Topic 7 Electricity

Question 1

What factors could be contributing to falling energy demand from UK households?

Answer 1

1. Economic weakness
2. Energy efficiency policy e.g. LED’s
3. Higher Energy prices
4. non-price behavior change

Question 2

What is the inverse of the diversity factor?

Answer 2

The coincidence factor

Question 3

What are the three sections of the load duration curve?

Answer 3

1. Base load
2. Intermediate load
3. Peak load

Question 4

What is unique about the power sector

Answer 4

Difficult to store economically - demand has to be met by modulating supply to meet demand

Question 5

Define load profile

Answer 5

Pattern of electricity usage for a segment of supply market customers

Question 6

Name three plants with high capital costs

Answer 6

Coal, Hydro, Nuclear

Question 7

What do coal and nuclear plants have in common?

Answer 7

Take time to start up and shut down hence not suitable for fluctuating loads of system frequencies

Question 8

Define generation capacity reserve

Answer 8

The additional amount of capacity that has to be maintained at any time in addition to current demand. It allows for errors.

Question 9

What are some issues that indivisibility of capital bring about?

Answer 9

• Booms and busts
• Affect investment decisions
• Economic uncertainties

Question 10

What substances can coal emit?

Answer 10

Carbon dioxide, sulphur dioxide, particulate matter, nitrous oxides, mercury, cadmium and arsenic

Question 11

What is a natural monopoloy

Answer 11

Production of a good or service by a single firm ensures least cost supply (long run average cost declines across all outputs). Another requirement for a natural monopoly is sub additivity.

Question 12

What are issues associated with a monopoly?

Answer 12

1. Price > Marginal cost
2. May choose factors of production in an inefficient manner
3. Rent seeking causes lobbying
4. Product differentiation can be a allocation of resources

Question 13

Define temporary natural monopoly

Answer 13

AC falls over a limited range of output (constant thereafter)

Question 14

What are two problems of integrated utility companies?

Answer 14

1. No incentive to be efficient (pass through rates)
2. No incentive not to over invest in plant capacity (guaranteed return)

Both result in higher cost electricity

Question 15

What would be needed if natural monopolies are acceptable?

Answer 15

1. Marginal cost pricing
2. Public ownership
3. Regulation

Question 16

What are some of the problems with public ownership?

Answer 16

Inefficient, poor labor productivity, poor service

Question 17

What is unbundling?

Answer 17

Separating natural monopoly elements (transport, transmission and distribution) from competitive elements (generation and supply/retail)

Question 18

When was full competition introduced into Britain’s electricity retail market?

Answer 18

1999

Question 19

What did Waddams 2005 conclude?

Answer 19

• A small number of suppliers retain considerable market power
• Prices charged to consumers are significantly above competitive level

Question 20

What does a smart meter do?

Answer 20

A smart meter can tell the occupant of a house or manager of a factory, what the real time cost of electricity is

Question 21

What is a smart grid and what could it do?

Answer 21

An electricity supply network that uses digital communications technology to detect and react to local changes in usage.

Control timing of recharging etc… in order to maintain an overall even electricity load