Chapter 1

Question 1

The “energy trilemma”

Answer 1

• econic sustainability
• Security of supply
• environmental sustainability

Question 2

What about money?

Answer 2

• Minimising costs
• Maximising profits
• Maximizing utility or benefits

Question 3

Minimising costs

Answer 3

• operating costs (fuel, personnel, maintenance)

- Investment costs (generators, lines, transformers, switching devices,…)

Question 4

Maximising profits

Answer 4

Competitive electricity markets

Question 5

Maximising utility or benefits

Answer 5

Consumer’s perspective

Question 6

What about reliability?

Answer 6

• operational reliability

- planning reliability

Question 7

Operational reliability

Answer 7

• withstand faults, failures, forecasting errors and other common operational problems
• operate with a security margin

Question 8

Planning reliability

Answer 8

• ability to handle long term problems (units on long-term maintenance, droughts)
• build enough spare capacity

Question 9

Balancing economic competitiveness and reliability

Answer 9

• cost of reliability

- value of reliability

Question 10

Cost of reliability

Answer 10

Providing a security margin and spare capacity costs money:

• run additional generating units to have some operating reserve
• limit production of some generating units to avoid problems in case of a sudden outage
• build additional generators and transmission lines to improve long-term reliability

Question 11

Value of reliability

Answer 11

1. Poor reliability cause consumer outages
2. Outages cause a loss of revenue or comfort
3. Measured using surveys: estimate of cost of latest outages or willingness to pay extra to avoid outages
4. Value of Lost Load(VoLL): average value of a megawatt hour not delivered; estimates range from $2,400 to $20,000->100 times larger than the cost of energy

Question 12

Government energy policy

Answer 12

• Note “pure” economics: markets and companies take a short-term view
• long-term or strategic considerations: reduce dependence on imports
• introduction of competitive electricity markets
• choice of primary energy sources:promotion of wind and Photovoltaik in Germany, nuclear power in France

Question 13

New challenges:”D^5”

Answer 13

1. Deregulation
2. decarbonization/defossilisation
3. decentralisation
4. digitalisation
5. diversification

Question 14

ESI

Answer 14

Energy Systems Integration

Question 15

RES

Answer 15

Renewable energy sources

Question 16

Energy systems integration and deep decarbonization/defossilisation

Answer 16

-rapid expansion of renewable energy sources, in particular solar and wind power, aimed at mitigating carbon emissions, leads to increase in: volatiliy, uncertainty, decentralization

• > increasing system flexibility required
• > Energy Systems Integration supports defossilisation of non-electricity sectors and provision of flexibility

Question 17

Major questions: energy systems integration and deep decarbonization/defossilisation

Answer 17

• impact of ESI on energy demand development by sector and energy carrier?
• impact of ESI on energy demand profiles over time?

Question 18

Traditional model of electricity supply

Answer 18

Monopoly:

1. Generation
2. Transmission
3. Distribution
4. Consumer

Question 19

Variant on the traditional model of electricity supply

Answer 19

Monopoly auf generation and transmission selling electricity to local monopoly discos

Question 20

Disco

Answer 20

Distribution company

Question 21

IPP

Answer 21

Independent power producers

Question 22

ISO

Answer 22

Independent System operator

Question 23

MO

Answer 23

Market operators

Question 24

TSO

Answer 24

Transmission system operator

Question 25

Genco

Answer 25

Large generation company

Question 26

Vertically integrated utilities

Answer 26

• Vertically integrated utilities own generating plants as well as transmission and distribution network
• In a traditional regulated environment, such a company has a monopoly for the supply of electricity over a given geographical area
• following the liberalisation of the electricity markets, its generation network activities are likely to be separated

Question 27

Generating companies (Genco)

Answer 27

• generating companies produce and sell electrical energy
• they may also sell services such as regulation, voltage control and reserve that the system Operator needs to maintain the quality and security of the electricity supply
• A generating company can own single plants or a portfolio of plants or different technologies
• generating companies that coexist with vertically integrated utilities are sometimes called independent power producers

Question 28

Distribution companies (discos)

Answer 28

• distribution company own and operate distribution networks
• in a traditional environment, they have a monopoly for the sale of electrical to all consumers connected to their network
• in a fully deregulated environment, the sale of energy to consumers is decoupled from the operation, maintenance and development of the distribution network
• retailers then compete to perform this energy sale activity
• one of these retailers may be subsidiary of the local distribution company

Question 29

Main electricity market participants

Answer 29

• vertically integrated utilities
• generating companies (gencos)
• distribution companies (discos)
• retailers
• Market operator (MO)
• independent System Operator (ISO)
• transmission company (Transco)
• independent to transmission company (ITC)
• transmission system operators (TSOs)
• the regulator
• small consumers
• large consumers

Question 30

Retailers

Answer 30

• retailers buy electrical energy on the wholesale market and resell it to consumers who do not wish to or are not allowed to participate in the wholesale market
• retailers do not have to own any power generation, transmission or distribution assets
• some retailers are subsidiaries of generation or distribution companies
• all the customers of the retailer do not have to be connected to the network of the same distribution company

Question 31

Market operator (MO)

Answer 31

• A MO typically runs a computer system that matches the bids and offers that buyers and sellers of electrical energy have submitted
• It also takes care of the settlement of the accepted bids and offers
• this means that it forwards payments from buyers to Sellers following delivery of the energy
• The Independent System operator is usually responsible for running the market of last resort, that is, the market in which load and generation a balance in real time
• markets that close some time ahead of real-time are typically run by independent for- profit market operators

Question 32

Independent system operator ISO

Answer 32

• the iso has the primary responsibility of maintaining the security of the power system
• It is called independent because in a competitive environments, the system must be operated in a manner that does not favor or penalize one market participant over another
• An ISO would normally own only the computing and communication assets required to monitor and control the power system
• An ISO usually combines its system operation responsibility with the role of the operator of the market of last Resort

Question 33

Transmission companies (Transco)

Answer 33

• transmission companies own transmission assets such as lines, cables, Transformers and reactive compensation devices
• they operate this equipment according to the instructions of the independent System operator
• transmission companies as sometimes subsidiaries of companies that also own generating plants

Question 34

Independent transmission company (ITC)

Answer 34

independent transmission company is a transmission company that does not own generating plants and acts as an independent System operator

Question 35

Transmission system operator (TSO)

Answer 35

Transmission system operators combine the functions of ISOs with the ownership of transmission assets

Question 36

The regulator

Answer 36

• They regulator is the governmental body responsible for ensuring the fair and effcient operation of the electricity sector
• it determines or approves the rules of the electricity market and investigates suspected cases of abuse of market power
• the regulator also sets the prices for the products and services that are provided by monopolies

Question 37

Small consumers

Answer 37

• small consumers buy electrical energy from the retailer and lease a connection to the power system from heir local distribution company
• their participation in the electricity market usually amounts to no more than choosing One retailer among others when they have this option

Question 38

Including the environment: three-way balancing

Answer 38

1) More complex problems
2) Some environmental effects can be monetised: Operating cost of renewable generation is essentially zero, carbon tax or carbon trading to reflect the effect of CO2 emissions
3) others cannot be monetised: effect of hydro generation on salmons

Question 39

Large consumers

Answer 39

Large consumers, on the other hand, will often take an active role in electricity markets by buying the electrical energy directly through the market.some of them May offer the ability to control the lot as a resource that the ISO can use to control the system.the largest consumers are sometimes connected directly to the transmission system.