Analysing electricity flows and congestions: looking at locational patterns

Countries are making important efforts decarbonising their electricity generation mix. In this context, improving the operational efficiency enables better use to be made by renewables and the grids. However, the location of new capacity might be relevant from the social welfare point of view when private decisions might affect the power system efficiency. In this paper, we analyze the Spanish transmission grid with the aim to explore in the power system efficiencies with a high share of renewables in the generation mix. We explore in the location of the generation technologies to see how efficient they are located with regard to the consumption. We find wind is one of the least efficiently located, which has implied relevant grid investments paid by consumers. Moreover, a high concentration of renewables increases grid-congestions, which might constrain locations for future capacity. Our results highlight there is a trade-off between incomes from RES and grid costs paid by consumers. Therefore, we suggest RES policies should include some locational incentives. We analyze pros and cons from some choices and conclude countries should provide further grid information to incumbents and also include locational incentives in future RES auctions. Indeed, results from this paper represent a first stage in the design of these locational incentives

The economic impact of electricity losses [WP]

Although electricity losses constitute an important, but inevitable, amount of wasted resources (and a share that has to be funded), they remain one of the lesser known parts of an electricity system, and this despite the fact that the decisions of generators, transmission and distribution system operators and consumers all impact on them. In this paper we analyse the effects of such losses from two perspectives: from that of consumption or outflows and from that of generation or inflows. Given that end-user consumption varies across the day, consumption has direct implications for electricity losses. Indeed, demand-side management policies seek to encourage consumers to use less energy during peak hours and to reduce network congestion. At the same time, from the perspective of generation, the recent growth in distributed generation has modified the traditional, unidirectional, downward flows in electricity systems. This affects losses as energy is produced in the lower voltage network, which is closer to points of consumption. In this paper we evaluate the impact of consumption patterns and different generation technologies on energy losses. To do so, we draw on data from a real electricity system with a high level of renewable penetration, namely, that of Spain between 2011 and 2013. To the best of our knowledge, this is the first paper to analyse the real impact of consumption and the effect of each generation technology on energy losses, offering an opportunity to evaluate the potential benefits of demand-side management policies and distributed generation. Based on our results, we make a number of regulatory recommendations aimed at exploiting to the full these potential benefits. Our results should serve as a baseline for countries that are in the early stages of implementing these policies

CO2 content of electricity losses

Countries are implementing policies to develop greener energy markets worldwide. In Europe, the ¨2030 Energy and Climate Package¨ asks for further reductions of green house gases, renewable sources integration, and energy efficiency targets. But the polluting intensity of electricity may be different in average than when considering market inefficiencies, in particular losses, and therefore the implemented policy must take those differences into account. Precisely, herein we study the importance in terms of CO2 emissions the extra amount of energy necessary to cover losses. With this purpose we use Spanish market and system data with hourly frequency from 2011 to 2013. Our results show that indeed electricity losses significantly explain CO2 emissions, with a higher CO2 emissions rate when covering losses than the average rate of the system. Additionally, we find that the market closing technologies used to cover losses have a positive and significant impact on CO2 emissions: when polluting technologies (coal or combined cycle) close the market, the impact of losses on CO2 emissions is high compared to the rest of technologies (combined heat and power, renewables or hydropower). To the light of these results we make some policy recommendations to reduce the impact of losses on CO2 emissions

Economic regulation and efficiency of electricity systems

[eng] Environmental awareness is of increasing concern for society and leads heavy pressure to adopt challenging political decisions. In this context, electricity systems are facing a massive transformation from the replacement of conventional generation technologies by renewables. A safe, successful and affordable energy transition entails an efficient, optimal and low-cost connection of renewables. To that end, it is essential anticipating future scenarios and creating market-based frameworks aimed at maximizing social welfare. In this context, this thesis focuses on grids, the core of electricity systems as they have to allocate large amounts of RES. Grid-efficiencies and grid-related costs linked with renewables and their impact on social welfare are explored in four empirical studies. More in detail, electricity losses, grid-congestion costs and grid-investments. This represents a relevant contribution to the literature, as there are fewer empirical studies about these topics at a country size using actual datasets. Each study collects results and conclusions from the previous ones, which enables better progress in the research and ensures a great traceability of the chapters from this dissertation. Topics explored in this thesis are of current interest in the literature about energy transition in the electricity systems. Moreover, results provide value insights to policymakers and regulators in the definition of energy transition policies. First study, the economic cost of electricity losses, explores the determinants of electricity losses, one of the most unknown grid-related cost, and evaluates the impact of consumption patterns and different generation technologies on electricity losses and their economic costs. In the analysis, electricity losses are disaggregated between losses in the transmission and distribution grid levels, which is a contribution to the literature. Results allow to quantify potential economic costs and benefits of some policies at country-scale. Among others, Demand Response and Distributed Generation. Second study, CO2 content of electricity losses, analyzes the contribution of electricity losses in the power system CO2 emissions, which has not been explored before in the literature. Results highlight and quantify how relevant is the impact of electricity losses reduction on CO2 emissions in the power systems. Third study, Analyzing flows and congestions: looking at locational patterns, explores in the grid flows and grid-congestions to know how the locations of actual generation technologies explain electricity flows, to identify locational patterns related to congestions and to evaluate how the generation produced in each region contributes to flows. The empirical approach also represents a contribution to the literature as includes a gravity model, which has scarcely been explored in the field of energy flows and provides different insights than models used so far. Results from this paper highlights how relevant is the location of actual generation in the electricity flows. Fourth study, Locational impact and network costs of energy transition: Introducing geographical price signals for new renewable capacity, uses results from the third study as baseline and explores how to make compatible markets principles, economic signals and grid development through the analysis of the grid-related costs associated with the location of new renewables. This study evaluates grid-congestions, grid-investments and electricity losses associated with the location of renewables in different geographical scenarios in a real electricity system. Results show how the location of future renewables is highly relevant from the private and social perspectives. Moreover, the future incurred costs for consumers might be much higher if the regulatory framework does not provide the right incentives for all the agents, specially the entrants: renewable promoters. This paper puts into question the actual regulatory framework about renewable auctions. Finally, conclusions’ chapter include an overview of all the policy recommendations defined in the four studies and potential impacts on the final price of electricity paid by consumers

CO2 content of electricity losses

Countries are implementing policies to develop greener energy markets worldwide. In Europe, the ¨2030 Energy and Climate Package¨ asks for further reductions of green house gases, renewable sources integration, and energy efficiency targets. But the polluting intensity of electricity may be different in average than when considering market inefficiencies, in particular losses, and therefore the implemented policy must take those differences into account. Precisely, herein we study the importance in terms of CO2 emissions the extra amount of energy necessary to cover losses. With this purpose we use Spanish market and system data with hourly frequency from 2011 to 2013. Our results show that indeed electricity losses significantly explain CO2 emissions, with a higher CO2 emissions rate when covering losses than the average rate of the system. Additionally, we find that the market closing technologies used to cover losses have a positive and significant impact on CO2 emissions: when polluting technologies (coal or combined cycle) close the market, the impact of losses on CO2 emissions is high compared to the rest of technologies (combined heat and power, renewables or hydropower). To the light of these results we make some policy recommendations to reduce the impact of losses on CO2 emissions

Locational impact and network costs of energy transition: Introducing geographical price signals for new renewable capacity

Electricity systems are facing a massive transformation from the replacement of conventional generation technologies by renewables. In this paper, we explore how to make compatible markets principles, economic signals and grid development through the analysis of the grid-related costs associated with the connection of new renewables (...

The economic impact of electricity losses

Although electricity losses constitute an important, but inevitable, amount of wasted resources (and a portion that has to be funded), they remain one of the lesser known components of an electricity system, and this despite the fact that the decisions of generators, transmission and distribution system operators and consumers all impact on them. In this paper we analyse the effects of such losses from two perspectives: from that of consumption and from that of generation. Given that end-user consumption varies across the day, consumption has direct implications for electricity losses. Indeed, demand-side management policies seek to encourage consumers to use less energy during peak hours and to reduce network congestion. At the same time, from the perspective of generation, the recent growth in distributed generation has modified the traditional, unidirectional, downward flows in electricity systems. This affects losses as energy is produced in the lower voltage network, which is closer to points of consumption. In this paper we evaluate the impact of consumption patterns and different generation technologies on the energy losses and the cost of losses. To do so, we draw on data from a real electricity system with a high level of renewable penetration, namely, that of Spain between 2011 and 2013. To the best of our knowledge, this is the first paper to analyse the real impact of consumption and the effect of each generation technology on energy losses, offering an opportunity to evaluate the potential benefits of demand-side management policies and distributed generation. Losses are divided between transmission and distribution levels, which is also a novelty that allows us to better define our regulatory recommendations aimed at exploiting to the full these potential benefits. Our results should serve as a baseline for countries at the early stages of implementing these policies

The economic impact of electricity losses

Although electricity losses constitute an important, but inevitable, amount of wasted resources (and a portion that has to be funded), they remain one of the lesser known components of an electricity system, and this despite the fact that the decisions of generators, transmission and distribution system operators and consumers all impact on them. In this paper we analyse the effects of such losses from two perspectives: from that of consumption and from that of generation. Given that end-user consumption varies across the day, consumption has direct implications for electricity losses. Indeed, demand-side management policies seek to encourage consumers to use less energy during peak hours and to reduce network congestion. At the same time, from the perspective of generation, the recent growth in distributed generation has modified the traditional, unidirectional, downward flows in electricity systems. This affects losses as energy is produced in the lower voltage network, which is closer to points of consumption. In this paper we evaluate the impact of consumption patterns and different generation technologies on the energy losses and the cost of losses. To do so, we draw on data from a real electricity system with a high level of renewable penetration, namely, that of Spain between 2011 and 2013. To the best of our knowledge, this is the first paper to analyse the real impact of consumption and the effect of each generation technology on energy losses, offering an opportunity to evaluate the potential benefits of demand-side management policies and distributed generation. Losses are divided between transmission and distribution levels, which is also a novelty that allows us to better define our regulatory recommendations aimed at exploiting to the full these potential benefits. Our results should serve as a baseline for countries at the early stages of implementing these policies