2)
Former integrated utilities Independent power producers (IPPs)
34
Generation (1.Step of the Business system) What are the Critical Success Factors here? (4)
Capex-long term portfolio development Cost efficiency (fuel, conversione, O&M) Maximize / optimize production volumes respect environmental constraints
35
Power investment increased by around 12% in 2022 to USD 1.1 trillion with 2023 expected to see further growth. -> FOLIE 18!
...
36
Over the last 40 years, China and India have consistently increased their electricity generation per capita siehe FOLIE 20!
...
37
Trading captures arbitrage opportunities in geographies over time or between commodities
...
38
Trading (2.Step of the Business system) Tasks: ?? (1)
Optimization of risk return ratio
39
Trading (2.Step of the Business system) key activities: ?? (4)
fuel sourcing asset-backed trading proprietary trading structured products/origination
40
Trading (2.Step of the Business system) Challenges: ?? (4)
Geographical flexibility (physical vs. financial markets) time flexibility (spot vs. forward markets) volatility of prices new commodities (i.e., wether derivatives)
41
Trading (2.Step of the Business system) Players: ?? (4)
Power generators Banks Fuel suppliers Power retailers
42
Trading (2.Step of the Business system) Critical Success Factors: ?? (3)
Optimize risk / return function Hedge physical & financial position Portfolio optimization
43
Trading platforms - Overview --> Folie 22!
...
44
Transmission manages the super-high voltage grid and assures the transport at the ?? level.
European
45
Transmission (3.Step of the Business system) tasks: ? (1)
Transport of electricity on super-high voltage grid
46
Transmission (3.Step of the Business system) key activities: ? (4)
Asset management network development operations and maintenance Tariff-setting
47
Transmission (3.Step of the Business system) Challenges: ? (5)
Cost pressure Facilitate expanding trading Integrating fluctuating output of renewables-based technologies Geographical expansion of the synchronized system Level of unbundling
48
Transmission (3.Step of the Business system) Players: ??
National or regional transmission system operators (TSOs)
49
Transmission (3.Step of the Business system) Critical Success Factors: ?? (4)
capacity planning minimize dispatching costs reliability minimize Opex
50
Overview of all TSOs in UCTE (Union for the Co-ordination of Transmission of Electricity) --> siehe Folie 24!!
...
51
The transmission and distribution infrastructure connects ?(1)? and ?(2)?
(1) generators (2) end users
52
Beschrifte die Abbildung auf Folie 25 korrekt !!!
....
53
The distribution system is organized on hierarchical levels Name the 4 levels!
Transmission: Extra-high-voltage-sector (over 220kV lines) -> scale: "Europe" Distribution: High-voltage sector (110 kV lines) -> Scale: "The region" Medium-voltage sector (6-60 kV lines) -> Scale: "The district" Low-voltage sector (230 V, 400 V lines) -> Scale: "The street"
54
?? manages the super-high voltage grid and assures the transport at the European level
Transmission -> Folie 27
55
Today 93 GW of cross-border transmission capacity and 23 GW under construction by 2025 -> Abbildung Folie 28
...
56
Operation of transmission and distribution systems varies across Europe -> Overview siehe Folie 29
...
57
There are net providers and net importers in highly interconnected markets Country A: Net provider of capacity -> Country A has excess capacity. It exports to country B until it would have to curtail loads as well. Country B: Net importer of capacity -> Country B has not enough reliable capacity to meet peak load. It imports from country A. Some load has to be curtailed -> Folie 30 ansehen!!
...
58
An example of cross-border flow French cross-border weekly scheduled flows -> siehe Folie 31
...
59
Regional transmission organization A regional transmission organization (RTO) in the United States is an electric power transmission system operator (TSO) that coordinates, controls, and monitors a multi-state electric grid The transfer of electricity between states is considered interstate commerce, and electric grids spanning multiple states are therefore regulated by the Federal Energy Regulatory Commission (FERC) An independent system operator (ISO) is similarly an organization formed at the recommendation of FERC. In the areas where an ISO is established, it coordinates, controls, and monitors the operation of the electrical power system, usually within a single US state, but sometimes encompassing multiple states. RTOs typically cover a large geographic area --> Folie 32! (North America)
...
60
Projects of common interest - cross-border interconnection Between 2014-2020, Euroean Comission has allocated EU funding to 149 energy cross-border infrastructure Actions for a total amount of €4.7 billion, contributing to the implementation of 107 PCIs By April 2021, around 81 of Actions have been already implemented. € 1.7 bn have been devoted to electricity transmission infrastructure --> Abb. Folie 33
...
61
Distribution (4.Step of the Business system) Tasks: ??
Transport of electricity over the high-to-low voltage grid
62
?? connects widespread generation and customers to the transmission grid and manages grids on a series of voltage levels.
Distribution
63
Distribution (4.Step of the Business system) Key activities: ?? (5)
Asset management Network development Operations and maintenance Tariff-setting Metering (sometimes) (Deutsch: Messung)
64
Distribution (4.Step of the Business system) Challenges: ?? (6)
Cost pressure Decentralized generation Unbundling Demographical shift Energy efficiency Smart Grid / Metering
65
Distribution (4.Step of the Business system) Players: ??
Regional or local distribution system operators (DSOs)
66
Distribution (4.Step of the Business system) Critical Success Factors: ?? (4)
Quality of supply Planning capex expansion Minimize Opex (O&M) Reduction of technical and commerical losses (fraud)
67
Level of DSO concentration The complexity of the system to move electric power from the point of production to the point of consumption combined with variations in weather, generation, demand and other factors provide many opportunities for the quality of supply to be compromised. To function in their intended manner (i.e. without significant performance losses) distribution grids require good quality electrical power with following characteristics: ?? (4)
stable continuity of service low harmonic content low variation in voltage magnitude (-> voltage magnitude: Spannungsgröße) low transient voltages and currents (-> geringe transiente Spannungen und Ströme -> Transiente Spannungen und Ströme sind wohl kurzzeitige, vorübergehende Zustände in einem elektrischen System, die durch plötzliche Änderungen, Schaltvorgänge oder andere Störeinflüsse verursacht werden können. Ein System mit niedrigen transienten Spannungen und Strömen ist weniger anfällig für Störungen oder Schäden durch solche vorübergehenden Ereignisse)
68
Quality of power supply is affected by a number of different dimensions: the most important being: ?? (3)
continuity of supply, voltage quality network losses
69
A plurality of regulatory tools, each of them addressing a specific task, could be the wisest approach. -> Folie 36 durchlesen!!!!!!!!!!!!!!!!!!!!!!!!
...
70
Models of regulation - Rate of return Most common utilities regulation scheme until 80s Increasing capital is a lever to raise revenues (Deutsch -> Die Erhöhung des Kapitals ist ein Hebel zur Steigerung der Einnahmen)) (Averch-Johnson effect, also known as cost padding or gold plating) In order to avoid Averch-Johnson effect, it is necessary to implement controls on the ?? (Ex post assessment of cost acceptability. Allowance of standard cost)
efficiency of investments
71
Models of regulation - Price Cap (RPI-X) Price cap largely used after publication of Littlechild's report (1983) to regulate telecommunications in Britain Price cap (RPI-X) regulation sets limits on price of ?(1)? The price cap, P, for each year is set based on the ?(2)? and an ?(3)?
(1) monopoly services (2) retail price index (RPI) (3) efficiency factor (X)
72
Models of regulation - Revenue Cap 1) The revenue cap method regulates what? 2) Revenue cap regulation is a special case of price regulation, but slightly different in the way it is established This regulatory mechanism incentives to maximize profit by ?(2)?.
1) the maximum allowable revenue that a utility can earn (2) reducing costs
73
Models of regulation Name 3!
Rate of return Price Cap (RPI-X) Revenue Cap
74
Service Quality regulation It is an incentivizing (Anreize schaffender) mechanism that converge to a ??
long-term optimum
75
Service Quality regulation It is the most common OUTPUT REGULATION mechanism True / False?
True
76
Service Quality regulation It represent the necessary counterbalance to the incentive to efficiency (Deutsch: Er stellt das notwendige Gegengewicht zum Anreiz zur Effizienz dar)
...
77
Service Quality regulation If performance is higher than ex ante set standard level Distributors receive premium --> Otherwise what?
distributors pay penalties
78
Service Quality regulation How can the Premium be calculated? (Formel)
Premium [€] = duration of avoided interruption [minutes] * value of lost load [€/MWh] * connected power [MW]
79
Service Quality regulation Folie 38 ansehen!!
...
80
Quality of network services Customer satisfaction depends not only on prices, but also on the quality offered by the regulated companies. What kind of quality is important? (3)
-> Commercial quality (efficiency, time needed to make connections, other services) -> Quality of supply (number and duration of interruptions) -> Contractual agreements between companies and specific clients (specific quality, billing)
81
Quality of network services Old regulatory framework: "Service agreements" as a tool of self-regulation by companies Disomogeneous standards on the territory No incentives / penalties (Anreize / Sanktionen) What does the new regulatory framework after liberalization looks like? (4)
automatic compensation for clients for certain cases (interruptions) Incentives / penalties for the network operator for mismatch with standard Mandatory standards defined by regulator, homogeneous on the national territory
82
Quality of supply results SAIDI describes what?
the total duration of the average customer interruption (mins per client per year)
83
Quality of supply results SAIDI -> Folie 40!!! (different countries in comparison !!)
...
84
Retail (5.Step of the Business system) Tasks: ?? (2)
Sales of electricity to end customers Billing and customer requests/handling
85
Retail (5.Step of the Business system) Key activities: ?? (7)
Electricity sourcing Customer acquisition Pricing Customer service Account management Metering and billing Marketing
86
Retail (5.Step of the Business system) Challenges: ?? (5)
Price pressure Market opening Development of individualized products for business and industrial customers energy efficiency smart metering
87
Retail (5.Step of the Business system) Players: ??
Various types of companies
88
Retail (5.Step of the Business system) Customer segments: ?? (3)
Industrial customers Business customers Residential customers
89
Retail (5.Step of the Business system) Critical Success Factors: ?? (3)
Quality of commercial service Optimization of the cost to serve Metering / billing collection
90
Retail is the face to the end customer and focuses on what?
developing sustainable strategies for different customer segments
91
For the whole year of 2022, wholesale prices in the EU averaged ?? €/MWh, well above other economies
230 --> Folie 43!!
92
Average monthly electricity wholesale prices - day ahead - in seleceted countries in the EU -> Folie 44
...
93
?? prices appears when demand for electricity is lower than expected and variable RES abundant
Negative hourly (Deutsch: Negative Stundenpreise treten auf, wenn die Stromnachfrage niedriger ist als erwartet und variable erneuerbare Energien im Überfluss vorhanden sind. ) -> Folie 45
94
Industrial companies with large annual consumption paid the highest prices in Italy -> Folie 46
...
95
The highest prices were observed in Dublin, Berlini and Rome (The Household Energy Price Index (HEPI) in European capital cities in Eurocents per kWh, Feb 23) -> Folie 47
...
96
?? and ?? activities are natural monopolies and regulated activities, whose remuneration and tariff is defined by the regulator
Transmission distribution
97
Customer satisfaction depends not only on prices, but also on
the quality by the regulated companies
98
key concepts (der lecture) Electricity industry value chain before and after liberlization process Types of unbundling and impact on utilities - Accounting, functional, legal and ownership unbundling Transmission and distribution activities are natural monopolies and regulated activities, whose remuneration and tariff is defined by the regulator Customer satisfaction depends not only on prices, but also on the quality by the regulated companies
...

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