Implementation of Smart Grid Technology in the United States

Increasing demands on the antiquated electric power industry in the United States has caused many to question the long term viability of such a system in light of the forecasted increasing demand for power. The current grid system relies on a three step system, with electricity being generated at power stations, transported over a network of cables, and finally distributed to consumers through local transformers. However, problems are present within each step of this system; power stations are plagued by rising fossil fuel prices and the system\u27s inability to integrate renewable energy sources. A portion of the energy is then lost as it is transmitted to local transformers where operation managers carefully dispatch the appropriate amount of energy according to consumer demand. Under this system, consumers are effectively removed from the electricity market as well as discouraged from implementing energy conservation and efficiency measures. The Smart Grid system has been proposed as a solution to the many problems associated with the current system of electricity. Key aspects of the Smart Grid include a smart distribution system, deployment of sensors and software allowing the incorporation of renewable energy, smart meters, in-home displays, and dynamic pricing. Accompanying the transition to a system which incorporates renewable resources, smart meters, which allow consumers to shift their consumption to times when energy prices are low according to a dynamic pricing model, and in-home displays will be a net increase in jobs, increased electricity reliability, a decrease in carbon dioxide emissions, and reduced dependence on foreign fossil fuels. Under the Federal Power Act, the Federal Energy Regulatory Committee (FERC) is responsible for electricity sales at the wholesale level while states regulate sales at the retail level. The passage of the Energy Policy Act and Energy Independence and Security Act were the first steps toward creating a Smart Grid, both of which urge states to deploy smart meters, increase renewable energy use, and implement dynamic pricing systems. Under these Acts, regulation at the federal level is executed by the FERC, while states rely on State Utility Commissions. However, movement toward the Smart Grid has resulted in regulations being increasingly decided by market forces. The benefits of a transition to the Smart Grid far outweigh any costs. Not only will the U.S. significantly cut carbon dioxide emissions by increasing inputs from renewable energy sources and assisting consumers in conserving energy, but it also will provide a net gain of green jobs, increase reliability of the current grid, and increase energy independence. However, certain measures must be employed to speed the deployment of Smart Grid technologies. Such measures include tax incentives to reduce investment costs as well as increased funding allocated to states so that they may update infrastructure, deploy technology, and gain expertise in Smart Grid energy systems. Finally, future policies will need to elucidate the role of the FERC in regulating deregulated markets to protect consumers from market abuses. Such incentives and policies will assist the United States in the inevitable transition to a smarter grid

Energy R&D in private and state-owned utilities: an analysis of the major world electric companies

The last two decades have witnessed a staggering decline of R&D investment in the fields of energy and electricity. This paper contends that this widespread phenomenon is mainly ascribable to the processes of liberalisation and privatisation of electricity markets which have induced electric utilities to dramatically reduce R&D expenditures. However, a closer inspection to recent data concerned with ten major electric companies of the world shows that not all of them behaved in the same way. The drop of research expenditures was particularly strong among the private or newly-privatised companies, while those that remained under public control did not reduce R&D efforts. Moreover, the choice of maintaining an adequate level of R&D was not at odds with the goal of increasing company profits. According to these findings and to the widely recognised need of a surge of energy R&D, radical policy measures seem necessary. Along with an R&D obligation for private electric utilities, also an extension of public ownership or the introduction of public-private partnerships should be seriously taken into account.Energy R&D; Electric utilities; Public and private enterprises

FROM MARKET UNCERTAINTY TO POLICY UNCERTAINTY FOR INVESTMENT IN POWER GENERATION: REAL OPTIONS FOR NPP ON ELECTRICITY MARKET

In the electricity sector, market participants must make decisions about capacity choice in a situation of radical uncertainty about future market conditions. Sector is characterized by non-storability and periodic and stochastic demand fluctuations. Capacity determination is a decision for the long term, whereas production is adjusted in the short run. Paper looks on the main contributions in investment planning under uncertainty, in particular in the electricity market for capital intensive investments like NPP. The relationship between market and nonmarket factors (recent UK policy example) in determining investment signals in competitive electricity markets was analysed. Paper analyse the ability of competitive electricity markets to deliver the desired quantity and type of generation capacity and also investigates the variety of market imperfections operating in electricity generation and their impact on long-term dynamics for generation capacity. Paper analyses how price formation influences investment signals. Number of factors (including market power, wholesale price volatility, lack Ž. Tomšić, From market uncertainty to policy uncertainty for investment in power generation: real options for NPP on electricity market, Journal of Energy, vol. 64 (2015) Special Issue, p. 178-197 of liquidity in the wholesale and financial market, policy and regulatory risks etc.) contribute to polluting the price signal and generating sub-optimal behaviour

Transmission of prices and price volatility in Australian electricity spot markets: A multivariate GARCH analysis

This paper examines the transmission of spot electricity prices and price volatility among the five Australian electricity markets in the National Electricity Market (NEM): namely, New South Wales (NSW), Queensland (QLD), South Australia (SA), the Snowy Mountains Hydroelectric Scheme (SNO) and Victoria (VIC). A multivariate generalised autoregressive conditional heteroskedasticity (MGARCH) model is used to identify the source and magnitude of spillovers. The results indicate the presence of positive own mean spillovers in only a small number of markets and no mean spillovers between any of the markets. This appears to be directly related to the limitations of the present system of regional interconnectors. Nevertheless, the large number of significant ownvolatility and cross-volatility spillovers in all five markets indicates the presence of strong ARCH and GARCH effects. Contrary to evidence from studies in North American electricity markets, the results also indicate that Australian electricity spot prices are stationary.spot electricity price markets; mean and volatility spillovers; multivariate GARCH

Essays on commodity cycles based on expanded Cobweb experiments of electricity markets

This thesis studies cycles in commodity markets. Such fluctuations have significant adverse effects onconsumers and producers. The properties of commodity price fluctuations are well known. However,there is considerable disagreement about the underlying causes of market fluctuations. Understandingsuch cycles is essential for policy analysis. We analyze the case of recently deregulated electricitymarkets, where several authors have expressed a concern that capacity cycles may emerge. Thepotential occurrence of cycles represents a major threat to electricity security, since there could beperiods with insufficient capacity to satisfy demand followed by periods with excess capacity andunsustainably low prices.Traditional economic literature argues that oscillations are caused by external shocks. We explore analternative explanation that comes from the internal structure of the system. The method is laboratoryexperiments. To link to the existing literature we start by investigating the simplest economic model ofcycles (the Cobweb model) with standard conditions, linear demand, and constant costs. Step by step,we add complexity (and realism) to the simple model. We introduce long lifetimes of productioncapacity and then we introduce a two period investment lag in addition to long lifetimes. Consistentwith previous experiments and the rational expectations hypothesis, we find no evidence of cycles inthe basic design and in the capacity lifetime treatment. Average prices are close to Cournot Nashequilibrium with a bias towards competitive prices. In the investment lag treatment, however, varianceand autocorrelation analysis indicate cyclical tendencies.In a follow up experiment we introduce a constant price elasticity with dynamic demand adjustment.The experiment gives rise to larger and asymmetric fluctuations similar to observed commodity prices(e.g. sugar and coffee prices). In a third experiment, we increase the frequency of decisions. Weobserve oscillatory behaviour in investment activity and prices. The cyclical tendency is stronger thanin the previous experiments, and the results corroborate assumptions made in previous simulationstudies of electricity markets. In a fourth paper, we look at empirical evidence of fluctuations in someelectricity markets in South America. While the time-series are not long enough to conclude that thereare systematic fluctuations, we observe that both Brazil and Chile have experienced very small reservemargins, electricity supply crises, and considerable shortages of electricity. The likely cause is lack ofinvestments in new generation capacity. Argentina and Colombia have high reserve margins and verylow spot prices, largely because of the deep recessions in their respective economies.The thesis contributes to a better understanding of endogenous causes of market fluctuations. Thisshould call for an increased interest in market models that include supply and demand side dynamics.Also, the findings should serve as a motivation to search for alternative stabilising policies in existingmarkets, particularly in markets where deregulation is considered