Karim L. Anaya

The Restructuring and Privatisation of the Peruvian Electricity Distribution Market

This paper attempts to assess the social welfare impact of the restructuring and privatisation of the electricity market in Peru. The target companies, Electrolima and Electro Sur Medio, account for 64 per cent of the total distribution market and 100 per cent of the privatised distribution companies respectively. Actual and counterfactual operating costs are examined. A separate analysis is performed for each company, due to the differences in terms of economies of scale and market structure. The benefits of being connected were also computed based on counterfactual scenarios. Companies that were not privatised (benchmark companies) were used for making appropriate comparisons and for determining our preferred counterfactual cost decline. Benchmark companies were also important for analysing the trend in quality issues. The results show that privatisation was worthwhile and that the social welfare of being connected has an important contribution on it. Government and producers benefited the most and consumers the least due to price increase.

Understanding best practice regarding interruptible connections for wind generation: lessons from national and international experience

The aim of this study is to explore different practices for accelerating the integration of generating facilities to the electricity network using smart solutions. Case studies from Great Britain, Ireland and Northern Ireland and the Unites States were selected. The paper assesses and compares the different Principles of Access (POA) that have been implemented in these countries, such as Last-in First-out (LIFO), Pro Rata and Market-based. The social optimality of these approaches is also discussed. The paper also evaluates how the risk (regarding curtailment and investment) is allocated between parties (distributor network operators, generators and customers). Even though the cases are diverse, important findings and lessons have been identified which may assist UK distribution network operators to address the issue of increasing the connection of distributed generation while managing efficiently and economically energy exports from generators.

Using stochastic frontier analysis to measure the impact of weather on the efficiency of electricity distribution businesses in developing economies

This paper analyses the influence of weather variables on the efficiency of electricity distribution companies in Argentina, Brazil, Chile and Peru, covering 82 firms which represent more than 90 percent of the distribution market of energy delivered for the period 1998–2008. Stochastic frontier analysis (SFA) is applied using a translog input distance function. Two different approaches are evaluated: weather in the production function and weather in the inefficiency term. The efficacy of one over the other is determined using nested models. Weather data are collected from meteorological stations (429) and NASA (3423 coordinates). A geographic information system (GIS) is used for locating the firms’ service areas and their weather conditions. A combination of cost only and cost-quality models is proposed. For cost only models, the results suggest that on average there is a significant increase in measured efficiency when weather is incorporated in the production function. Under the cost-quality models, on average the effect of weather is much lower. This suggests that firms have internalised the effects of weather and have adapted their networks to the environment in which they operate. A company-level analysis indicates that across models a significant number of companies are affected by weather. Regulators are advised to make 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.

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.

Electric Power Distribution in the World: Today and Tomorrow

In light of the increasing importance of distributed energy resources (DERs) in the electricity system, there is an ongoing need to understand the current status of electric power distribution across the world. This review paper compiles key information about the distribution systems in 175 countries worldwide. The findings for each country include the number, legal structure and ownership of distribution system operators, the access to electricity they provide, distribution level voltages, electric power frequency and the significance of renewable electricity generation. This study covers 99.4% of the world’s population. As of June 2018, there are around 7600 distribution system operators in these 175 countries. After reviewing today’s distribution system status, this paper also reviews the various discussions and proposals for tomorrow’s electric power distribution. The discussion covers both system operation and market platform roles as well as data management options for DSOs in the near future.

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.

A Social Cost Benefit Analysis of Grid-Scale Electrical Energy Storage Projects: Evaluating the Smarter Network Storage Project

This study explores and quantifies the social costs and benefits of grid-scale electrical energy storage (EES) projects in Great Britain. The case study for this report is the Smarter Network Storage project, a 6 MW/10MWh lithium battery placed at the Leighton Buzzard Primary substation to meet growing local peak demand requirements. This study analyses both the locational and system-wide benefits to grid-scale EES, determines the realistic combination of those social benefits, and juxtaposes them against the social costs across the lifecycle of the battery to determine the techno-economic performance. Risk and uncertainty from the benefit streams, cost elements, battery lifespan, and discount rate are incorporated into a Monte Carlo simulation. Using this framework, society can be guided to cost-effectively invest in EES as a grid modernization asset to facilitate the transition to a reliable, affordable, and clean power system.