Electricity Generation Industry Research Articles

Long-term contracting in hydro-thermal electricity generation: Welfare and environmental impact

We consider electricity generation industries where thermal operators imperfectly compete with hydro operators that manage a (scarce) water stock stored in reservoirs over a natural cycle. We explore how the exercise of intertemporal market power affects social welfare and environmental quality. We show that, as compared to the outcome of spot markets, long-term contracting either exacerbates or alleviates price distortions, depending upon the consumption pattern over the water cycle. Moreover, it induces a second-order environmental effect that, in the presence of a thermal competitive fringe, is critically related to the thermal market shares in the different periods of the cycle. We conclude by providing policy insights.

The Relation between Input and Output of Electric Power Generation Industry in Korea Comparison of Panel Regression Analysis

The Relation between Input and Output of Electric Power Generation Industry in Korea Comparison of Panel Regression Analysis

Political capabilities, policy risk, and international investment strategy: evidence from the global electric power generation industry

Whereas conventional wisdom holds that multinational enterprises (MNEs) invest less in host countries that pose greater policy risk—the risk that a government will opportunistically alter policies to expropriate an investing firm's profits or assets—we argue that MNEs vary in their response to host-country policy risk as a result of differences in organizational capabilities for assessing such risk and managing the policy-making process. We hypothesize that firms from home countries characterized by weaker institutional constraints on policy makers or greater redistributive pressures associated with political rent seeking will be less sensitive to host-country policy risk in their international expansion strategies. Moreover, firms from home countries characterized by sufficiently weak institutional constraints or sufficiently strong redistributive pressures will seek out riskier host countries for their international investments to leverage their political capabilities, which permit them to attain and defend attractive positions or industry structures. We find support for our hypotheses in a statistical analysis of the foreign direct investment location choices of MNEs in the electric power generation industry during the period 1990–1999, the industry's first decade of internationalization. Copyright © 2010 John Wiley & Sons, Ltd.

Short-term forecasting of electricity prices in the Colombian electricity market

The restructuring of the electricity-generating industry from protected monopoly to an open competitive market has presented producers with a problem scheduling generation: finding the optimal bidding strategy to maximise their profits. In order to solve this scheduling problem, a reliable system capable of forecasting electricity prices is needed. This work evaluates the forecasting capabilities of several modelling techniques for the next-day-prices forecasting problem in the Colombian market, measured in USD/MWh. The models include exogenous variables such as reservoir levels and load demand. Results show that a segmentation of the prices into three intervals, based on load demand behaviour, contribute to an important standard deviation reduction. Regarding the models under analysis, Takagi-Sugeno-Kang models and ARMAX models identified by means of a Kalman filter perform the best forecasting, with an error rate below 6%.

Investigating technical and ecological efficiencies in the electricity generation industry: are there win-win opportunities?

Using data from the EPA's EGRID and Clean Air Markets databases, we investigate the energy (technical) and emissions (ecological) efficiencies of 437 of the largest US electricity generators. We focus on fossil-fuel-based electricity generating plants because of their significant impact on industry environmental performance, especially with respect to air media emissions. Data envelopment analysis is used to determine the relative technical and environmental performance of these plants and whether win-win opportunities and end-of-pipe versus in-process (reactive versus proactive) practices relate to these efficiencies. The results show that win-win opportunities in terms of simultaneous technical (operational) efficiency and ecological efficiency do not appear to exist.

Assessment performance of high-temperature filtering elements

An extensive experimental campaign has been carried out in a hot gas filtration test facility so as to test several filtering elements and configurations, particularly, three different types of bag filters and one ceramic candle. The facility was designed to operate under a wide range of conditions, thus providing an excellent tool for the investigation of hot gas filtration applications for the advanced electrical power generation industry such as IGCC, PFBC or fuel cell technologies. Relevant parameters for the characterisation and optimization of the performance of the filters have been studied for a variety of operating conditions such as filtration velocity, particle concentration, pressure and temperature among others. Pressure drop across the filter, cleaning pulse interval, baseline pressure drop, filtration efficiency and durability of the filter have been investigated for each type considered and dependences on parameters have been established. On top of that, optimal operating conditions and cleaning strategies were determined. The tests results show that bag filters are a suitable alternative for the hot gas filtration due to the better performance and the high efficiency observed, which makes them suitable for industrial applications operating under high temperature high pressure conditions considered within the study (200–370 °C and 4–7.5 barg, respectively).

Justification for the next generation of maintenance modelling techniques

Variant forms of reliability centred maintenance (RCM) have been the maintenance improving tools of choice for the last 20 years. In this case study paper, justification is made for implementing, and a path is laid out to implement, Operations Research in the form of statistical modelling as the next step forward after RCM. The lack of failure data issue has been addressed by using elicitation protocols to provide component lifetime distributions. Graphical analysis and Crowe/AMSAA (Army Materials Systems Analysis Activity) methodologies are developed as a basis for justifying expenditures on maintenance improvement initiatives. A review of historical empirical—inferential techniques dating back to WWII is presented as well as discussions of the current applicability of the same. The deregulation of the Electrical Generation Industry has produced severe restraints on the publishing of failure data. Owing to a fortuitous set of circumstances, a limited amount of data became releasable, which allowed the promise of the method to be demonstrated.

Equilibrium and Kinetic Studies of in Situ Generation of Ammonia from Urea in a Batch Reactor for Flue Gas Conditioning of Thermal Power Plants

Ammonia has long been known to be useful in the treatment of flue/tail/stack gases from industrial furnaces, incinerators, and electric power generation industries. In this study, urea hydrolysis for production of ammonia, in different application areas that require safe use of ammonia at in situ condition, was investigated in a batch reactor. The equilibrium and kinetic study of urea hydrolysis was done in a batch reactor at reaction pressure to investigate the effect of reaction temperature, initial feed concentration, and time on ammonia production. This study reveals that conversion increases exponentially with an increase in temperature but with increases in initial feed concentration of urea the conversion decreases marginally. Further, the effect of time on conversion has also been studied; it was found that conversion increases with increase in time. Using collision theory, the temperature dependency of forward rate constant developed from which activation energy of the reaction and the frequency factor has been calculated. The activation energy and frequency factor of urea hydrolysis reaction at atmospheric pressure was found to be 73.6 kJ/mol and 2.89 × 107 min−1, respectively.

Restructuring, Ownership and Efficiency: The Case of Labor in Electricity Generation

This analysis considers improvements in productive efficiency that can result from a movement from a regulated framework to one that allows for market-based incentives for industry participants. Specifically, I look at the case of restructuring in the electricity generation industry. As numerous industries and economies have undergone this sort of transition to varying degrees, it is instructive to assess the performance of market-based incentives relative to what was observed under tighter regulation. Using data from the electricity industry, this analysis considers the total effect of restructuring on one input to the production process - labor - as reflected in employment levels, payroll per employee and aggregate establishment payroll. Using concurrent payroll and employment data from non-utility (merchant) and utility generators in both restructured and nonrestructured states, I estimate the effect of market liberalization, comprising both new entry and state-level legislation, on employment and payroll in this industry. I find that merchant owners of divested generation assets employ significantly fewer people, but that the payroll per employee is not significantly different from what workers at utility-owned plants are paid. As a result, the new merchant owners of these plants have significantly lower aggregate payroll expenses. Decomposing the effect into a merchant effect and a divestiture effect, I find that merchant ownership is the primary driver of these results.

Assessing the impact of regulatory reforms on China's electricity generation industry

In the past two decades, China has experienced a series of regulatory reforms in its electricity industry, aimed at improving power production efficiency. The central planning system was broken up and the market-oriented modern enterprise system was established. Furthermore, the former vertically integrated electricity utilities were divested and the generation sector was separated from the transmission and distribution networks. In this paper, we intend to estimate the impact of regulatory reforms on production efficiency of fossil-fired generation plants using the plant-level national survey data collected in 1995 and 2004. Applying the econometric method of Differences-in-Differences, we estimate the effects of these reforms on the demand for inputs of employees, fuel and nonfuel materials. The results show that the net efficiency improvement in labor input associated with the regulatory reforms is roughly 29% and the gains in nonfuel materials are about 35%, while there is no evidence of efficiency gains in fuel input associated with the electricity reforms.

Prospects for electricity generation and electrification in Russia till 2030

The results of modeling Russia’s electricity generation and electrification until 2030 are presented. Prospects were made out for two scenarios of socioeconomic development in relation to the dynamics of electricity generation and related industries of the country’s energy system. Electrification and energy generation/consumption levels are assessed together with installed power-plant capacities and greenhouse gas (GNG) emissions to the atmosphere. The consequences of expected risks arising from the possible prolongation of the Kyoto Protocol are analyzed.

A decision support tool for the analysis of pricing, investment and regulatory processes in a decentralized electricity market

After the liberalization of the electricity generation industry, capacity expansion decisions are made by multiple self-oriented power companies. Unlike the centralized environment, decision-making of market participants is now guided by price signal feedbacks and by an imperfect foresight of the future market conditions (and competitor actions) that they will face. In such an environment, decision makers need to better understand long-term dynamics of the supply and demand sides of the power market. In this study, a system dynamics model is developed, to better understand and analyze the decentralized and competitive electricity market dynamics in the long run. The developed simulation model oversees a 20-year planning horizon; it includes a demand module, a capacity expansion module, a power generation module, an accounting and finance module, various competitors, a regulatory body and a bidding mechanism. Many features, singularities and tools of decentralized markets, such as; capacity withholding, enforced divestment, long-term contracts, price-elastic demands, incentives/disincentives, are also incorporated into the model. Public regulators and power companies are potential users of the model, for learning and decision support in policy design and strategic planning. Results of scenario analysis are presented to illustrate potential use of the model.

Impacts of Market-based Environmental and Generation Policy on Scrubber Electricity Usage

The introduction of scrubbers as a means of controlling sulfur dioxide (SO2) emissions from stationary sources coincided with the implementation of the Clean Air Act of 1970. Since that time, there have been many policy changes affecting the electricity generation industry. These changes can be characterized as moving from direct regulation toward market-based incentives, both in deregulation or restructuring of power markets and adoption of market-based environmental regulation. These changes provide natural experiments for investigating whether the form of regulation can alter the rate of technological progress. This paper analyzes changes in scrubbers’ use of electricity (also known as parasitic load) in relation to regulatory policy regimes. Results show that restructured electricity markets led to innovations that reduced parasitic load considerably (35-45%). Conversely, the change to a cap-and-trade system for SO2 has not led to similar reductions.

Estimating Cost Structures in the U.S. Nuclear Power Industry

With growing concerns about global warming and surging oil prices, nuclear power is now back on the U.S. energy policy agenda. This paper provides firm level analysis of the production technology and cost structures in the U.S. nuclear power generation industry. The paper applies an econometric approach into a dual restricted variable cost function within a “temporal equilibrium” framework. A panel data set of 32 nuclear power generations for major U.S. investor owned utilities over the period 1986–2002 is used. The major finding indicates that most electric utilities in the nuclear electricity generation industry over utilized capital in production. The estimated results show evidence of scale economies in the production of the electricity industry. The paper presents supporting evidence that nuclear technology is cheaper than other alternative technologies and fuels, and it can offer possible cost savings to other alternative technologies.

Adaptive process control for turning operation using expert systems

Process control is concerned with the reduction of variance in the key aspects of a process. Process control is practiced in a variety of industries, including the chemical, petroleum, pharmaceutical, glass, steel and electric power generation industries. Traditional systems still have difficulty dealing with the non-linear nature of various processes, the vagueness of information about the process and the rapidly changing nature of the information about the process. Expert systems have the capacity to solve these problems because of their ability to process information with real time updating, deal with uncertain or incomplete knowledge, incorporate new knowledge into the program easily and put less pressure and responsibility on the human operator. This paper demonstrates the use of expert systems in process control using a realistic example and evaluates the effect of different manufacturing parameters.

The Role of Steam Power in the Victorian Hardwood Sawmilling Industry

Steam-powered sawmilling was first introduced in Victoria in 1841, just six years after European settlement, but it was not till after the goldrushes of the 1850s that sawmillers began tapping into the extensive eucalypt forests of the central highlands. By the late 1860s, steam sawmilling was one of Victoria’s largest secondary industries, and a major contributor to economic development and employment. It was to remain one of the state’s most significant rural industries over the following century and a key user of steam power. Outside the electric power generation industry, it would be the last major user of steam power during the decades after the Second World War. This paper examines the role of steam power in the Victorian hardwood sawmilling industry from the 1850s to the 1950s, providing an overview of the development of the industry, types of equipment employed, the functions to which it was applied, and the impact offactors such as changing boiler and steam engine technology, boiler safety legislation, new processing requirements, and the changing geographic location of sawmills.

Electricity sector reform in developing countries: an econometric assessment of the effects of privatization, competition and regulation

Electricity sectors in both developed and developing countries have been subject to restructuring to introduce private capital and increase competition. Although the effects of such reforms in a number of the developed economies are now well documented, the experience of developing countries is much less well researched. This paper provides an econometric assessment of the effects of privatization, competition and regulation on the performance of the electricity generation industry using panel data for 36 developing and transitional countries, over the period 1985–2003. The study identifies the impact of these reforms on generating capacity, electricity generated, labor productivity in the generating sector and capacity utilization. The main conclusions are that on their own privatization and regulation (PR) do not lead to obvious gains in economic performance, though there are some positive interaction effects. By contrast, introducing competition does seem to be effective in stimulating performance improvements.

Investigating Technical and Ecological Efficiencies in the Electricity Generation Industry: Are There Win-Win Opportunities?

Using data from the EPA's EGRID and Clean Air Markets databases, we investigate the energy (technical) and emissions (ecological) efficiencies of 437 of the largest U.S. electricity generators. We focus on fossil-fuel based electricity generating plants because of their significant impact on industry environmental performance, especially with respect to air media emissions. Data envelopment analysis is used to determine the relative technical and environmental performance of these plants and whether win-win opportunities and end-of-pipe versus in-process (reactive versus proactive) practices relate to these efficiencies. The results show that win-win opportunities in terms of simultaneous technical (operational) efficiency and ecological efficiency do not appear to exist.

Capacity commitment and price volatility in a competitive electricity market

The long lead time required to add new capacity in the electricity generation industry means that daily demands are necessarily served by capacity already installed. However, in a competitive market, even if the installed capacity was designed to serve the projected demands, frequent surpluses and occasional full utilization inevitably lead to price volatility. This paper develops a two-stage model of the generation market in which capacity construction occurs in stage 1, before demand realization, and price determination occurs in stage 2, when the equilibrium price ensures that the realized demand does not exceed the installed capacity. We show that price volatility and price spikes are inevitable, and that while price capping can mitigate high and volatile prices, it causes unmet demands and reduction in system reliability. This paper accentuates the interdependence among generating capacity, price volatility and service reliability, a primary cause of concern in the debate on electricity market reform.

Does divestiture crowd out new investment? The “make or buy” decision in the U.S. electricity generation industry

An empirical model of the “make or buy” decision faced by independent power producers (IPPs)in restructured U.S. wholesale electricity markets is derived to analyze power plant investment decisions by major IPPs from 1996 to 2000. The estimated investment cost and expected profit functions are used to evaluate the effectiveness of divestiture programs (which sold utility power plants to IPPs)in encouraging greater IPP participation. The estimates and counterfactual simulations indicate that a minimal amount of new plant investments were “crowded out” by divestiture and that divestiture encouraged greater (short‐run)entry, especially among utility‐affiliated IPPs.