Environmental Engineering Reference
In-Depth Information
reliability and security of supply. With large amounts of wind power being installed
there is a requirement that this investment is in plant and technology that comple-
ment wind power characteristics. The price signals to the market must encourage
and reward correct behaviour among participants. The market should result in an
optimal operation of the power system such that the cost/benefit to society (social
welfare) is maximised. This is not an easy matter to quantify as it involves optimal
operation in short, medium and long time frames. It involves solving the optimal
dispatch, unit commitment and optimal planning problems, which are still the
subject of research. The market needs to reward innovation and needs to minimise
barriers to entry. The market should promote energy efficiency and minimise
harmful emissions. The cost to society of these emissions needs to be built into the
market and hence the prices. Some will also argue that the price to consumers
should be low. This type of argument is na¨ve, as the price in a competitive market
will reflect the costs. A sustainable, reliable, efficient, low-emission power supply
system is a costly proposition that needs to be paid for.
Wind power is not the only recent addition in electricity markets. The load in
an electricity system was assumed traditionally to be largely inflexible and hence
was treated as a price taker. With the demand side of the market being largely
inflexible, market power on the generation side is harder to avoid (particularly in
small markets at times of high demand). This has led to serious market power
issues which have, in many cases, undermined the entire concept of electricity
markets. However, with technology developments, particularly in telecommunica-
tions, the load is becoming much more flexible and can participate more fully in the
emerging electricity markets. Not only will this load flexibility make the markets
function more efficiently and effectively, but it should also allow more wind power
to be connected to the grid as there will be the opportunity to match the wind
variability and unpredictability with flexible load. Energy storage may also have
a future in electricity markets as a complementary technology to wind power
(Section 5.4). However, most market studies would indicate that storage is only
viable in niche areas.
It could be argued that the well-publicised blackouts in North America and
Europe in the early 2000s highlight the failure to restructure the industry correctly.
In this environment there are many critics of wind power who suggest that its
variability will threaten the reliability of the electricity system. This argument will
have merit if the market fails to encourage behaviour leading to correct investment
in the appropriate plant mix and technologies that will complement wind power.
Some have argued that the introduction of competitive electricity markets has led to
underinvestment in generation and transmission. They claim that the assets are
being sweated for short-term gain with little or no long-term planning. The success
of wind power penetration is heavily dependent on investment in the transmission
system, and on the appearance of thermal plant that will serve to replace wind
power during lulls.
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