Week 3-4 Flashcards
Base load
minimum amount of power that to meet minimum demand, load that is always on
Intermediate load
portion of the load that predictably rises from low point to the high point of daily demand.
Load-following
Occurs during intermediate load times, when technology has to be ramped up/down to meet this demand.
Electric Grid
= power
o Purpose: provides power and energy demanded at high reliability and low cost
o The grid matches daily supply and demand
o Grid = Natural Monopoly
Natural Monopoly
o “decreasing cost industry” – it is always cheaper to add more people onto the existing vendor than it is to find a second source
o it’s the most economic to have only one provider = monopoly
Rules for Grid operation
- Electricity supply must always equal electricity demand
- Small failures in one part of system cascade through the system. Because if simultaneous linkages, a small failure in one part of the system can cascade through the rest, triggering even larger shortfalls
- System failures are very damaging. Cascading events can result in complete loss of service, blackouts, or lower delivered voltage, brownouts, which harms services and economic activity and damages devices
PUCHA
=Public Utility Holding Company Act (1934)
o State regulators engaged in a regulatory bargain with utilities and rate payers and established the Public Utility Holding Company Act (PUHCA – 1934) as well as the Federal Power Act (1935), which led to more closely governed utilities but recognized natural monopoly economics by allowing single operator distribution networks. This resulted in universal electrification in the US and build today’s national grid system, as utilities could operate with more certainty and regulators had increased planning and system oversight.
Challenges/Constraints for the grid
o LT capacity margins are still inadequate (we’re running out of capacity)
o Integration of renewables and nuclear create constraints, because they are intermittent
o Regulatory constraints: meet air quality standards, use less water (thermal PPs require a lot of water)
o Transmission situation needs further work
o Aging workforce presents skills gap (deteriorating intellectual and human capital)
Reserve margin
Margin on top of peak demand
PUC
= Public Utilities Commissions
o State entities
o Governance and oversight (e.g. COSR (rev. determination), rate base and rate design)
o Funding decisions of the utility
o Establish rules for integrated resource planning (IRP)
o Meeting env./social objectives
o Maintaining operator reliability
o Ensuring dual goals of grid regulation: cost efficiency & highest service availability
FERC
=Federal Energy Regulatory Commission
o Integrated network oversight. Ensure functioning wholesale & transmission markets:
o They regulate
• Wholesale generation
• Wholesale power
• Wholesale transmission
o Independent government agency
o Created non-profit NERC = North American Electric Reliability Corporation
• NERC manages Bulk Power Systems (BPS) reliability
• In charge of: system reliability and resource adequacy
• At regional level, this is done by RRCs= Regional Reliability Councils
NERC
=North American Electric Reliability Corporation
• In charge of: system reliability and resource adequacy
NERC manages Bulk Power Systems (BPS) reliability
• It’s been created by FERC
• It’s a non-profit
PURPA
= Public Utility Regulatory Policies Act (1978)
o Increased competition, as vertically-integrated utilities were abundant
o Allowed access by third-party generators
o This process changed the structure of regulated utilities, also referred to as deregulation, structuring or liberalization
Unbundling
to introduce competition in electricity delivery, distribution functions were separated from transmission and generation = unbundeling
o T&D stays a natural monopoly
o Generation = free market
IOU
Investor owned utility
POU
Publicly owned utility
ISO
Independent System Operators (Optimization of system)
RTO
Regional Transmission Organizations
- administer the transmission grid on a regional basis
Vertically-integrated utilities
Do everything: generation, T&D, demand-side & optimization
Electricity supply chain risks
o Supply risks • Resource availability • Intermittency • Resource predictability • Water requirements o Demand side • Load uncertainty • Changing demand patterns o Capital risks: • Physical capital constraints, like loss of generator access, loss/ congestion of transmission, cascading failures, adequate reserve margins, system security • Regulators risks • Human capital risks • Financial capital constraints
Spinning reserves
Generation reserves required to be available and able to provide rapid replacement in case of unexpected loss of generation capacity
Operating reserves
Reserves required to ensure that sufficient assets are in place to meet the needs of customers (includes spinning and non-spinning reserves)
Bus-Bar
Points that connects a generator to the grid and generally used as points to measure cost & price of electricity
Dispatch
The combination of all the different technologies to generate electricity to meet the load
Stranded costs
When competitive markets are set up, certain assets may become uneconomic or no longer needed - > these asset are called stranded assets. The associated investments that are paid off over years (like debt) and these ongoing costs are called stranded costs.
Control area
Refers to ISO territories.
Reliability
Likelihood that the asset will be in service when needed
Intermittency
Resource availability risk relating to kinetic energies such as those from wind, sun and wave sources. It’s a POWER PROBLEM. 3 types: a) seasonal: winter vs. summer b) diurnal: day & night c) cloud-induced: minute to minute
Resilience
Threats and external shocks that various uncertainties create for the grid
Hardening
Means of protection against natural or man-made loss of asset use
Capacity factor
The ratio of a plant’s actual output over a period of time, divided by the corresponding potential maximum output when operating at full nameplate capacity
LCOE
o LCOE tells us the cost at the bus-bar Consists of 4 main components o Overnight costs: capital costs o O&M: • Fixed: costs to maintain the plant • Variable: costs for each additional kwh once you start generating o Fuel costs And LCOE has four main assumptions: o Discount rate: in many cases the WACC • WACC= cost of debt and equity financing o Discount period o Heat rate: amount of energy used by an electrical generator or power plant to generate one kilowatthour (kWh) of electricity; a lower Heat Rate is better o Capacity factor
LCOE is sensitive to: fuel price assumptions, discount rate/period assumptions, overnight costs assumptions
Main issues with LCOE:
o Inherent forecasting risk
o False comparisons when fungability is not considered
Bus-Bar Costs
Also referred to as LCOE
WACC
Cost of debt and equity financing. In efficient markets, the WACC should approximate the overall risk that the market perceives in the investment
Heat rate
Amount of energy used by an electrical generator or power plant to generate one kilowatthour (kWh) of electricity, a lower heat rate is better
Wholesale Electricity Markets
market structure = “bid-based”, security-constrained, economic dispatch with nodal prices. Only for dispatchable sources.
• When procuring electricity in the wholesale market operators consider:
o Unpredictability of load
o Purchasing reliability and quality (dispatchability of capacity)
o Locational pricing: options zonal pricing (=same price across entire control area) or nodal pricing (=pricing at numerous transmission hubs within territory – better to account for cost of transmission over long distances)
o Purchasing low-cost energy supply (merit order)
Organized Markets
Markets where energy resources are bid and dispatched in hourly and daily auctions, and are operated by RTOs and ISOs.
Type of markets:
o Organized wholesale markets tend to use Dutch auction, which allows people to bid at marginal cost.
o Forward markets = markets where electricity is procured in advanced through bilateral contracts at a fixed price
o Day-ahead market = market for electricity to be supplied the next day (based on forecasts of load, set in hourly)
o Real-time market = market to obtain electricity in real time (time lag between a few minute to a couple of hrs)
Bid Stack
All generation capacity bid into the wholesale market ordered from lowest to highest marginal cost in the electricity market.
ONLY ST VARIABLE costs are bid.
• X-axis: MW – width of stack = quantity
• Y-axis $/MW
• Less stacks on graph can mean industry consolidation
Load duration curve
Stacks up all hours of the year from highest load to lowest
Capacity market
o markets where forward capacity 3+ years out can be bought and owners of generators can get contracts to sell capacity at a future date.
o Ensures long-term grid reliability
Marginal Cost
cost generated by the production of an additional unit of output evaluated at the a level of output
Merit order
Purchasing low-cost energy supply
Supply Stack
Aggregation of all bids of supply in the wholesale market, ranked by price
o Typical supply stack has very low price elasticity, only at very high demand elasticity is high
Rate case
Utilities have to present their general rate case to regulator to determine the appropriate and allowable costs that can be allocated to the customer.
Prime mover
Machines that are used to transfer primary kinetic and potential energy sources into directed and concentrated forms to produce mechanical work
Fukoshima risk
low probability but high impact event risk that must be considered in any risk technology
Power Take-off (PTO)
any of several methods for taking power from a power source, such as a running engine, and transmitting it to an application
Reprocessing
refers generally to processes necessary to separate used nuclear fuel into material that may be recycled for use in new fuel and material that would be discarded as waste
Induced seismicity
minor earthquakes that are caused by human activity
Run-of-river
is hydro power on a small scale, usually without large water storage capacity.
CHP
= combined heat and power
o use of a heat engine power station to generate electricity and useful heat at the same time
o A type of distributed generation, which, unlike central station generation, is located at or near the point of consumption.
How to know whether electricity system works?
o Price signals
o Outages
o Entries & exists of players
o Volatility in system
Fundamental constraints in electricity system
o Objectives: high reliability at lowest price
o Emissions
o Environmental, social constraints
o Universal access
Credit rating
assessment of credit worthiness of a borrower
Emissions
Production or discharge of something, usually gas
Unsubsidized LCOE
LCOE only considering the 4 cost components, excluding any subsidies (Fit, cabon price)
Subsidized LCOE
LCOE taking into account subsidies, e.g. Fit, carbon price. Should be used when comparing LCOEs.
Coal-by-Wire
Coal by wire (generation at mine mouth) avoids coal shipment costs
Scheduling
=electricity procurement. Describes intermediate step btw operation/capacity planning (6m- 10 yrs ahead) and system balancing ( Scheduling= day ahead scheduling to dispatching (15 min - day ahead).
Flood control
Methods of reducing or preventing negative impacts of flooding; e.g. hydropower acting as flood control through the creation of a dam
