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4 - Power System Economics

power system Economics

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Ziaurahman Habibi
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5 views

4 - Power System Economics

power system Economics

Uploaded by

Ziaurahman Habibi
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Advance Energy

Economics
Master Program of REEE
Energy Engineering Department
Faculty of Engineering
Kabul University

Lecturer: M. Abed Anwarzai Ph.D.


Contents
Remember
1. Why Energy Economics?
2. Investment and Profitability
3. Demand Analysis
Future
1. Energy Resources and Reserves
2. Power System Economics
Introduction To The Power System
Economics

08/10/2024 Advance Energy Economics 2


Energy Resources and Reserve
• Coal
Conve • Fuel
ntional • Gas
• Atomic

• Hydro
• Wind
Renew
• Solar
able
• Geothermal
• Biomass
08/10/2024 Advance Energy Economics 3
• For example, the uranium
Energy isotope U235 became an energy
resource after nuclear fission
Resources was achieved.
and Reserve • Next, ‘resources’ must be
distinguished from ‘reserves’
08/10/2024 Advance Energy Economics 4
Energy Resources and Reserve
Following the World Petroleum Council,
reserves are classified according to the
probability of economically viable extraction
(see Campbell and Laherrere 1996):
– P (proved): probability of extraction >90%;
– 2P (proved + probable): probability of
extraction >50%;
– 3P (proved + probable + possible): probability
of extraction >10%.

08/10/2024 Advance Energy Economics 5


Contents
Remember
1. Why Energy Economics?
2. Investment and Profitability
3. Demand Analysis
Future
1. Energy Resources and Reserves
2. Power System Economics
Introduction To The Power System
Economics

08/10/2024 Advance Energy Economics 6


Introduction To The Power System Economics

Contents
1. Why Competition
2. Market Structure and Participants
3. Dramatis Personae
4. Competition and Privatization
5. Experience and Open Questions

08/10/2024 Advance Energy Economics 7


Why Competition

Twentieth century in the world in Afghanistan


still when consumers wanted/want to buy
electrical energy, they had/have no choice.
1. Vertically integrated monopoly.
2. In some parts of the world, these utilities
were regulated private companies, while in
others they were public companies or
government agencies.

08/10/2024 Advance Energy Economics 8


Why Competition

4. In the 1980s, some economists started arguing


that this model (monopoly) had run its course;
cash cow for politicians,
unnecessary investment,
customer should pay the investor mistakes
5. These economists suggested that prices would
be lower and the overall economy more efficient
if the supply of electricity was subjected to
market discipline rather than monopoly
regulation or government policy.

08/10/2024 Advance Energy Economics 9


Why Competition

6. Before electricity, this movement had already


affected airlines, transportation and the
supply of natural gas.
7. If kilowatt-hours could be stacked on a shelf
– like kilograms of flour or television sets –
ready to be used as soon as the consumer
turns on the light or starts the industrial
process, electricity would be a simple
commodity, and there would be no need for
this book.

08/10/2024 Advance Energy Economics 10


Why Competition

8. In this book, we explore how various aspects


of the supply of electricity can be packaged
into products that can be bought and sold on
open markets.
9. How their trading affects the operation of the
power system.
10. How operational constraints affect on the
electricity markets.

08/10/2024 Advance Energy Economics 11


Market
Structures and
Participants

1. Traditional
Model

08/10/2024 Advance Energy Economics 12


Market
Structures and
Participants

1. Traditional
Model

08/10/2024 Advance Energy Economics 13


Market Structures and Participants

2. Introducing
Independent
Power
Producers
First step to
competition
IPPs will try to
get as high a
price as they
can
08/10/2024 Advance Energy Economics 14
Market Structures and Participants

3. Wholesale
Competition

08/10/2024 Advance Energy Economics 15


Market
Structures and
Participants

4. Retail
Competition

08/10/2024 Advance Energy Economics 16


Market
Structures and
Participants

5. Renewable and
Distributed
Energy Resources
Aggregator's role is to
serve as a commercial
and technical
intermediary between the
wholesale markets and
the owners of distributed
energy resources who
could contribute to the
economic efficiency of the
overall system.

08/10/2024 Advance Energy Economics 17


Dramatis Personae
1. Vertically integrated utilities
2. Generating companies (gencos)
3. Distribution companies (discos)
4. Retailers
5. Market Operators (MOs) run computer
systems to match the bids and offers that
buyers and sellers of electrical energy submit.
6. Independent System Operator (ISO)
Regional Transmission Organizations (RTOs).

08/10/2024 Advance Energy Economics 18


Dramatis Personae
7. Transmission companies (transcos)
8. Transmission System Operators (TSOs)
9. Small consumers
10. Aggregators contract with several small
consumers to reduce or shift their demand in
time on request.
11. Large Consumers often have the skills and
technical resources needed to trade directly
on the wholesale electricity markets.

08/10/2024 Advance Energy Economics 19


Competition and Privatization
Privatization is the
process by which publicly Government
owned utilities are sold
by the government to
private investors.
 Public
utilities can
coexist with
private
Utilities
companies in Regulatory Public and
a competitive Private
environment
08/10/2024 Advance Energy Economics 20
Experience and Open
Questions

08/10/2024 Advance Energy Economics 21


Thank You

08/10/2024 Advance Energy Economics 22

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