Sunday, October 4, 2009

Why nodal pricing matters for generation and transmission?

This is another follow up post to Brian Fallow's articale in the New Zealand Herald on asset swaps. One of the things he suggests in the article is that nodal pricing doesn't matter for generation. This is not true. Arguments about the relevance of nodal pricing to the demand side are quite valid.

Nodal pricing in fact is highly relevant to efficient generation and transmission outcomes both in operational terms and investment efficiency. The locational issue relevant to generation is the fundamental question, (at its simplest) are we better to have a local generator only or a remote generator with transmission? If you don't have a locational signal in your pricing then you run the risk of using a remote generator every time and having an increasingly expensive transmission network. This is true of operating the electricity system as well. Sending power through transmission lines heats those lines up, which represents a loss of energy to the system. Without a nodal pricing system for dispatch then you could easily use a far away generator to meet demand even though it uses proportionally more energy (through losses) than the difference in cost of the local generator. Choosing which plant should run to meet the energy needs at least cost overall is a process called economic dispatch.

Brian Fallow makes a reasonable point in suggesting that nodal prices are meaningless because renewables are the first cab off the rank for investment and they have to be built where there is a resource. This oversimplifies the issue, however, because there are lots of renewable projects and they are distributed all over the country. The question isn't so much where should a project be built (it must be built where fuel is available - this is even true of thermals) but which projects should be built. Given that the main logistic challenge of the power system is getting power to Auckland from all over the country (but with significant other loads at very different places - such as 12% of the country's demand at the very bottom of the South Island) then deciding the least cost way of moving this energy around is a complex problem. The SPD model is the piece of technical magic that performs this task. Then, managing to signal to potential investors where they should invest (nodal pricing) is a neat trick that falls out of the New Zealand's electricity market pricing model (SPD - which is in fact an economic dispatch model).

Even under the heading of renewables you can choose hydro in the South Island (and other places), geothermal in the central North Island or wind (predominantly around the lower North and upper South Island). Each choice has a markedly different impact on how much the grid will cost to dispatch and how much transmission capacity will need to be built; and this can be very different at different times depending on weather (hydro and wind), outages and fossil fuel stockpiles. The pricing model for generation and transmission is, necessarily, complex.

Most of the solutions proposed to increase simplicity tend to be quite static. This is to say that they might work well if the electricity system didn't change much. The problems with electricity supply, however, are either very short term (I have to meet demand now) or very long term (which 40 year investment decision is best). Neither of these suits static solutions. The electricity system is very dynamic and dynamic means complex.

This does contribute complexity to the buying side of electricity and it is here that pure nodal pricing and economic dispatch has far less relevance. Here some form of simplification might make sense.

Mr Fallow has made some sensible observations but he does need to be aware of one of Albert Einstein's most useful quotes: "Everything should be made as simple as possible, but not simpler."

13 comments:

  1. Anuncie grátis no “Anunciar Grátis na Internet” e alcance seu publico alvo.

    Deixe um link no anúncio e receba visitas ilimitadas no seu site ou blog

    Site de anuncios gratis

    Com o crescente número de usuários da internet no Brasil e no mundo e a consequente busca por produtos,

    serviços e empresas por esse meio, tornou se questão de necessidade para muitas empresas e profissionais liberais marcar presença na web.

    Umas das mais poderosas ferramentas para esse fim é sem dúvida um site de classificados que é um bom negócio.

    Como se anuncia no “Anunciar Grátis na Internet?” classificados na internet grátis

    Umas das mais poderosas ferramentas para esse fim é sem dúvida um site de classificados gratis que é um bom negócio.

    Com o crescente número de usuários da internet no Brasil e no mundo e a consequente busca por produtos,

    serviços e empresas por esse meio, tornou se questão de necessidade para muitas empresas e profissionais liberais marcar presença na web.
    Umas das mais poderosas ferramentas para esse fim é sem dúvida um site de classificados que é um bom negócio.

    anunciar olx

    publicidades gratis na internet

    anúncios grátis ,alô negócio ,classificados grátis de carros ,anuncios gratis ,anuncios gratuitos ,anunciar gratis na internet ,anunciar , anuncios gratis na internet ,classificados ,anuncio gratis ,alo negócios imoveis ,sites de anuncios gratis ,classificados grátis carros ,alo negócios curitiba ,site de anuncios ,alo negocios ,alo negocio ,anunciar carros gratis ,onde anunciar gratis ,anunciar serviços ,anuncio gratuito ,classificados gratis na internet ,anúncio gratuito ,como anunciar no google ,anunciar imoveis gratis ,anunciar empresa gratis ,anuncie aqui ,sites de anuncio ,sites de anuncios gratuitos ,anuncios ,sites gratuitos para anuncios ,site classificados ,anuncios gratis de encontros ,classificados online ,sites de anuncios gratis na internet ,como anunciar gratis ,alo negócios curitiba empregos ,anuncio de veiculos gratis ,classificados empregos curitiba ,anuncios online ,site anuncios gratis ,alo negocio curitiba ,classificados para anunciar ,alô negócio paraná ,classificados online gratis ,classificados curitiba ,alo negócios curitiba aluguel casas ,anunciar gratis no google ,classificados grátis paraná ,anuncios classificados gratis ,sites gratuitos para anunciar ,anuncios gratuitos para empresas ,anúncio ,site de classificados gratis ,alo negocios curitiba ,anuncio de carros gratis ,anuncios gratis de imoveis ,anuncio gratis de imoveis ,anuncios de emprego ,anuncio gratis internet ,anuncios de imoveis gratis ,anuncios de carros ,anuncios adultos gratis ,site de anúncios ,publicar anuncios gratis na internet ,colocar anuncios gratis ,anuncios classificados ,publicar anuncios gratuitos ,anúncios paraná ,site de anuncio gratis ,sites para anunciar ,anúncios classificados grátis ,fazer anuncios gratis ,criar anuncio gratis ,anuncio gratis imoveis ,classificados grátis cascavel ,anuncios gratis de serviços ,inserir anuncio ,fazer anuncio ,sites de anuncios de imoveis gratis ,anunciar produtos gratis ,anuncios gratis online ,site de anuncio ,site anuncio gratis ,alo negócios classificados grátis ,anuncios imoveis gratis ,colocar anuncio gratis ,sites para anuncios gratis ,site anuncios ,anunciar site gratis ,anunciar imovel gratis ,como anunciar no google gratuitamente ,vender gratis ,quero anunciar gratis ,anuncios gratuitos na internet ,site de classificados grátis

    https://www.anunciargratisnainternet.org/ad-tag/anunciar-olx/
    https://www.anunciargratisnainternet.org/ad-tag/anunciar-blogs/
    https://www.anunciargratisnainternet.org/
    https://www.publicidades.org/
    http://www.compredachina.biz/
    https://www.desapegaaqui.com.br

    ReplyDelete


  2. نقل عفش من الرياض الى مصر نقل عفش من الرياض الى مصر
    نقل عفش بالدمام نقل عفش بالدمام
    نقل عفش بالاحساء نقل عفش بالاحساء
    نقل عفش داخل مكة نقل عفش داخل مكة

    ReplyDelete
  3. It's very nice of you to share your knowledge through posts. I love to read stories about your experiences. They're very useful and interesting. I am excited to read the next posts. I'm so grateful for all that you've done. Keep plugging. Many viewers like me fancy your writing. Thank you for sharing precious information with us. Get for more information QuickBooks customer service

    ReplyDelete