Managing Supply to Meet Demand

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From the course by Duke University

Electric Industry Operations and Markets

127 ratings

Duke University

Electric Industry Operations and Markets

127 ratings

This is a two week course. In the first week you will learn about the core activities that the Industry executes to bring electricity to customers. We will review what electricity is, how it is generated, how it is transmitted, how it comes into buildings, and how consumption of electricity instantly feeds back on the transmission and generation of electricity. You will learn to: Define what electricity is; Describe how electricity is generated, transmitted and distributed; Describe how electricity is generated, transmitted and distributed; and Summarize how the consumption of electric energy instantly feeds back on the transmission and generation of electricity. In the second week, the course shifts to the markets that drive Electric Industry operations. You will learn about the various costs of the electric industry’s core activities, how electricity is priced, the various ways that electric markets are structured, how these market structures determine which power plants are dispatched to produce electricity when, and how recent changes in generator fuel prices, generation technology, market regulations, and environmental regulations are transforming both Electric Industry Markets and Operations. You will learn to: Describe the main cost components to the electric system; Compare the costs of different types of power plants; Interpret the retail pricing of electricity; Explain the different types of electric markets and understand how they operate to dispatch electric supply to meet demand in real time; and Explain why and how the electric industry is regulated.

From the lesson

Electricity Industry Markets

In this second module, the course shifts to the markets that drive Electric Industry operations. You will learn about the various costs of the electric industry’s core activities, how electricity is priced, the various ways that electric markets are structured, how these market structures determine which power plants are dispatched to produce electricity when, and how recent changes in generator fuel prices, generation technology, market regulations, and environmental regulations are transforming both Electric Industry Markets and Operations.

Managing Supply to Meet Demand6:32

The Need for Different Power Plants5:53

Levelized Cost of Electricity6:00

Retail Pricing of Electricity4:05

Meet the Instructors

Lincoln Pratson
Gendell Professor of Energy & Environment
Nicholas School of the Environment

The electric industry operates on a just-in-time basis.

This is because unlike solid, liquid, or gaseous forms of energy,

there is as of yet no practical and economic way to store electrical

energy in the amounts that modern society uses on a second-by-second basis.

Consequently, the supply of electric energy must be produced so

as to always meet demand.

Furthermore, the flow of electric energy cannot be controlled in the same

way that solid, liquid, and gaseous flows of energy can be.

Electric energy can be put onto the grid and taken off the grid.

But the energy generated at a particular power plant cannot be sent

to a particular load.

Instead the plant's energy gets added to the electrical energy

being fed to the grid by other power plants.

And the energy is simultaneously consumed by all of the loads drawing from the grid.

Furthermore electric energy travels at light speed.

So any disturbances can rapidly propagate throughout an electric grid.

Disturbances to electric voltage and current frequency can damage electrical

equipment that has been built to operate at specific voltages and frequencies.

And electric outages, even momentary,

can lead to large financial losses and or endanger lives.

It is the job of electric system operators to keep electric supply balanced

with demand, while ensuring there are sufficient system backups in place to keep

the grid functioning if generators or grid components have to come off line or

even fail.

To accomplish this, the system operator must forecast the demand for

electricity one day ahead.

Schedule generation to meet this demand.

Schedule backup or reserve generation along with other ancillary services.

Schedule the use of transmission lines by various electric market participants.

Share schedules with operators managing neighboring electric grids, so

electric flow across grid interconnections can be managed.

Adjust the generation & transmission resources to correct for

minute by minute system imbalances.

And fix the grid & restore electric power to it in the event there is an outage.

Day-ahead forecasting of demand is done using

models that draw upon historical demand data for that particular time of year,

the next day's weather forecast and any information on upcoming business activity.

These models will then be re-run the next day,

while electricity is being in demanded, so that the forecast can be adjusted

real time in response to the day's actual weather and other factors.

With the day ahead forecast in hand,

the system operator then schedules generation to meet anticipated demand,

plus a certain level of unexpected demand or loss of generation.

This back up generation represents the system's reserve requirements.

A power flow model is then used to help determine a feasible schedule

of which generators, and which transmission lines to use,

to serve the demand of all the customers throughout the day.

The goal of the modeling is to optimize the generation and

transmission schedule on an hour by hour basis, so

as to ensure good reliability while minimizing supply cost.

If not enough generation or transmission is scheduled, supply will not meet demand.

And if too much generation, and or transmission,

is scheduled, more input energy to the power plant will be spent electrifying

the grid than is necessary, possibly reducing grid reliability and

for sure bringing about unnecessary wasted operation cost.

Additional protective or ancillary services that the system service operator

will contract include one automatic generation control to increase or

reduce power generation is needed to meet short term fluctuations in customer load.

Two, spinning reserves which are generators that are disconnected from

the grid but are already turning at the same frequency and

phase as the electric current on the grid.

And so can be connected to the grid at a moment's notice if

additional power is needed.

Three, non-spinning reserves, which are generators

that are not synchronized to the grid frequency but can be up and

running and putting power onto the grid within 10 minutes if requested.

Four, supplemental reserves, which are additional generators that need even

more lead time before they can be connected to the grid, but

which provide even more emergency back up power.

And four, black start units, which are often diesel generators that provide

power to power plants that have gone down and need electricity to get started again.

System operators are responsible for

managing their own electric grids, as well as for

coordinating operations with the operators of adjacent interconnected grids.

A system operator may be managing the grid of an investor owned utility,

a municipal utility or a federal power agency.

In certain instances the operator may be managing the grids of multiple utilities

to the benefit of all the utilities.

These particular types of system operators are known as independent system operators,

or regional transmission operators.

More concisely, they're known as ISOs or RTOs.

System operators in different parts of the US and

Canada coordinate their operations through eight regional reliability

councils that make up the North American Electric Reliability Corporation or NERC.

NERC sets the standards for operation reliability in North America.

And the regional reliability councils implement these standards within their

particular part of the North American electric grid.

In fact, the North American electric grid consists of four separate

regional transmission grids that generally operate independent of one another, but

are interconnected, and so, back one another up.

These four regional transmission grids are know as the Eastern, Western,

Texas, and Quebec interconnections.

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