Introduction: Energy foundation

Question 1

Which four drivers are there for transition of the Electricity Sector

Answer 1

• Resource Scarcity
• Climate Change
• Society
• Technological Change

Question 2

Energy Transition and Energy System Transformation (4D)

Answer 2

• Democratizition
• Decentralizion
• Digitalization
• Decarbonisation
  *

Question 3

Which 4 key physical properties make electricity a unique commodity?

Answer 3

• 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

Question 4

Electricity can hardly be stored:

Answer 4

The flow of electrons is not “consumed” as usual
commodities, it is just the movement of the particles that
powers on various electrical equipment
* The only way to store electricity is to “prepare” a flow
at a later point in time; this is not simple to do
* Electrical systems require continuous input of
energy to keep electrons moving

An electrical system requires continuous surveillance and adjustment to assure that supply matches demand in real time

Question 5

What are the Strenghts of the Super Grid

Answer 5

≡ Less power reserve necessary
≡ Security of supply (local shortages/peaks can be addressed with capacity from other
areas)
≡ Cheaper electricity generation (generation where LCOE is lowest)
≡ Economies of scale in generation and transmission
≡ Top down electricity distribution is maintained

Question 6

What are the Weaknesses of the Super Grid

Answer 6

≡ 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

Question 7

What are the Risks of the Super Grid?

Answer 7

≡ Large-scale blackouts
≡ Local resistance against planned transmission lines
≡ Political threats

Question 8

How is the Generation Technology in Smart Grids?

Answer 8

≡ Decentral generation:
= PV and Wind turbines
= (small) CHP plants

Question 9

How is the Grid Structure in Smart Grids?

Answer 9

Grid structure
≡ 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

Question 10

How is the Asset Ownership and Organization in Smart Grid?

Answer 10

▪ Asset ownership
≡ Small generation unit owned by private household, enterprises and communities
≡ Grid owned network provider (DSO)
▪ Organization
≡ 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
= The medium to gather consumer information is the Smart Meter

Question 11

What are the Strenghts of Smart Grid?

Answer 11

Strengths
≡ 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)

Question 12

What are the Weaknesses of Smart Grid?

Answer 12

Weaknesses
≡ 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 topdown power flow
≡ Privacy concerns
≡ Higher volatility of electricity generation

Question 13

What are the Risks of theSmart Grid?

Answer 13

Risks
≡ 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)

Question 14

Why electrity producers use financial methods in energy economics?

Answer 14

• Liberalisition of electricty market
• Market Risks
• Regulatory Risks
• Changes in Power generation mix

Question 15

The path followed by electricity is difficult to follow

Answer 15

Electrons follow the path of least resistance (i.e., it would
flow through a wet tree to the ground if its branches
touched the transmission line)

Interconnected utilities must cooperate and coordinate
operations, as the actions of one may cause electrons
to flow into/out of the others’ system

Question 16

Disturbances are quickly
transmitted and hard to
isolate

Answer 16

• The electricity flow on electrical lines moves at the speed
  of light (300 meters/µsecond)
• Disturbances travel just as quick and go fast throughout
  the whole interconnected system
• Isolating a disturbance could be done only by breaking
  the circuit

System operators must be prepared to react almost
instantly to outages and variations in supply and demand

Question 17

Significant voltage or frequency
fluctuations are not acceptable

Answer 17

The voltage and frequency levels have to be kept almost
constant, to protect the units in the electricity delivery
system
* Electric devices don’t tolerate fluctuations in voltage
or frequency

Question 18

Write the characteristics of a traditional power grid

Answer 18

▪ Centralized generation (Generation highly
concentrated and “totally” under control)
▪ Not designed to allow “up-stream” power flow
▪ Hierarchical topology following “top-down philosophy”
▪ Load is statistically predictable
▪ Load-driven system
▪ Power flow from transmission to distribution is
unidirectional
▪ Distribution is a totally passive system

Question 19

What are the characteristics of a future power Grid?

Answer 19

▪ More Decentralized generation
▪ Bi-directional power flow
▪ Cellular “bottom-up” approach
▪ Renewable sources are not totally predictable
(uncertainty) and not under control
▪ Generation-driven system
▪ Power injection occurs also at distribution level
(bottom-up power flow)
▪ The system is characterized by higher dynamics and
low physical inertia

Question 20

How is the Generation technology and the grid Structure of Super Grid?

Answer 20

**▪ Generation technology
**≡ Large-scale generation:
= Conventional power plants (nuclear, coal)
= Renewables (PV, solar thermal, wind)
▪ Grid structure
≡ High voltage transmission system
≡ Wide area transmission network
≡ Centralized supply model
≡ High cross-system transmission capacity by HVAC or HVDC
≡ Transmission of electricity from generation centers to consumption centers

Question 21

How is the Asset Ownership in a Super Grid?

Answer 21

≡ 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

Question 22

How is the Organization in a Super Grid?

Answer 22

Organization
≡ Centralized and top-down approach
≡ Mainly existing frameworks, regulations and
markets
≡ Two examples for super grids are the solar
Super Grid in the south of Europe/North
Africa and the Offshore Super Grid in the
North Sea in Europe

Question 23

What are the two main concepts of the Portfolio theory?

Answer 23

Two 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

Question 24

The market is …. and all investors have free access to fair and correct information about the stock market

All investors are ….. and try to …… the risk

All investors are ….. and try to ….. their rate of return

Investors prefer higher returns to lower returns for a ….. risk

Investors can ….. their risk if they add investment to his portfolio

Assumptions of the Markowitz portfolio theory

Answer 24

The market is efficient and all investors have free access to fair and correct information about the stock market

All investors are risk averse and try to minimize the risk

All investors are rational and try to maximize their rate of return

Investors prefer higher returns to lower returns for a given level of risk

Investors can reduce their risk if they add investment to his portfolio