Regulating the Electricity System Operator: Lessons for Great Britain from around the world

This study explores the international experience with independent system operators (ISOs) with respect to the incentives that system operators face to operate the electricity network efficiently (from the point of view of society). We look for lessons that we can learn from this experience for the future regulation of the Great Britain (GB) System Operator (National Grid Electricity Transmission). We examine seven ISOs from the USA, where the model seems to be successful but with some cost issues within the system operator itself. We also examine system operators from Australia (AEMO), Chile (SIC/SING) and Peru (COES). Our findings are supported by a short survey that was sent directly to our contacts in the system operators from our sample of ISOs. Against a background of rising distributed renewable generation on the electricity system, we discuss the international experience of ISOs with respect to their incentives to: maximise social welfare; manage the increasing amount of renewables and new participants; manage their overall actions for customers; engage in stakeholder participation and transparency

Storage Business Models: Lessons for Electricity from Natural Gas, Cloud Data and Frozen Food

The aim of this paper is to evaluate different well-established non-electrical storage markets (gas, frozen food and cloud storage) in order to identify relevant lessons for electrical energy storage (EES) connected to the electricity distribution networks. The case studies that have been evaluated are Centrica Storage (gas storage), Google Drive (cloud storage) and Oakland International (frozen food storage). A specific business model methodology has been selected for comparing the different business model components across these sectors. The methodology (following Johnson et al., 2008) refers to key interconnected components: customer value proposition, the revenue formula, key resources and key processes. The evaluation of the three case studies suggests that well-developed business models already exist in growing and mature storage markets. Regulation also plays an important role across the different storage markets and business model components, how-ever its importance varies depending on the type of market. Innovation in storage business models is also observed (technological and contractual) which should be also facilitated in EES. Innovation helps move markets towards more sustainable business models

Reactive Power Procurement: Lessons from Three Leading Countries

This paper explores the international experience in the procurement of reactive power and related electricity ancillary services. It involves system operators from different jurisdictions including Australia, the United States and Great Britain. The paper evaluates the different procurement mechanisms and related compensation schemes. In addition, it also appraises a novel approach (from the Power Potential initiative in the UK) for contracting reactive power services from distributed energy resources (DERs) using a market-based mechanism. The conceptual auction design applicable to the procurement of reactive power is also discussed. Our findings suggest that competition in reactive power is very limited in comparison with other ancillary services such as frequency regulation and capacity reserves. The introduction of more market oriented mechanisms for acquiring reactive and active power services by the system operator opens new opportunities and new ways to deal with voltage stability issues. Power Potential trails a technical and commercial solution, new market roles and the new interactions required in the introduction of a competitive reactive power market

Ocean warming-acidification synergism undermines dissolved organic matter assembly.

Understanding the influence of synergisms on natural processes is a critical step toward determining the full-extent of anthropogenic stressors. As carbon emissions continue unabated, two major stressors--warming and acidification--threaten marine systems on several scales. Here, we report that a moderate temperature increase (from 30°C to 32°C) is sufficient to slow--even hinder--the ability of dissolved organic matter, a major carbon pool, to self-assemble to form marine microgels, which contribute to the particulate organic matter pool. Moreover, acidification lowers the temperature threshold at which we observe our results. These findings carry implications for the marine carbon cycle, as self-assembled marine microgels generate an estimated global seawater budget of ~1016 g C. We used laser scattering spectroscopy to test the influence of temperature and pH on spontaneous marine gel assembly. The results of independent experiments revealed that at a particular point, both pH and temperature block microgel formation (32°C, pH 8.2), and disperse existing gels (35°C). We then tested the hypothesis that temperature and pH have a synergistic influence on marine gel dispersion. We found that the dispersion temperature decreases concurrently with pH: from 32°C at pH 8.2, to 28°C at pH 7.5. If our laboratory observations can be extrapolated to complex marine environments, our results suggest that a warming-acidification synergism can decrease carbon and nutrient fluxes, disturbing marine trophic and trace element cycles, at rates faster than projected

Does Weather Have an Impact on Electricity Distribution Efficiency? Evidence from South America

This paper analyses the influence of weather variables on the efficiency of electricity distribution utilities in Argentina, Brazil, Chile and Peru. The data covers 82 firms that operate in the previously mentioned countries which represent more than 90 per cent of the distribution market of energy delivered for the period 1998-2008. The stochastic frontier analysis (SFA) is applied with a translog input distance function approach. A combination of cost and cost-quality models is proposed to create better discussions. Weather data are collected from 429 meteorological stations and lightning data (flash rate) are collected from 3,423 coordinates provided by NASA. A geographic information system (GIS) is used for locating the firms' service areas and for allocating their respective meteorological stations and coordinates. Results suggest that on average under cost models there is a significant increase in efficiency when weather is incorporated in the production function. Firms from Brazil and Peru are those which operate in less favourable weather conditions. Under the cost-quality models, on average the effect of weather is much lower. From this, it appears to be that firms have internalised the effects of weather and have adapted their networks with consideration to the environment in which they operate. A company-level analysis indicates that across models an important number of companies are affected by weather. Regulators are advised to make the case for the proper adjustments of efficiency scores when specific firms face important efficiency changes due to weather

Distributed Generation: Opportunities for Distribution Network Operators, Wider Society and Generators

This study explores and quantifies the benefits of connecting more distributed generation (with and without the use of smart connections) across different parties (Distribution Network Operators, wider society and generators). Different connection scenarios are proposed (with partial and full interruptible capacity quota, a mix of generation and different technology-specific curtailment levels) for integrating DG units in the constrained area of the March grid (East of England). This constitutes the trial area of the Flexible Plug and Play project, which is being implemented by UK Power Networks. The smart connection option is by far the preferred option across all the scenarios (higher NPV/MW). However, for some generators the results are very sensitive to the discount rate used (i.e. solar PV). The analysis of the distribution of benefits suggests that generators capture most of the benefits while DNOs and wider society capture much less benefit. A smart connection incentive, which recreates the benefits to DNOs from an earlier losses incentive, is proposed. In contrast with other societally desirable metrics which are usually incentivised or penalised, there is currently no direct connection between more DG MWs connected and DNO incentive payments. Our proposed smart connection incentive, by charging DG for smarter connection may help to distribute more efficiently the benefits for connecting more DG

Integrating Distributed Generation: Regulation and Trends in Three Leading Countries

We explore trends in the deployment and integration of distributed generation in Germany, Denmark and Sweden. In particular, we examine the regulation of renewable energy generation with a focus on grid access and connection mechanisms. The high rate of distributed generation penetration in these countries is the result of early support given to the expansion of renewable energy generation – mainly wind and solar - within their respective national policies. Germany and Denmark are the countries with the most sophisticated support schemes, which have shown changes over time. In terms of connections, Germany is the country with the most favourable connection regime. It provides not only priority connection but also priority use of the grid to generation units that produce electricity from renewable energy sources. Sweden guarantees equal treatment among different technologies (i.e. a non-discrimination principle) and is thus the least favourable. High connection costs have been observed, especially in Germany and Denmark. The costs of network upgrades are usually socialised across customers. The use of smart solutions combined with novel business models might allow more efficient use of the current distribution electricity infrastructure. Hence, integration issues should be taken into consideration in order to avoid expansion of distributed generation in a way that unnecessarily raises total system costs, via high connection costs