1.1 Power System Functions
The traditional power system is arranged as a hierarchy. Generators feed into a high voltage transmission system that facilitates bulk transfers of power over large distances. Connected to the transmission system are medium voltage distribution networks that take power from grid supply points and deliver it to the customers who are supplied a low voltage.
For a lot of its history, the electricity supply industry has operated as set of vertically integrated monopolies within certain geographic areas. Many countries, notably but not only, the UK, have sought to bring competition to this industry in order to provide better value to consumers. The approach in the UK, has been to unbundled the various functions within the industry and then use a combination of market mechanisms and regulation are then used to enhance economic efficiency. There are four functions on the supply-side: Generation; Transmission; Distribution and Supply And one function on the demand-side: Consumption The various functions are summaries in the table overleaf.
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Steam, gas, water or wind turbines driving alternators 275kV & 400kV overhead lines –“the national grid”
nPower, E.On, British Energy, SELCHP, Barking Power National Grid (owner and operator), Scottish Power (owner) UK Power Networks, Scottish and Southern EDF Energy, E.On, British Gas
132kV, 33kV, 11kV overhead lines and cables Purchase of energy on wholesale market, resell and bill Motors, heaters, lighting & supplies for electronic equipment
Industrial, commercial and domestic consumers
In the UK, the unbundling of the supply-side is known as “ownership unbundling” in which a company can only operate in one of the functions. Some of the large energy companies have split their business into subsidiary companies to comply with this but then must ensure there is no leakage of commercial information or influence between the subsidiaries. There are two ways to describe the relationships between the functions based on either the trading relationships or on the flow of energy. The trading of electricity in the UK has two fully competitive markets. The first is the generation market between generators on the one hand and on the other hand large consumers and electricity supply companies (wholesalers of electricity). This market is bilateral and allows parties to trade energy in advance of its actual delivery on any timescale they wish (from half-hour blocks to yearly commitments for instance). The generation market is frozen one hour ahead of delivery so that the technical side of grid operation can be accommodated. The second market is the supply market between the energy supply companies and domestic and small commercial consumers. Consumers can change their suppliers as they choose but will generally have a simple tariff that is not subject to the half-hour price variations of the main generation market. The trading view of the unbundled industry makes no mention of how the energy is actually transported. The second view addresses this. Most generation is large scale and connected directly to a bulk transmission network the covers the country. This network delivers the energy to “bulk supply points” which feed a lower voltage distribution network that delivers the energy to the final consumers. There are some small generators (and plans for many more) that connect directly to the distribution system. Similarly there are some very large consumers who connect directly to the transmission network. The British transmission system which is operated by National Grid Electricity Transmission Limited, NGETL. NGETL also owns the transmission network in England and Wales but in Scotland it is owned by Scottish Power ETL and Scottish Hydroelectic Limited. The...