Modern Electricity Systems

Preface

Acknowledgments

About the Authors

1 Essentials of Power and Control

Abstract 2

Keywords 2

1.1 Introduction 3

1.2 Basic Principles of Power and Control 4

1.2.1 Energy and Power 5

1.2.2 Voltage, Current, and Impedance 8

1.2.3 Alternating Current Vs. Direct Current 10

1.2.4 Single Phase vs. Multiphase 13

1.2.5 Active, Reactive, Apparent Power and Power Factor 15

1.3 Control Overview 19

1.4 Power Generation and Grid: Operation and Control 21

1.5 Generation Dispatch and Balancing the System 23

1.6 Transmission and Distribution Network 24

1.6.1 Transmission Network 25

1.6.2 Distribution System 26

1.6.3 One Line or Single Line Diagram 27

1.7 Wholesale and Retails Markets 28

1.7.1 Wholesale Market 29

1.7.2 Retail Market 34

1.8 Smart Meters 40

1.9 Distributed Generation and Grid Edge 43

1.9.1 Microgrids in Kenya and Other Locations 43

1.9.2 Microgrids in the United States 44

1.9.3 Flexibility Services in Europe 45

1.9.4 Virtual Power Plants in Australia 46

1.10 Changes in the Grid 46

1.11 Visioning 47

Index 48

2 Basic Discounting and Levelized Costs Concepts

Abstract 3

Keywords 3

2.1 Introduction 3

2.2 Fundamentals 6

2.2.1 Cashflow and Discount Rate 6

2.2.2 Market Failures and Externalities 9

2.2.3 Tax and Subsidy 11

2.2.3.1 Carbon Tax 12

2.2.3.2 Subsidy 14

2.2.4 Present Value and Future Value 17

2.2.5 Risk and Risk Management 19

2.2.5.1 Identification 20

2.2.5.2 Assessment 21

2.2.5.3 Mitigation 21

2.3 Simple Applications 23

2.3.1 Simple Payback 24

2.3.2 Return on Investment 24

2.3.3 Gross Margin 25

2.3.4 Net Present Value 26

2.3.5 Levelized Costs 26

2.3.7 Lifecycle cost 28

2.3.8 Supply and Demand 29

2.4 Extended Applications 32

2.4.1 Wholesale market 32

2.4.2 Retail Market 39

2.4.3 Local Electricity Market 41

2.5 Visioning 42

Index 43

3 Modern Electrical Engineering Systems, Current Events," Crises," and Tradeoffs

Abstract: 2

Keywords: 2

3.1 Introduction: Tradeoffs, Crises, and Notable Current Events 2

3.2 Current Events, Crises, and Tradeoffs 5

3.2.1 Extreme weather and Climate events need Resilient and Diverse grid - Texas Power Crisis 2021 6

3.2.2 Wholesale Electricity Markets and their manipulations - big banks to wall street darlings 9

3.2.3 Systematic Energy Crisis - Nepal's Energy Poverty 12

3.2.4 Europe and Natural Gas: Increasing dependence on single resource -. Policies to achieve clean energy targets are not simple. 16

3.2.5 Pandemic's Impacts on electrical systems - Energy supply crunch and sudden change in electrical demand. 18

3.3 Tradeoffs 19

3.3.1 Green Energy Choices vs. Conventional Energy Choices 20

3.3.2 Regulation vs. Deregulation 24

3.3.3 Reliability vs. Costs 27

3.4 Crises and Tradeoffs mapping 29

3.5 Visioning 33

Index 36

4 Introduction to Influence of Wholesale Energy Markets in policy and pricing discussions

Abstract 3

Keywords 3

4.1. Introduction 3

4.1.1. True market proponents believe in market-based solutions to enable energy transformation 4

4.1.2. It is energy markets, not electricity markets 4

4.1.3. The United States Regional Transmission Organization developments 5

4.1.4. International energy market developments 5

4.1.5. Don't expect a policy to lead energy markets 6

4.1.6. Finally, energy markets are fascinating and complex 6

4.2. Do energy markets influence policy? 7

4.3. How does policy benefit market operations? 8

4.4. Joining an energy market is a decision not to be taken lightly ("On-Ramp" of the market setup costs) 8

4.4.1. The benefit to cost studies 9

4.4.2. Energy Imbalance Markets 9

4.4.3. Value Proposition studies 11

4.4.4. Regulatory Compliance and Audits 12

4.5. States with multiple RTOs 13

4.5.1. Texas has 3 RTOs - Electric Reliability Council Of Texas, Southwest Power Pool, and Midcontinent Independent System Operator 13

4.5.2. Missouri - Southwest Power Pool and Midcontinent Independent System Operator 14

4.5.3. Illinois - Pennsylvania-New Jersey-Maryland Interconnection and Midcontinent Independent System Operator 14

4.5.4. States with multiple RTOs creates "Seams" issues 15

4.5.5. Joint and Common Market - Pennsylvania-New Jersey-Maryland Interconnection and Midcontinent Independent System Operator effort 15

4.6. Other organized wholesale markets 15

4.6.1. Australia 16

4.6.2. Germany 18

4.6.3. Vietnam 19

4.6.4. Nepal (Potential) 20

4.6.5. Africa (Potential) 21

4.7. Leaving energy markets is a decision not to be taken lightly ("Off-Ramp") 23

4.7.1. First Energy and Duke Energy Ohio left MISO 23

4.7.2. New Jersey threatened to leave PJM's Capacity Market 24

4.8. States or Countries without RTOs 24

4.8.1. Who maintains reliability? 25

4.8.2. How are capacity needs assessed? 25

4.8.3. How are transmission needs assessed? 26

4.8.4. Capacity Benefit Margin is relevant in states without RTOs similar to locational capacity needs in states with RTOs 27

4.8.5. Some transmission planning concepts continue to be relevant for the market to non-market regional purposes 28

4.8.6. And energy markets added new metrics to continue to show the importance of transmission investments 29

4.8.7. Transmission planning and capacity markets are intertwined 30

4.9. Cost Allocation of Transmission projects 31

4.9.1. Reliability Project Cost Calculation 33

4.9.2. Economic Project Cost Calculation 33

4.9.3. Adjusted Production Cost Calculation 35

4.9.4. Public Policy Project Cost Calculation 36

4.10. Visioning - 37

INDEX 39

5 How to put together a regulatory policy by following a process

5.1. Introduction 3

5.2. What is a regulatory policy? 4

5.2.2. What about the influence on energy policy and regulatory actions in developing countries and fragile economies? 7

5.3. Different flavors of regulatory policy in the electric utility industry 8

5.3.1. A utility's regulatory policy for emerging technology is going to look different than the utility's strategy for an existing technology 8

5.3.2. The regulatory policy is going to look different in regions that have organized markets than the regions that don't 10

5.3.3. Regulatory policy for an IOU is different compared to a CCA 10

5.3.4. Regulatory policy for consumer advocates is going to be different than utilities 11

5.3.5. A utility's regulatory policy for industrial customers is different than consumer advocates or residential Customers 11

5.3.6. The regulatory policy for an Independent Transmission Company (ITC) is different than a Transmission Owner (TO) 11

5.3.7. Regulatory policy for a specific supply-side fuel such as Nuclear fuel is in a class by itself 12

5.3.8. A demand-side regulatory policy such as Demand Response 12

5.3.9. A regulatory policy with a compliance purpose 13

5.3.10. A technology provider's regulatory policy is going to look different than a national laboratory's policy 13

5.3.11. Regulatory policy drives partnerships 14

5.3.12. So, how do we know the regulatory policy is working? 14

5.4. There are five steps in any regulatory policy process 15

5.4.1. First, understand the customers of this process 16

5.4.2. Second, understand the output from the regulatory process. 16

5.4.3. Third, understand the regulatory process. 18

5.4.4. Fourth, understand the Inputs to the process. 19

5.4.5. Fifth, understand the Stakeholders in this regulatory process. 20

5.4.6. Applying the five steps to the Dynamic Line Rating (DLR) policy context 20

5.4.7. Applying the five steps to the Australian policy context 21

5.5. How does regulatory policy drive legislative affairs? 21

5.6. Additional examples of regulatory policy driving regulatory success 22

5.6.1. Salvation Army's Heat program 23

5.6.2. Example of IOU listening to stakeholder comments in Integrated Resource Planning (IRP) proceedings 23

5.6.3. Narrative about Citizen and Industry group influence on renewable standards 24

5.7. How does regulatory policy drive individual participation in industry communications? 26

5.7.1. How do you know you had a successful event? 27

5.8. Visioning 29

INDEX 30

6 How institutions shape energy policy

Abstract 3

Keywords 3

6.1. Introduction 3

6.2. Strategic Action Field Framework for Policy 7

6.3. What are the major institutions in US energy policy? 10

6.3.1. US Congress 12

6.3.2. Department of Energy (DOE) 16

6.3.3. Federal Energy Regulatory Commission (FERC) and Independent System Operator (ISO) 18

6.3.4. Independent Market Monitors 20

6.3.5. Energy Information Administration (EIA) 21

6.3.6. North American Electric Reliability Corporation (NERC) 22

6.3.7. Federal Bureau of Ocean Energy Management (BOEM) 23

6.3.8. State Legislatures (Senate and House) 24

6.3.9. Public Utility Commissions (PUC) 24

6.3.10. National Association of Utility Regulatory Commissioners (NARUC) 26

6.3.11. The role of local city governments 26

6.3.12. Energy advocates role in US policy 27

6.3.13. Stakeholder working group's role in setting US energy policy 28

6.3.14. Associations & Alliances role in policy 30

6.3.15. Summary of US institutions 31

6.4. What are the major institutions in international energy policy? 32

6.4.1. Examples from strong economies 33

6.4.1.1 European Union (EU) 33

6.4.1.2. European Commission (EC) 33

6.4.1.3. International Energy Agency (IEA) 33

6.4.1.4. World Energy Council (WEC) 34

6.4.1.5. European Network of Transmission System Operators for Electricity (ENTSO-E) 34

6.4.1.6. Australia 35

6.4.1.7 Energy Regulators Regional Association (ERRA) 39

6.4.1.8. China 39

6.4.2. Examples from Fragile Economies 41

6.4.2.1 Nepal 41

6.4.2.2 Democratic Republic of the Congo 44

6.4.3. Examples from the private sector 45

6.4.12. Summary of International institutions 46

6.5. The role of Climate Change/Low Carbon/Renewable Energy regulations, goals, and pledges in setting policy 47

6.6. The role of courts 48

6.7. Visioning 50

INDEX 53

7 How does the power system work?

Abstract: 3

Keywords: 3

7.1 Introduction 3

7.2 Guiding Principles for a Power System 5

7.3 Schematic of the modern energy system 6

7.4 Governing bodies and actors 8

7.5 Power System 8

7.5.1 Energy Management Systems 9

7.5.1.1 Generation Management 9

7.5.1.2 Transmission 13

7.5.1.3 Distribution 15

7.5.1.3.1 Distributed Energy Resource Management (DERMS 16

7.5.1.3.2 Head-End Systems (HES 18

7.5.1.3.3 Meter Data Management 19

7.5.1.3.4 Customer Information Systems (CIS) 20

7.5.1.3.5 Virtual Power Plant 21

7.5.1.3.6 Peer to Peer Trading and Flexibilities System 24

7.5.2 Market Management 25

7.6 High-level architecture and redundancies of the systems above 26

7.6.1 Cybersecurity 27

7.6.2 Change Management of Software Changes 28

7.7 Advanced Concepts of Power and Control 30

7.7.1 Power Flow 30

7.7.1.1 Transmission 30

7.7.1.2 Distribution 31

7.7.2 State Estimation 32

7.7.2.1 Transmission 32

7.7.2.2 Distribution 32

7.7.3 Contingency Analysis 33

7.7.4 Fault Management 34

7.7.4.1 Transmission 34

7.7.4.2 Distribution 35

7.7.5 Volt-Var-Watt control 37

7.7.6 Optimal Network Reconfiguration 37

7.7.6.1 Transmission 38

7.7.6.2 Distribution 38

7.7.7 Supervisory Control 38

7.7.8 Outage Management 39

7.7.8.1 Unplanned Outage 40

7.7.8.2 Planned Outage/Work 40

7.7.9 Asset Management 41

7.7.10 Automatic Generation Control 41

7.7.10.2 Unit Commitment 42

7.7.10.3 Reserve Calculations 42

7.7.11 Market Operations 43

7.7.12 Model Management and Digital Twin 43

7.7.13 Dynamic Line Rating 44

7.7.14 Other Basic Control 45

7.8 Power System 46

7.8.1 Long Term Planning 47

7.8.2 Medium Term Planning 47

7.8.3 Short Term Planning 47

7.8.4 Operational 47

7.9 Visioning 49

Index 51

8 How are changes to Power generation operation and control relevant today

Abstract 2

Keywords: 2

8.1 Introduction 2

8.1.1 What is happening in the current power systems? What shall drive the future changes? 6

8.1.1.1 The costs of renewables are declining 6

8.1.1.2 The sectors are more coupled 11

8.1.1.3 Energy security, reliability, and resiliency goals are more important 13

8.1.1.4 Innovations and the Internet of Things (IoT) are opening newer doors 15

8.1.1.5 The customers are becoming more aware 17

8.1.1.6 New actors like the aggregators are emerging 17

8.1.2 What did we learn? How is this relevant today and for the future of the power systems? 27

8.1.3 Pathways to make informed decisions for the future of the power system 29

8.1.3.1 Transformation into an unleased Distribution System Operator (DSO) 29

8.1.3.2 Encouraging (re) innovation for cleaner restructuring 32

8.1.4 Newer Elements of the Power System 33

8.1.4.1 Mini and Microgrid and their roles in Top-down and bottom-up electrifications 33

8.1.4.2 The aggregator is the new actor 34

8.1.4.3 Peer to Peer (P2P) Trading and Localized Energy Markets (LEMs) 36

8.1.5 Innovation and the Power System 37

8.2 Visioning 40

Index 42

9 Influence of Wholesale Energy Markets in policy and pricing discussions

9.1. Introduction 3

9.2. How do energy markets coordinate reliability? 7

9.2.1. What past reliability issues from energy markets have influenced policy? 8

9.2.2. Balancing inverter-based resources is the future for operations in energy markets 9

9.3. How do energy markets facilitate grid investments? 11

9.3.1. What major events have influenced transmission policies? 12

9.3.2. DERs, Energy Storage and Off-Shore Wind, drive the future grid investments in energy markets 17

9.3.2.1. Modeling Energy Storage is increasingly relevant in transmission planning 20

9.4. An introduction to capacity markets 21

9.5. How do capacity markets ensure reliability? 23

9.5.1. How do reliability assessments inform capacity markets? 25

9.5.2. The future role of operations in capacity markets depends on how well DERs and other emerging technologies perform in the next 5-10 years 28

9.6. How do capacity markets facilitate grid investments? 29

9.6.1. Past transmission planning experience may not be relevant for the future capacity markets. 29

9.6.2. Generator Interconnection reform is the future for transmission planning in capacity markets 29

9.6.2.1. Multiple engineering studies 30

9.6.2.2. Negotiation 32

9.6.2.3. Construction 33

9.7. An introduction to Ancillary Services Markets 36

9.7.1. Operating Reserve Demand Curve (ORDC) 41

9.8. How Ancillary Services markets ensure reliability? 44

9.8.1. A single entity administrating ancillary services provides benefits to consumers. 46

9.8.2. Real-Time Co-Optimization is the future for operations in A/S markets 48

9.9. How do A/S Markets facilitate grid investments? 50

9.9.1. Past transmission planning experience may not be relevant for the future A/S markets. 50

9.9.2. More A/S market products would be needed in the future 51

9.10. Visioning 54

10 Energy policy should include consideration of Energy poverty

Abstract 3

Keywords 3

10.1. Introduction 3

10.2. Energy Poverty definition 5

10.2.1. Energy Accessibility 5

10.2.2. Energy Quality Attributes 6

10.2.3. Multiple definitions of energy poverty 8

10.2.4. Developed and partially developed countries with Energy Poverty and Social Justice Issues 9

10.3. Hierarchy Model of Energy Attributes and Access 11

10.4. Importance of Energy Poverty mitigation as a priority in the eyes of international Non-Governmental Organizations (NGOs) 14

10.4.1. The World Bank definition 15

10.4.2. Energy poverty progress 15

10.5. Significant drivers for energy poverty 16

10.5.1. Energy Poverty links with basic needs 16

10.5.2. No one driver for energy poverty 17

10.5.3. Historical and current socioeconomic drivers for energy poverty 18

10.6. Energy poverty and ties to Thermal and, Cooking and Food energy 18

10.6.1. The need for multiple cooking and heating fuels 19

10.6.2. Energy Poverty and access to basic human and infrastructure needs 20

10.7. Why is energy poverty a significant issue now, more than ever? 20

10.7.1. Specific Experiences in Fragile Economies and the Global South 20

10.7.2. Need for Ongoing Data 22

10.7.3. The role of social media 22

10.7.4. Energy and safety, disproportionate effect on women, entrepreneurship, and energy 22

10.7.5. Energy Choice and Growth 23

10.8. Can wholesale energy markets help solve energy poverty? 23

10.8.1. Wholesale markets provide price transparency and non-discriminatory access to transmission 24

10.8.2. Market operators forecast future needs 25

10.8.3. Phased manner of market adoption and market startup costs 25

10.8.4. Power pool members in the global south are ideal candidates 26

10.8.5. Role of an independent board of directors 26

10.9. If there is no political will or economic driver for the wholesale markets, can proper retail reforms be the solution? 27

10.9.1. Industrial and Commercial customers guaranteed tariff 27

10.9.2. Residential customers tariff 28

10.9.3. Natural gas is the bridge fuel 28

10.9.4. Smart Meters role in reducing energy demand and consumption 29

10.9.5. Energy Subsidy should make way for Distribution System Operator 30

10.10. Can we get rid of energy poverty in our lifetime? 30

10.10.1. Energy Access - focus on power generation need 30

10.10.2. Energy Access - focus on the transmission system 32

10.10.3. Energy Access - focus on the Distribution system 33

10.1.1. Energy Quality - focus on the Data Institution Model (DIM) framework 34

10.1.1. Innovation for Energy Access and Quality - Examples 35

10.2. Visioning 37

INDEX 39

The authors have leveraged their combined 70 years of experience in the energy sector to develop a book that is unique among treatments of modern electric energy systems. It integrates engineering methods and concepts, financial requirements, business perspectives, policy drivers, and social implications to provide readers with a deep and broad understanding of the electric power industry in the US and around the world. The book begins by addressing basics of power systems engineering and engineering economics and state-of-the-art technical developments together with the influence of current events.

It provides an excellent treatment of wholesale energy markets both in the US and abroad, together with fundamentals of regulatory policy, including how policy is shaped by various institutions. A technically sound and very readable description of "how does the power system work" initiates new learners, while a treatment of recent changes, including high renewable growth, offers substantive insights for seasoned experts. Advanced energy market concepts related to ancillary services, reliability, investment, and capacity markets are clearly explained.

The book appropriately concludes by defining energy poverty and describing the need for nations worldwide to direct policy formation towards addressing this complex subject. This book is a must-read for all energy sector engineers and policy makers. It is also an exceptionally useful book for university coursework at both the senior undergraduate and graduate levels.

James McCalley

Distinguished Professor

Iowa State University

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It is a unique book that holistically brings together the pressing issues in modern electricity systems. The authors begin with fundaments of electrical engineering, economics, and tradeoffs made in real-life planning and operations. The subsequent chapters explain the role of people and institutions, energy poverty, the actual workings of power systems, wholesale, retail, and local energy markets, their relevance now, and their future direction. I especially liked the diversity of global examples in this book. For example, the book discusses Nepali power cuts and their solution in Chapters 3 and 10, highlights the importance of local innovation "City Safari" in Chapter 10, and provides examples/exercise in investment in renewable hydrogen in Chapters 5 and 7. In all, they introduce technical 'Tools' to address opportunities and issues around modern electrical systems.

Their combined international, diverse experience is the secrete sauce for making this book readable and timely. It is a must-read for engineers, policymakers, managers, and other professionals working in the electrical energy sector.


Prof Dr. Bhola Thapa

Vice Chancellor, Kathmandu University, Nepal

Vivek Bhandari, Ph.D., PE. SMIEEE is a Director at a multinational software company. He is responsible for providing end-to-end global leadership for the software solutions related to Distributed Energy Resource Management.

Rao Konidena, MBA founded Rakon Energy LLC, USA, and most recently was the Midcontinent ISO (MISO) as Principal Advisor for Policy Studies, working on energy storage and distributed energy resources.

William (Bill) Poppert, MBA is a 30-year veteran of the energy sector based in the US, where he has worked, in the US and internationally, in the operation, design, financing, and development of energy projects programs and businesses.