Complimenting Or Implementing Supply Shortfalls July 3, 2008 |  Arizona-Ogwu L.Chinedu (Archives)

 

 

 

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 Complimenting Or Implementing Supply Shortfalls

 

 

 

 

 

in 1752, the principles of electricity gradually became understood.

 

 

 

electricity supply industry then with now superficially paints a very similar picture. But, although the turmoil is equivalent, new skills are needed for the engineers, the managers, the leaders who will lead the electricity supply companies into the next century. Today we have a range of businesses in electricity supply and related equipment manufacturers which face significant challenges in the 21st century, which will bring to the fore the electrical engineer-a challenge which is waiting to be grasped and won. In particular the author discusses the drivers for change in the industry, liberalisation of the electricity industry, health and environmental factors, capital management, and the impact of the information age.

 

 

 

Electricity Emergency offers electric utilities and their regulators a process for making

 

the most of the rapid changes and developments in today’s electricity markets. A utility

 

or default service provider that actively participates in electricity markets, and that

 

carefully chooses among the wide variety of different electricity products and resources,

 

will be able to provide better services to its customers over both the short- and long-term

 

future.

 

Electricity Emergency begins with the primary objectives of a utility or default service

 

provider in obtaining electricity resources for customers. Providing reliable electricity

 

services at just and reasonable rates will continue to be a primary goal of electric utilities.

 

Other objectives include mitigating risk; maintaining customer equity; improving the

 

efficiency of the generation, transmission and distribution system; improving the

 

efficiency of customer end-use consumption, and reduction of environmental impacts.

 

 

 

Electricity Emergency provides a process for utilities to determine and implement the mix

 

of electricity resources that will achieve these objectives to the greatest extent possible.

 

Portfolio management requires several key steps on the part of electric utilities or default

 

service providers. Electricity Emergency managers must first prepare load forecasts that represent the best assessment of customer demands for generation, transmission and distribution services for the long-term future. They must then assess all the opportunities available for meeting customer demand through cost-effective energy efficiency resources. The next step includes assessing the wide variety of generation-related opportunities,

 

 

 

 

 

 

including building power plants; purchasing from the wholesale spot market; purchasing short-term and long-term forward contracts; purchasing derivatives to hedge against risk; developing distributed generation options; building or purchasing renewable resources;and expanding transmission and distribution facilities. The next, and most challenging,
step in portfolio management is to develop the optimal mix of these resources that will best achieve various objectives identified by the utility and promoted by the regulators.

 

 

 

 

 

 

 

 

 

 

 

With the current lack of retail competition, default service providers have little pressure or incentive to pass the benefits of their long term portfolios on to retail customers. State policymakers need to create the necessary conditions for the full benefits of successfull electricity emergency to flow to retail electric customers It may also be that some
default service providers only passively participate in the competitive electric market, by purchasing all of their generation from relatively short-term options. In so doing, they are missing many opportunities, and they are leaving their customers vulnerable to higher costs and greater risks. In order to benefit from competitive electricity markets, default service providers must participate more actively in procuring resources for their customers.

 

 

 

 

 

 

Electricity Emergency is also important for those utilities that remain vertically integrated. It provides a means for these utilities to meet the traditional objectives of providing reliable, low-cost electricity services by taking advantage of the new and emerging opportunities available from the competitive wholesale electricity markets.

 

 

 

,PHCN is now a world-wide trend, with various programmes of de-regulation, liberalisation and trading creating new markets, opportunities, and risks.

 

 

 

Commercial organisations as well as regulators and governments, who may only have experience of managing electricity supply in a monopoly or highly regulated environment, therefore face major challenges in having to design and successfully manage the transition to a fully competitive environment.  For those players in already liberalised markets, the financial, strategic and institutional pressures of change create a volatile business environment.

 

 

 

Modeling and Managing Competitive Electricity Markets is a unique course, which provides an intensive exposure to the key issues faced by any organization which is going through the process of adjusting to the on-going challenges of electricity market liberalization. If the looming electricity emergency declaration, could consume more than four-year work-span to research, invent and implement modalities that could overcome lapse-ridden trouble-shooting to the nation’s electricity industry, a landmark would be recorded. Using a distinctly model based approach; you will gain experience of how to develop new strategies, and manage risk in a market based electricity supply industry.

 

 

 

 

 

(because high dependence on hydro and thermal) could make the problem worse-. Then, the electric system is highly capital intensive and requires long lead times for new expansion.

 

 

 

could easily be avoided by investing in the demand side rather than the supply side. So far, all attention has been on infrastructure expansion– expansion of Kainji power station with additional 110 MW at the cost of $220 million, building 300 MW thermal power plant at Egbin, 400 MW Afam thermal, building 330 KV Omoku transmission lines at a cost of $60 million, Papalanto 161 kV transmission line at a cost of $30 million, etc.

 

 

 

It appears the government is the main investor in the power sector because the sector is not lucrative enough to attract private investment. Peak generator that run on natural gas and diesel oil are very expensive and thus investment may occur only when very high prices can be expected, and if there would be no risk of price cap by politicians. Because the government is the main investor, it could easily channel some of the money into demand side to help deal with peak demand problem instead of the usual supply-side upgrading. Integrated resource planning is the word. Most of the electricity we generate is used in our households, we can easily see the impact of the demand response if we are able to encourage and get each household to switch off one-60 Watts electric bulb when supply is constrained. The aggregate, of which, could avoid some of the expensive, and polluting thermal plants being constructed.

 

 

 

 

 

 

 

Economic theory asserts that the most efficient use of resources occur when consumption decisions are based on prices that reflect the marginal cost of supply. This price is normally defined by the intersection of demand and supply curve. In electricity generation, resources are ordered from cheapest to the most expensive. Expensive and polluting thermal power plants are fired after generation from hydro sources has been exhausted. - The chart below shows a typical generation model - . That is to say that, when demand approaches installed generation capacity, each additional increment of demand imposes increasingly more cost to the generation company than the previous one. In other words, the marginal cost of electricity becomes most sensitive to changes in demand when demand is already high.

 

 

 

On the demand side, electricity demand does not differ from most goods. The demand for electricity exhibits declining marginal value (i.e., the marginal value of additional consumption declines as consumption increases). Electricity demand is characterized by a downward-sloping line, regardless of how electricity is priced. But, if the price that consumers pay is small and never varies, demand appears to be perfectly inelastic, and is characterized by a vertical described as Qpeak. Economic way to achieve demand reduction during periods of supply constraints is to increase prices. When prices are high, most consumers will reduce their demand for power. This will result in a shift of demand curve to left .If demand reduction is not achieve during this peaking period, investment in peaking generator or power rationing has to occurs to avoid the collapse of the whole system. It could graphically show a shift in demand from QPeak to Q’peak due to high price. The difference QPeak - Q’peak may be necessary to maintain supply-demand balance.

 

 

 

is to appeal to consumers (through the media) to reduce their demand during such period. Investment in energy-efficient electrical appliances can also reduce the total load. Other solutions will require research into human behavior and how to live and function under electricity supply constraints.

 

 

 

 

 

 

 

that can communicate to the people, the available resources remaining, the rate and the prediction of excesses or shortfalls. - A System that can predict future demand and supply pattern, and can inform consumers about their responsibility in ensuring the continuity of supply -. Communication between the supplier and the consumer is possible way to deal with our electricity constraints.

 

 

 

 

 

 

 

A student who receive a certain amount of money per month, say, N40,000, will be able to buy food, pay rent, entertainment, and other required necessities. The student would have budgeted that rent would cost N28,000 for the month. Food would cost N12,000 leaving N12,000 for power, entertainment, transportation and others. Generally, the student would continually manage his/her funds to ensure that he/she has a little left over at the end of the month for emergencies, but in most cases, the N40,000 per month is never exceeded. If the monthly limit was changed to N60,000, it is likely that the funds remaining in the student’s account would be similar to the N6,000 per month case. In fact, if monthly limit were reduced, the student would achieve more economic living, yet still maintain the same standard of living that he/she initially obtained, quite possibly not require more then than the N50, 000 each month.

 

 

 

With a set limit of ‘credit’ that is known by, displayed to and that can be easily and continually checked and analyzed by the consumer, a new lower overall net consumption ‘volumes, can be achieved.

 

 

 

know how to live in resource constraint when the whole world gets there. To fulfill all our electricity need either now or in a future remains a big challenge. We are already in peak oil period. World static range of natural gas might be shorter when oil peaks. This means that, even if we are able to build more thermal power plant, firing fuel or resource may not be available in the near future. Water bodies around the world are loosing a significant portion of their volumes to global warming. Kainji dam is not an exception.

 

 

 

, and in fact in the whole world, looks uncertain.

 

 

 

 

 

L.Chinedu Arizona-Ogwu

 

Founder; Nigeria4BetterRule

 

Port Harcourt

 

08034885337