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Lecture2

The document outlines a course on restructured power systems, focusing on the transition from conventional to deregulated power industry operations, emphasizing economic efficiency alongside secure and reliable operations. Key topics include microeconomics fundamentals, power market design, operational challenges, and international restructuring experiences. It also discusses the history, regulation, and reasons for deregulation in the power industry.

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Neha Mahendran
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
3 views

Lecture2

The document outlines a course on restructured power systems, focusing on the transition from conventional to deregulated power industry operations, emphasizing economic efficiency alongside secure and reliable operations. Key topics include microeconomics fundamentals, power market design, operational challenges, and international restructuring experiences. It also discusses the history, regulation, and reasons for deregulation in the power industry.

Uploaded by

Neha Mahendran
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 21

29-01-2025 © Deep Kiran, IIT Roorkee (2025) 1

EEN/L-671:
RESTRUCTURED POWER
SYSTEMS
LECTURE 2: Introduction
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 2

What are we going to learn in this course?


• Restructuring/ deregulation of power industry has
changed the way of operation of the power systems.
• Initial focus was on the secure and reliable operation of
power systems
• Now, economic efficiency has joined the game.
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 3

What are we going to learn in this course?


• As a power/ electrical engineer, the knowledge of
following topics are required for the restructured/
deregulated power systems:
• Electrical engineering
• Power systems
• Conventional operation of power systems
• Economics.
• Understand the new dimensions associated with the
power systems.
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 4

What are we going to learn in this course?


1. Initially bring out the differences between the conventional and
the restructured.
2. A background with fundamentals of microeconomics will be
setup.
3. Design of power markets and architectural aspects will be
discussed.
4. Changes in operational aspects with new operational
challenges like congestion management and ancillary service
management will be elaborated.
5. Efficient pricing of transmission network usage is a must to
bring economic efficiency in the power market operation.
6. Generators bidding strategies and market power with
mitigation techniques.
7. Towards the end, the discussion on restructuring experiences
of different countries and India will be provided.
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 5

References
• Texts:
• Fundamentals of Power System economics, Daniel Kirschen and
Goran Strbac, John Wiley & Sons Ltd, 2004.
• Power System Restructuring and Deregulation – Trading,
Performance and Information Technology, Loi L. L., John Wiley and
Sons, 2003.
• References:
• Spot Pricing of Electricity, Fred C. S., Michael C. C., Richard D. T.
and Roger E. B., Kluwer Academic Publishers, 1988.
• Making competition work in electricity Sally Hunt, John Wiley &
Sons, Inc., 2002.
• Research papers
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 6

Marking scheme
• Attendance: >95%: 5; >90%: 4; >85%: 3; >80%: 2; >75%:
1; <75%: 0 (5 marks)
• Term paper: Explain and code the recent paper (last 5
years) from IEEE TEMPR (20 marks)
• Explanation of paper: before MTE
• Codes and results: before ETE
• Quizzes: Surprise and informed (10 marks)
• CWS: 35 marks
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 7

Marking scheme
• CWS: 35 marks
• MTE: 25 marks
• ETE: 40 marks
• Total: 100 marks
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 8

A few Questions…
• Can you compare electricity as commodity with apples or
toothpaste?
• Electricity market is a perfectly competitive market: True
or False?
• Which transmission pricing mechanism is the most
popular?
• Did you know that the same MW generated by a
generator takes form of different commodities?
• Name at least one power market in USA & in Europe
• Which is the only country having more than 2 power
exchanges spanning the entire country?
• Name 3 private generators in India
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 9

Power System Analyst

Regulatory

Core
Core Power History
Power Policy
System
Issues
System
Issues

Economics

1995 2010 onwards


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 10

Attendance
• MS Teams: l6ahq8m

• Please ensure 75% of attendance for ETE.


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 11

Brief Concepts of Regulation and


Deregulation
➢What is Regulation?
➢What is Deregulation?
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 12

What is Regulation?
• Regulation means that the Government has set down
laws and rules that put limits on and define how a
particular industry or company can operate.

Regulation Consumer benefit


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 13

What is Deregulation?
• Deregulation in power industry is restructuring of the
rules and economic incentives that government set up to
control and drive the electric power industry.

Competition New rules Societal benefit


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 14

Brief History
1870s
• Lamps for street lighting

1882
• First electric power system in New York by Edison

1884
• Development of DC motor

1888
• AC motors, generators, transformers by Tesla

1889
• First AC transmission line between Oregon and Portland

1893
• 3-phase line in California

1900s
• Commercialization starts across the world
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 15

Original Need for Regulation


• Risk-free way to finance the creation of electric industry
• Establishment of local monopoly
• Assured return on investment
• Legitimization of electric utility business
• Recognition and support from local government to utilities
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 16

Characteristics of Regulated Industry


• Monopoly franchise
• Obligation to serve
• Regulatory oversight
• Regulated rates
• Assured rate of return
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 17

Structure of Regulated Industry


Transmission &
Generation Customer
Distribution

Energy Information Money


flow flow flow

Vertically Integrated Utility


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 18

Reasons for Deregulation


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 19

Basic Motivation: Change in Power


Industry Scenario
• Technology advancement led to more efficient small
turbines and generators
• Possible to build new power plants near load centers
• Industrial & commercial users began to build & operate
their own plants

Shift in Economy of Scale


29-01-2025 © Deep Kiran, IIT Roorkee (2025) 20

Main Reasons for Deregulation


• Need for regulation changed
• Privatization
• Cost is expected to drop
• Encourages innovation
• Competition will improve customer focus
29-01-2025 © Deep Kiran, IIT Roorkee (2025) 21

Supplementary Reasons for Deregulation


• Political and ideological changes
• Lack of public resources for the further development
• More demanding environment issues
• Pressure of financial institutes

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