Hugh Outhred

Forward contracts for the operation of an electricity industry under spot pricing

A study is reported of the use of forward contracts as risk instruments for electricity industries operating under spot pricing. Forward contracts involve financial transactions or commitments which relate to a physical trade at a later time instance. Price setting and appropriate participant responses are discussed. Simulation studies are used to demonstrate that forward contracts offer participants an opportunity to reduce their risk exposure without removing the incentive to respond to higher spot prices. >

Life‐cycle air emissions from PV power systems

This paper addresses the air emissions of grid supply versus grid-connected and off-grid photovoltaic power generation, using the framework of life-cycle assessment, in the context of rural household energy supply in Australia. Emissions of carbon dioxide, sulphur dioxide and nitrous oxides are calculated for the three life-cycle stages of manufacture, use and disposal. Sensitivities to materials and data inputs, as well as to component efficiencies, lifetimes and sizing are discussed. For each supply option, demand management options, including insulation and appliance choice, and the substitution of solar heating or bottled gas for electricity, are considered. The best option in all cases, in terms of life-cycle air emissions, is a grid-connected photovoltaic system used to supply an energy-efficient household with a mix of solar, gas and electric appliances. However, in financial terms, with current Australian energy prices, this option represents a high capital and life-cycle cost. Additionally, for the grid options, electricity costs do not significantly disadvantage the high demand scenarios. Both results provide a clear illustration of current Australian energy-pricing policies being in conflict with long-term environmental sustainability.

Cumulant based probabilistic power system simulation using Laguerre polynomials

The authors describe a novel cumulant method of probabilistic power system simulation using the Laguerre polynomial expansion. In this method, Laguerre polynomials are used for obtaining the equivalent load duration probability density function from cumulants representing the load and generator outage probability density functions. A recursive algorithm is used for calculating moments and cumulants which enables practically any number of cumulants to be used in the simulation. The results of testing the method on the IEEE Reliability Test System are presented. The accuracy and computational efficiency of the method are compared with those of the conventional cumulant method based on the Hermite polynomial expansion. >

The competitive market for electricity in Australia: why it works so well

The National Electricity Market is the centerpiece of the Australian restructured electricity industry. It is a spot market in which prices are determined an a five-minute basis but half-hour averages are used for commercial transactions. The five-minute prices are broadcast to participants so that they can respond while the prices are still avoidable. An approximate form of nodal pricing is used. This market has proved to be an effective design in terms of competition between generators, but is as yet far from perfect. The need for evolution in market rules was recognized in the market implementation, and refinements to the design may be expected for some years to come. The paper discusses key issues involved in the implementation of competition in the electricity industry and then discusses strengths and weaknesses of the Australian National Electricity Market design. Suggestions are made as to how the market design might be improved.

Probabilistic power system production cost and reliability calculation by the Z-transform method

The authors describe a novel method of probabilistic power system production cost and reliability calculation using the Z transform. In the proposed method, the generating unit available capacity probability density functions (PDFs) are represented by probability impulses. These PDFs are convolved using the Z transform to produce equivalent capacity PDFs. By operating the equivalent capacity PDFs on the system demand, the unit energies, loss of load probability (LOLP), and expected unserved energy (EUE) can be calculated for each load level and the total demand. The method is compared with the cumulant method and Calebreses traditional direct convolution procedure in terms of accuracy and computing time using the IEEE Reliability Test System. The main advantage of the new method is that actual load and generator availability data can be used directly, rather than via a mathematical representation such as cumulants. An efficient recursive algorithm using the Z transform procedure has been formulated to allow fast evaluations of convolution and deconvolution of PDFs. In terms of computing time, the new method is not much slower than the cumulant method. LOLP and EUE are also calculated more accurately. >

Some strengths and weaknesses of electricity industry restructuring in Australia

Electricity industry restructuring is a complex, multidisciplinary problem that requires a consistent approach to its engineering, economic, commercial and socio-political aspects to achieve a satisfactory outcome. Moreover, all aspects of the energy conversion chain, from primary energy forms to end-use energy services, should be consistently addressed so that options at all points in the energy conversion chain receive equal consideration, including fossil and renewable fuels and demand-side options and their associated external impacts. After discussing underlying principles and the conceptual model on which the Australian national electricity market design has been based, this paper reviews progress to date in electricity industry restructuring in Australia and discusses the challenges that lie ahead. It concludes that there have been significant achievements but that important issues remain to be addressed, and that the restructuring process, which commenced in the early 1990s, may require another decade to complete.

Australian and international renewable energy policy initiatives

Despite efforts in Australia and other developed countries, greenhouse gas emissions from most countries continue to rise and the targets set in 1997 for emission reductions in the Kyoto Protocol are becoming more difficult to achieve. Without coordinated policy development and successful policy implementation, there is a chance that the major players will not ratify the Protocol and efforts at a global response to emissions control will be abandoned. Renewable energy technologies offer the only long term strategy for emissions reduction. This paper summarises policy initiatives used around the world to support their development and use and suggests some strategies for Australia.

Electricity industry restructuring in Australia: underlying principles and experience to date

Electricity restructuring is a complex, never-ending process that has engineering, economic, social, commercial, legal and policy dimensions and takes place within a broad societal context. Thus, there are many interdisciplinary challenges for the design, implementation and on-going maintenance of a successful restructuring process. Moreover, it is not possible beforehand to be sure that a particular design will work satisfactorily because the formally designed aspects of a restructured industry are only part of the whole. Therefore, it is most important to approach the design of restructuring in manner that is as robust as possible over both the short and long term. This paper describes the underlying principles used in restructuring the Australian electricity industry and discusses outcomes to date and current challenges

Comments on Resource Adequacy in the Australian Competitive Electricity Industry

Resource adequacy is a complex concept in a competitive electricity industry. In principle, end-users should purchase their preferred levels of assurance for future availability and quality of supply in a competitive commercial environment. However, competitive electricity industry design may never become sufficiently sophisticated to support this concept. An interim objective is to design and implement a consistent, efficient and compatible set of regimes for managing security, commercial trading, industry regulation and policy formation. The Australian competitive electricity industry design illustrates this approach and is described and discussed in these comments. Its strengths include a real-time spot market that implements a security-constrained dispatch and is interfaced to a strong security management regime. Its weaknesses include the lack of a formally designed derivative market, excessive reliance on demand forecasting and as yet limited active end-user participation. Its robust performance to date will be tested as temperature-sensitive load grows and greater reliance is placed on non-storable renewable energy fluxes.

Market-Based Ancillary Services in the Australian National Electricity Market for Increased Levels of Wind Integration

This paper provides an overview of Australias National Electricity Market (NEM) with a focus on its design and implementation features that benefit an increasing level of wind generation. The NEM design is discussed both in terms the ability of the system operator to manage threats to the security of the power system that an increasing level of wind integration may pose through the use of market-based frequency control ancillary services (FCAS) as well as the extent to which the commercial decision-making processes are suitable for participation of wind farm operators in the electricity market. In this way, the features of the NEM that facilitate wind integration are identified along with aspects of the market design that could be refined. This allows for comparisons to be made to other electricity market designs in terms of their ability to support an increasing level of wind integration.