Environmental Engineering Reference
In-Depth Information
can range in size from individual households to large industries with multiple sites
consuming significant quantities of electricity. Wind generation has features of
both generation and load. It is largely uncontrollable (although it can be curtailed)
which is similar to load, and it is difficult to predict over long time frames
Some form of regulation is a requirement in all electricity markets. The level
of regulation is determined by the particular economic and political circumstances
of each region. At a very minimum, the monopoly parts of the business, i.e.
transmission and distribution, need to be regulated. Electricity markets are also
subject to regulatory oversight. This is particularly important in markets where
competition is in its infancy where, for example, an incumbent VIU still maintains
a dominant position. Regulatory decisions can and do have very large financial
consequences for the participants and poor regulation can lead to risks for partici-
pants. With large amounts of wind power, with its unique characteristics, being
connected to electricity systems, there is a danger that regulators will fail to grasp
the issues and make decisions that will stifle the development of the industry as a
whole and wind power in particular. If the regulatory regime is too favourable to
wind power, then it will thrive at the expense of the other parts of the industry,
which will be damaging. If the regulator is too severe with wind power, then
investment in the sector will suffer, and society will fail to benefit from the emis-
sions reduction and security of supply potential of the technology. Regulators need
to encourage innovation and to help the industry to seek out the most effective
means of wind power integration.
The electrical energy market
The principal product being sold in an electricity market is energy. There are a
number of possible mechanisms for selling the energy (Kirschen and Strbac,
2004). The choices may be limited by the particular market structure and local
circumstances. There may be a pool market where electrical energy is bought and
sold centrally (Figure 7.1), where participation can be mandatory, sometimes
Bilateral market
Genco 1
Supplier 1
Genco 2
Supplier 2
Genco 3
Supplier 3
Genco 4
Forward market
Figure 7.1
Representation of a gross pool electricity market
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