Local energy

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IET POWER AND ENERGY SERIES 55

Local Energy

Distributed generation

of heat and power

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Other volumes in this series:

Volume 1 Power circuit breaker theory and design C.H. Flurscheim (Editor) Volume 4 Industrial microwave heating A.C. Metaxas and R.J. Meredith Volume 7 Insulators for high voltages J.S.T. Looms

Volume 8 Variable frequency AC motor drive systems D. Finney Volume 10 SF6 switchgear H.M. Ryan and G.R. Jones

Volume 11 Conduction and induction heating E.J. Davies

Volume 13 Statistical techniques for high voltage engineering W. Hauschild and W. Mosch Volume 14 Uninterruptible power supplies J. Platts and J.D. St Aubyn (Editors)

Volume 15 Digital protection for power systems A.T. Johns and S.K. Salman Volume 16 Electricity economics and planning T.W. Berrie

Volume 18 Vacuum switchgear A. Greenwood

Volume 19 Electrical safety: a guide to causes and prevention of hazards J. Maxwell Adams

Volume 21 Electricity distribution networkdesign, 2nd edition, E. Lakervi and E.J. Holmes Volume 22 Artiﬁcial intelligence techniques in power systems K. Warwick, A.O. Ekwue and

R. Aggarwal (Editors)

Volume 24 Power system commissioning and maintenance practice K. Harker Volume 25 Engineers’ handbookof industrial microwave heating R.J. Meredith Volume 26 Small electric motors H. Moczala et al.

Volume 27 AC–DC power system analysis J. Arrillaga and B.C. Smith Volume 29 High voltage direct current transmission, 2nd edition J. Arrillaga Volume 30 Flexible AC Transmission Systems (FACTS) Y-H. Song (Editor) Volume 31 Embedded generation N. Jenkins et al.

Volume 32 High voltage engineering and testing, 2nd edition H.M. Ryan (Editor) Volume 33 Overvoltage protection of low-voltage systems, revised edition P. Hasse Volume 34 The lightning ﬂash V. Cooray

Volume 35 Control techniques drives and controls handbook W. Drury (Editor) Volume 36 Voltage quality in electrical power systems J. Schlabbach et al. Volume 37 Electrical steels for rotating machines P. Beckley

Volume 38 The electric car: development and future of battery, hybrid and fuel-cell cars M. Westbrook

Volume 39 Power systems electromagnetic transients simulation J. Arrillaga and N. Watson

Volume 40 Advances in high voltage engineering M. Haddad and D. Warne Volume 41 Electrical operation of electrostatic precipitators K. Parker Volume 43 Thermal power plant simulation and control D. Flynn

Volume 44 Economic evaluation of projects in the electricity supply industry H. Khatib Volume 45 Propulsion systems for hybrid vehicles J. Miller

Volume 46 Distribution switchgear S. Stewart

Volume 47 Protection of electricity distribution networks, 2nd edition J. Gers and E. Holmes

Volume 48 Wood pole overhead lines B. Wareing

Volume 49 Electric fuses, 3rd edition A. Wright and G. Newbery

Volume 50 Wind power integration: connection and system operational aspects B. Fox et al.

Volume 51 Short circuit currents J. Schlabbach Volume 52 Nuclear power J. Wood

Volume 53 Condition assessment of high voltage insulation in power system equipment R.E. James and Q. Su

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Local Energy

Distributed generation

of heat and power

Janet Wood

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First published 2008

This publication is copyright under the Berne Convention and the Universal Copyright Convention. All rights reserved. Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, 1988, this publication may be reproduced, stored or transmitted, in any form or by any means, only with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers at the undermentioned address:

The Institution of Engineering and Technology Michael Faraday House

Six Hills Way, Stevenage Herts, SG1 2AY, United Kingdom www.theiet.org

While the author and the publishers believe that the information and guidance given in this work are correct, all parties must rely upon their own skill and judgement when making use of them. Neither the author nor the publishers assume any liability to anyone for any loss or damage caused by any error or omission in the work, whether such error or omission is the result of negligence or any other cause. Any and all such liability is disclaimed.

The moral rights of the author to be identiﬁed as author of this work have been asserted by her in accordance with the Copyright, Designs and Patents Act 1988.

British Library Cataloguing in Publication Data

A catalogue record for this product is available from the British Library ISBN 978-0-86341-739-9

Typeset in India by Newgen Imaging Systems (P) Ltd, Chennai Printed in the UK by Athenaeum Press Ltd, Gateshead, Tyne & Wear

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Chapter 1 Developing the UK’s energy infrastructure

1.1 The development of electric power

Scientists first began to understand fully and make use of electricity generation in the late nineteenth century. Experimenters had been investigating the phenomena of static electricity and magnetism for more than 200 years up to that point and had reported on a variety of interesting results. Their names are commemorated in some of the units used to measure the effects they discovered – the ohm, tesla and ampere. The IET commemorates one of the most important scientists, Michael Faraday, who explored electromagnetic induction during a series of experiments begun in 1831. He found that, if he moved a magnet through a loop of wire, an electric current flowed in the wire. The current also flowed if the loop was moved over a stationary magnet. This is the basic principle of electricity generation: the three ingredients are a magnetic field, an electric current and movement. Any two of these components together will produce the third, so that moving a conductor in a magnetic field will produce a current, and, equally, passing an electric current through a conductor in a magnetic field will make the conductor move – the principle by which an electric motor works.

With these three components electricity can be generated – or an electric motor set up – using very simple apparatus and at small or large scale. As a result, once it was clear that electric current was a useful tool and could be employed in an electric circuit to produce light or heat, first experimenters and then industry quickly began to make use of it and, in its very early days, it was produced domestically, in sheds or cellars.

Of course, to generate electricity in a reliable way it was necessary to find a force to move the conductor within the magnetic field. One way would be to attach the conductor directly to an object moved by some other force. This might be water, for example, falling through a mill wheel, a method that had been directly used for centuries to move grindstones for milling flour. In fact, there are mills still in existence with nineteenth-century electricity-generation apparatus. Using a mill was particularly valuable because many had millponds in place, allowing water to be conserved so that it was available at times when the river would otherwise have too little water to allow the water-wheel to operate. Dams, ponds and adjustable gates or sluices, used to direct the water and provide a reliable supply for grindstones, could be equally effective at ensuring electricity generation was reliable. Alternative motive

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forces for electricity generators could include wind (‘harvested’ by windmills). But for industry, which wanted a 100 per cent reliable source if it was to use electric power, the most attractive motive force to use to generate electricity was steam.

The steam engine had been invented and developed by Thomas Newcomen and James Watt, and was already used by many industries. Almost any kind of fuel, but mainly coal or wood, could be used to boil water and produce steam under high pressure, which was originally, in Newcomen’s and Watt’s engines, used to drive pistons. But in 1884 Charles Parsons proposed a steam turbine in which vanes rather like those of a windmill (the turbine blades) are connected to a central shaft. The steam turns the blades as it expands through them, turning the centre shaft. This arrangement can be very efficient, because additional sets of turbine blades can be added, with each set sized according to how far the steam has expanded. The entire steam turbine is in a cylindrical casing.

The steam turbine was far more useful for the fledgling electric-power industry than the earlier steam engines because the result is a rotating shaft ideal for using in a stationary magnet to produce an electric current.

In fact, Parsons’s first model was connected to a dynamo that generated 7.5 kW of electricity. That first turbine was soon scaled up, and within Parsons’s lifetime turbines were built with generating capacity thousands of times bigger. Steam turbines are still by far the most common method of generating power, whether in so-called ‘thermal’ stations, where the steam is produced by burning coal or biomass fuel, or in nuclear stations, where the steam is produced using the heat from nuclear fission. In some cases they are used in conjunction with a gas turbine – known as a combined-cycle plant, or in configurations where waste steam is captured at some point in the process and used for direct heat in a so-called combined-heat-and-power plant. The names of Parsons and his US competitor George Westinghouse are still to be seen in the companies active in the power industry.

The relative simplicity of the electricity-generation process and the use of the steam turbine meant they were quickly employed in both industrial and domestic applications. Most were dedicated for use by a single industrial concern, or domesti-cally were used for a few customers of a single site. Initially there was no consistency between the different generators: each operated at its chosen current and voltage. Mea-sured in amps, current describes the amount of electric charge moving in the electric circuit, while the voltage (measured in volts) describes how much energy each unit of charge has – similar to the difference between the number of cars travelling along a road (current) and the speed at which each is travelling (voltage).

1.2 Regulating the industry

Generation began to come under legislative regulation in the 1880s and 1900s. The first Electricity Act in 1882 allowed the setting up of supply systems by persons, companies or local authorities, and amendments in 1888 made such new enterprises easier to set up. A further Act in 1909 regulated planning consent for new power stations, but by 1914 there were hundreds of independent undertakings, private and

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Developing the UK’s energy infrastructure 3 public, in operation. They sold electricity for power and for lighting, meeting demand of nearly 2 TWh over the year. During the First World War, demand increased sharply, as the war machine swung into gear and factories switched to full-scale production of munitions and machinery.

At this stage there were few connections between local undertakings, and many technical differences. Although there were 600 or so generators, they were unable to be fully effective because they were not interconnected. Generators that for one reason or another had to stop producing power were unable to make up the shortfall by importing power from other suppliers, and at the same time companies who were producing more than required by their customers could not export the power. The lack of connecting wires was not the only problem: the different companies still provided their power to different specifications and used different technical standards. London alone had 50 electricity supply systems, 24 different voltages and 10 different frequencies. Power stations remained unlinked, however, and it was not until 1919 that legislation was passed aimed, among other things, at correcting this.

A government committee set up by the Board of Trade and chaired by Sir Archibald Williamson had recommended that the electricity supply companies be nationalized. The government rejected this proposal, but went ahead with other proposals to set up an Electricity Commission under the Ministry of Transport and a series of regional Joint Electricity Boards. The Commissioners regulated the industry but the joint boards, which were intended to coordinate development, were ineffec-tive. By 1926 total sales of electricity were 5.8 TWh, generated by 478 power stations with a total capacity of 4 422 MW. Local authorities owned 264 stations and compa-nies owned 215, the biggest of which had more than 100 MW of plant installed. Some generators were producing alternating current, while others produced direct current.

1.3 Coordinating the supply

In 1926 the new Electricity Act not only provided for existing undertakings to maintain control of distribution, but also provided for the coordination of new power-station planning and the control of power stations. It established a public body, the Central Electricity Board, which had a remit to standardize electricity supply across the country. It also had powers to control power stations’ operations and to establish a ‘grid’ of high-voltage transmission lines.

The ‘grid’ was required because small domestic power generation was steadily being replaced by larger, more efficient power stations that served hundreds or thou-sands of users. This allowed for economies of scale, but transmitting electricity along electric wires can mean that much of the energy is dissipated – depending on the type of wire, energy can be lost as heat, for example; this is the principle by which the traditional incandescent light operates.

However, the rate at which energy is dissipated varies depending on the voltage and current measured in the wire. A high current, when lots of charge is moving in the wire, has a much greater heating effect than a high voltage. The total energy is a product of the voltage and the current. Another result of this relationship is that, if

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the energy remains the same, a higher voltage must result in a lower current, and vice versa. At lower current, less energy is dissipated and there is potential to transport much more power.

Power designers took advantage of this relationship in designing electricity trans-port networks, along with another well-known property of electricity: the fact that a changing electric current passing through a coil of wire that generates a magnetic field could induce an electric current in a second, unattached, coiled wire (see Panel 1.3) – an arrangement known as a transformer. The transformer could be used to vary the voltage and current to produce a very high voltage and therefore a very low current – ideal when power had to be transported long distances – and a second transformer could be used to reduce the voltage and increase the current to the levels used to power appliances.

The result was the complex ‘grid’ that began to take shape after the 1926 report and has been expanding ever since. Now there is a national grid with some long-distance lines operating at 440 000 V (440 kV) and others at 275 000 V (275 kV) that is used to transfer ‘bulk’ supplies from major power plants to the major load centres, and a network of local connections that carry electricity at 110 kV for local distribution. Transformers are used to ‘step up’ power to high voltages for transmission and to ‘step down’ the voltage to feed it into the local network. Finally, more step-down transformers are used to reduce the voltage to a level suitable for domestic users.

Domestic power supply was standardized at 240 V for many years, although recently the UK voltage has been standardized at 230 V to be consistent with the rest of the European power network. Large industrial energy users may take power from the network at higher voltage levels depending on their requirements.

1.4 Centralizing power stations

Why was it necessary to develop the high-voltage grid? Even back in 1926 it was clear that, as the electricity industry was developing, the need to transmit power longer distances was growing. This was not just to allow power to be transferred between neighbouring companies among the 400 or so selling electricity: it also enabled the network as a whole to take advantage of economies of scale. Steam turbines could be made to work more efficiently as the size of the boiler and turbine increased, so the cost of a unit of electricity produced decreased. At the same time, economies of scale could be made, once again reducing the capital cost per unit of electricity.

Other pressures also drove the trend for larger power stations sited further from the areas where electricity was used (the ‘load’ centres). For steam turbines, one reason for the shift was the need to transport huge amounts of fuel to the big new stations.

One of the valuable characteristics of coal is that it can be bought, and transported, from many suppliers worldwide. But the downside is that there can be huge financial and environmental costs in transporting coal from the mine to the power station. If the power station owner is willing to link the plant closely to a single mine, it is much more efficient to build so-called ‘mine mouth’ power stations to minimize the distance that

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Developing the UK’s energy infrastructure 5 the coal has to be transported. There are other potential benefits to the ‘mine mouth’ plant. First, the plant operator can contract for long-term fuel supplies and, second, the detailed design of the plant can be optimized to fit with the characteristics of the coal, which can vary considerably from deposit to deposit.

China has come up against this issue recently, during its rapid growth in the last two decades and resulting need to supply power to its burgeoning industries. While most of the country’s coal deposits are in the north and west of the country, the major load centres were, and still are, the fast-growing industrial centres and cities of the southwest. Instead of choking the country’s train system by transporting millions of tonnes of coal each day, the country announced a ‘coal-by-wire’ policy to site power generation closer to the mines and build high-voltage transmission lines instead.

The recognition that power stations can cause local environmental degradation and emit pollutants that affect its immediate surroundings has also tended to aid the shift towards using sites far away from centres of population and hence areas where the power load is highest.

While for coal-fired power stations choice of site is a balance between transport-ing power and transporttransport-ing fuel, other types of power-generattransport-ing plant may have less flexibility in deciding on a site. Traditional water (hydro) power, for example, is immediately restricted to sites on a suitable river or near enough to allow water to be diverted or stored. What is more, the amount of electricity that can be gen-erated depends on the amount of energy available from the moving water, which usually requires either a significant drop, or a large volume of water moving through the turbines. Mountainous terrain is where suitable hydropower sites are most often found, which are seldom the areas where major load centres are found. That can lead to significant power-management requirements in countries that are heavily reliant on water power. Norway, for example, which meets upwards of 90 per cent of its electricity needs from hydropower plants, has to transport most of its electricity from the north of the country to the major cities in the south.

The UK is a windy country, and average wind speeds are favourable for build-ing wind farms in many areas of the country. But good winds ‘on average’ are not necessarily good enough for a wind farm to make economic sense. Instead, power-generating companies have to search out the sites that offer the best possible wind speeds on the maximum number of days each year – maximizing ‘fuel’ availability. That tends to drive major wind-farm development to particular parts of the country, such as Wales and the far north of Scotland. These areas tend to be those where fewer people live and where farming or other low-density activities are more common than industry, so the electricity system in these areas tends to be on a relatively small scale and low in capacity – built to serve a few small users.

The Western Isles of Scotland and the island of Lewis are a good example. These areas have among the UK’s best wind resources but have in the past been home to farming and fishing communities. It is thought that Lewis alone could host several hundred wind turbines providing electricity equivalent to a couple of the UK’s largest power stations. But transmitting the electricity to places where it will be used in England requires some new high-capacity transmission lines to be built – ‘wind by wire’.

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New types of water power will also have the problem of location, to a varying extent. Some devices rely on a so-called ‘tidal race’, which is typically a channel between two areas of sea where the effect of the tide is very pronounced, so that the water moves much faster through the channel. These are of course entirely restricted on their location. However, some other tidal devices will have much broader appli-cation and could be used to abstract some energy from less dramatic tides along the coast and in river estuaries. Wave-powered devices will also be less constrained. For these power sources it will be a matter of finding the best possible sites and costing the transport of power back to shore; the chosen sites will be an economic balance between the two.

1.5 Managing the expansion

Building ever-larger and more complex networks to subdivide and deliver the elec-tricity output to users did carry significant cost, and still does. What is more, it requires transmission lines to be installed across both public and private property. Building new lines is always contentious. But the overall effect of the increasing scale of electricity generation and interconnected systems steadily reduced the cost of electric light and motive power.

The National Grid was developed rapidly after the 1926 recommendations. By 1933 some 4 000 miles of transmission lines had been completed and by 1935 the grid was regarded as complete. Rated at 110 kV, it was much smaller and operated at a lower voltage than the grid in operation today. But it signalled a radical shift in managing the electricity supply. The fact of the grid’s existence meant that all electricity generators and electricity users were connected. For it to work successfully, power generators had to supply (‘export’) power to the network within strictly controlled current and voltage limits. What is more, the power stations could no longer operate entirely independently. Part of the intention of the grid was to allow electricity to be moved around the network to meet users’ needs and to provide backup, for example for power stations that had to shut down. But, in return for access to supplies from the grid, power-plant operators had to accept that part of their own supply could be diverted to other parts of the network as required, and, what was more, they had to be willing to accept a measure of control from the grid.

In 1939 this was formalized when the grid became a nationally integrated network with a National Control Centre under the CEB’s direction.

The savings arising from the grid were large and demand grew rapidly. In 1914 electricity sales per head of population had been 77 kWh. By 1939 it was 486 kWh. At that time the installed capacity of power stations was 9 712 MW, most new generators being 30 or 50 MW capacity.

1.6 The Central Electricity Generating Board

In April 1948 the entire industry in Great Britain (except the North of Scotland Hydro-Electric Board, already a public board) was nationalized when the assets of 200

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Developing the UK’s energy infrastructure 7 companies, 369 local authority undertakings and the Central Electricity Generating Board (CEGB) were brought together under the British Electricity Authority (BEA) – which was known as the Central Electricity Authority (CEA) after 1954 – and 14 area distribution boards.

At this time work started on building the 275 kV high-voltage grid (known as the supergrid) that operates today.

The area distribution boards accepted bulk supply from the supergrid and stepped it down to provide power to domestic properties. The power stations and transmission network were run by a central authority within the BEA.

In January 1958, following examination of the industry by the Herbert Committee and legislation, the CEA was replaced by an Electricity Council, whose function was to act as a central policy-making body for the whole of England and Wales; and a Central Electricity Generating Board, which was to be responsible for generation and main transmission in England and Wales, owning such assets as the power stations and the grid.

The CEGB inherited 262 power stations with a capacity of 24.34 GW, and annual sales of 40.3 TWh and it split the country into five operating regions.

Output increased rapidly in the 1960s and was catered for by a huge programme of power-station and transmission-line construction. By 1971 the CEGB owned 187 power stations with a total capacity of 49.28 GW and had annual sales of 184 TWh. At this time power-station sizes were increasing, and some of the country’s largest coal-fired and nuclear stations came on line. Within each power station there may be several ‘generating sets’ or units, each producing several hundred megawatts of power.

The largest power station of all was Drax, a coal-fired station in the north-east with a total rating of 2 000 MW from its six units, but there were several sites pumping over 1 000 MW into the grid. In the 1970s the increasing demand and the larger power stations in operation required still more power to be transferred around the country, and in this decade the 400 kV supergrid was completed.

The largest single-turbine generating set on the grid is currently at Sizewell B, which came on line in 1994 and is rated at 1 200 MW.

1.7 Monopolies and private companies

From its earliest days the electricity supply system was seen as a ‘natural monopoly’ and it was still being described in this way in the 1980s. This assumption was both a cause and effect of the industry’s development. Economies of scale meant that building large power stations was more cost-efficient for the electricity gen-erator. But bigger power stations meant more customers were required, with ever-greater costs for installing and maintaining an extensive fixed network of wires.

The industry was capital-intensive: building the generating stations and the net-work was relatively expensive, while producing and delivering the product once the infrastructure was in place were relatively cheap. A power-generating company had

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to be able to rely on customers over terms of many years to make a return on the capital invested – and, in any case, electricity supply was quickly seen as a ‘public good’, and a requirement almost as basic as a water supply. The result was that it was assumed that power companies should be awarded monopoly supply rights within their areas.

In the UK, that meant a single supplier over the whole of England and Wales – eventually known as the Central Electricity Generating Board – and two other monopoly suppliers in Scotland: the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board. Within these power monopolies were gen-erating stations, a high-voltage transmission network and local ‘area boards’ that operated the low-voltage network and supplied power to domestic customers.

This industry structure was largely replicated worldwide. Local or national monopolies generated and supplied electricity within a defined area and many were owned by the national or local government corresponding to their service area.

Since they were monopolies, their investments and customer pricing were over-seen by the government. In some cases – notably in the USA – power companies were privately owned, but their ability to decide investment and set customer prices was limited by independent Public Utility Boards, who scrutinized utilities’ work and investment programmes and agreed what prices were allowable.

The monopoly structure helped determine the industry’s development. It worked extremely well and customers – especially domestic customers – could assume that a reliable and unlimited supply of electricity was available at all times. Once a reliable supply of electricity could be assumed to exist in every house, appliances could be developed to make use of it. From fridges and irons, to PlayStations and home cinemas, there was no restriction on domestic electricity use. Demand could grow ever higher, while suppliers with large service areas tended to invest in ever-larger power-generating stations, to meet their customer needs, and build them at the most economic site, generally near the fuel source and away from population centres.

A similar development had been under way in the supply of gas. A network of pipes had been installed, supplied at first by local ‘gas works’ and later direct from North Sea and other reserves. As with the electricity network, a state-owned monopoly – British Gas – was set up to procure gas and supply it to domestic and industrial customers. The UK’s gas network is still less extensive than the electricity network, thanks partly to the high cost of burying pipes to serve small groups of isolated customers, but also partly because once an electricity supply is in place it can provide the heat that the gas would supply, both for space heating and for cooking, while also powering all kinds of other appliances. With an electricity supply in place the arguments for a gas supply become still less favourable. Nevertheless, the UK’s gas network is very extensive, and this is an important factor in electricity decentralization.

The monopoly paradigm began to change at the end of the 1980s. In the UK, a series of publicly owned industries had already been sold to private investors, including the gas network. The CEGB was next on the list.

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Developing the UK’s energy infrastructure 9

1.8 Breaking up the monopoly

As well as privatizing the CEGB, the Conservative government under Prime Minis-ter Margaret Thatcher also wanted to shake up its monopoly supply function, on the grounds that competition would be more efficient, would lower prices and encourage innovation. Clearly, there would be limited areas where competition was possible: building new wires alongside those already existing and inviting customers to switch between them was no efficiency improvement. Nor could the government achieve its aims by simply splitting the CEGB geographically: that would result in a patchwork of monopoly suppliers instead of just one. Instead, the government split the industry by function. Electricity generation and supply to customers were two areas where compe-tition could be introduced. Operating the high- and low-voltage networks constituted monopoly activities and would remain so.

The result was a split into generation, transmission, distribution and supply that has been widely copied among other countries that have also been changing the operating model of their power industries. This model conceives the industry not as unique, but as very similar to other industries where manufacturers sell their products wholesale to retailers who supply individual customers. In this model, products are transferred from manufacturer to retailer to customer via road, rail, post, etc., using, but not owning, other freight infrastructure.

Similarly, in the so-called ‘deregulated’ electricity industry, a group of generating companies build and operate electricity-generating plants to manufacture electricity. They sell their electricity in bulk to supply companies with thousands or millions of small customers (or sometimes direct to very large users such as heavy industry). The supply companies, or electricity retailers, are the industry face that domestic users see, and customers can switch between them without needing to make physical changes to their supply.

The electricity networks play the role of, say, the road network. Bulk power is transmitted across the high-voltage ‘motorways’ – owned (in England and Wales) and operated by a company now called National Grid Electricity Transmission (or just National Grid) – and is then stepped down on to the distribution net-work. These local, low-voltage networks are owned and operated by so-called distribution network operators (DNOs), which step down the power still further and distribute it to individual premises and houses. The National Grid and the DNOs are monopolies, whose income is from ‘tolls’ paid by the generating and supply companies and who supply various other services to keep the network running.

The result is that what were parts of the same industry now have very different functions and operate in very different ways. The companies that retail electricity are more like other major consumer companies such as banks, focused on providing services for thousands or millions of customers. Among their major functions as companies are managing their customer information, billing and collecting payment. In the 1990s this reinvention as ‘home service’ companies led them to expand into other services, such as providing vehicle-breakdown cover or financial services. At that time the strategy was not very successful, except in closely related industries so

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that most energy retailers supplied both gas and electricity. Now, however, the model has been revived, as other consumer companies such as supermarkets have begun to offer electricity supply deals.

The transmission and distribution companies remain superficially similar as businesses. They maintain, and where appropriate expand, a fixed network and are paid via tolling fees that are governed by an independent regulator, the Office of Gas and Electricity Markets (Ofgem). The transmission operator National Grid has additional roles in balancing supply and demand and managing an active net-work, whereas the local networks are passive, as we will see (Chapter 5). Both are seen as relatively stable industries with low risk and relatively low returns on investment.

The generation companies have operations that are still rather similar to those of the corresponding section of the CEGB, but the market in which they operate is very different. Building generating plants under a monopoly supplier was a low-risk activity, centrally planned and with assured customers for the life of the plant. Now generators compete on price to sell their supplies to retailers, and their investment is driven by a market that may provide very little information about trading conditions over the life of any new plant built. So-called ‘forward prices’ give some indication of whether the electricity price is likely to rise (responding to a shortage of power stations) or fall (in response to overcapacity). But this indication extends only a few years ahead, whereas power stations are immense capital investments that require customers over two to four decades to provide their owners with a return on invest-ment. Since a number of companies are making investment decisions in response to similar market conditions, the industry tends to swing from boom to bust and back again. The UK generating market was described as ‘bust’ by one generating com-pany in 2002, for example, but by the winter of 2005–6 generating capacity was very near demand, leaving little margin for emergencies, and prices had risen to record levels.

Although companies are required to keep activities in the different parts of the industry separate, many large utility companies now have interests in both retail and generating sectors. A stake in the generating sector ensures that companies will have sufficient electricity to meet their customers’ needs even in times of shortage, and the peaks and troughs of retail and generating businesses will be different, giving companies more surety over their long-term return.

1.9 The effect of competition

The industry privatization was successfully completed in the early 1990s, and com-petition did, as planned, take effect in the generating and retailing of electricity. What it did not do was open the industry to different forms of generation and models of electricity supply – in fact, the reverse happened. With a customer base of millions and guaranteed income in perpetuity, the CEGB had an enormous research budget and could – in theory – invest in new forms of generation that might not provide an economic return for many years. One continuing complaint against the company,

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Developing the UK’s energy infrastructure 11 however, was that public-sector inertia and an institutional belief in the existing model of ever-larger central power stations combined to stifle innovation.

But when the private electricity generators took over, the basis on which they could compete for customers among the retail companies was mainly the price of the electricity they supplied. This drove down electricity prices for the whole of the late 1990s and the early years after 2000, partly because efficiency improvements meant there were savings to be made, but also because oversupply drove prices down further. Investment decisions were driven not by the possibility of changing the power system but by the need to build any new power-generating capacity as fast as possible, and at as low a capital cost as possible, so it could start earning income for the company immediately. The result was a so-called ‘dash for gas’ dur-ing the 1990s. Gas-fired electricity generation was very well understood, but had never been favoured – in fact was under a moratorium – under the CEGB, which considered that gas was far too expensive and useful in direct supply to be converted to electricity. But for private electricity generators gas was ideal. The gas-turbine stations could be built extremely quickly – within 18 months, once planning permis-sion had been obtained – so they began paying back on their investment very fast. The investment was relatively low, as gas-fired stations were cheap to build. What was more, gas was a ‘clean’ fuel: it did not produce the emissions associated with coal-fired plants, including sulphur dioxide and particulates, that were the subject of increasingly stringent regulations, requiring ‘cleanup’ technologies to be fitted to the plant and both incurring new capital costs and reducing the plant efficiency. It was true that running costs of gas plant could be high, and it was very vulnerable to high gas prices, but the plants could be started up and switched off fairly quickly, so it was possible to stop operating them at times of oversupply when electricity prices were low.

As with the electricity generators, so with the retailers. They compete on price, and, what is more, their domestic customers traditionally had little interest in or understanding of how or where their electricity was generated. The retailers were unlikely to find much take-up for different supplies, and this was borne out by the experience of so-called ‘green’ tariffs, which offered customers access to electricity produced from renewable sources – but at a higher price. The proportion of customers taking up the option was vanishingly small.

Elsewhere, an alternative model for electricity generation was being explored that went right back to the UK’s early electricity industry. Countries where there was no electricity infrastructure already existing were developing one that looked rather like the UK’s early industry, with local electricity generation for local use, and gradual linkages forming between local areas to exchange supply and supply backup where necessary. This ‘distributed’ model was somewhat different from the early days in the UK. First, with standards in place across the developed world, electricity systems tended to be able to link. Second, new forms of electricity generation were being developed, and old ones updated, that could be employed at very small scale and without the drawbacks of previous technologies. Solar photovoltaic panels and battery storage, for example, offered clean generation and minimal running costs, compared with using a diesel generator.

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12 Local energy

There was a second benefit to generating and using electricity locally: transmis-sion, at high or low voltage, necessarily involves significant energy loss through the wires. Using the electricity at or near the generation point could balance out the economies of scale and be more efficient. What is more, if a heat process was used, such as a steam turbine, the excess heat that would otherwise have to be dissipated via a cooling tower or other ‘heat sink’ could be used. It was available for industrial processes, if some were or could be sited near the power plant, or it could be used to supply heat to local buildings. This type of combined-heat-and-power (CHP) plant was overall much more efficient.

Neither the UK’s privatized system nor its power market supported this type of local generation. By 2000 it was clear that government intervention would be needed to change the market structure to force it to invest not only in new types of generation such as renewables, but also to shift the balance in the UK away from a centralized system so that electricity could be generated at whatever scale and site it was most efficient. That would mean that, as well as central power stations, there would be electricity fed into the system from a huge variety of local projects ‘embedded’ into the lower-voltage parts of the network. It could make the network more efficient, more reliable and cheaper to operate – but it would clearly require government intervention and financial incentives to make the shift.

Panel 1.1 Generators

Most metals have electrons that can detach from their atoms and move around. The loose electrons make it easy for electricity to flow through these materi-als, so they are known as electrical conductors. They conduct electricity. The moving electrons transmit electrical energy from one point to another.

Electricity needs a conductor in order to move. There also has to be something to make the electricity flow from one point to another through the conductor. One way to get electricity flowing is to use a generator.

A generator works by electrical induction. It consists of a coil of wire rotated between the poles of a magnet. Because the coil is rotating, it produces an elec-tric current that varies regularly, known as an alternating current. As the coil makes one revolution, one cycle is produced, so that the frequency of the cur-rent equals the number of revolutions per second made by the coil. In practice the coils are wound in a soft iron cylinder known as an armature. In a power station the armature containing the coils remains stationary and is known as the stator, and instead the magnetic field is rotated around it and is referred to as the rotor. A turbine turned by steam pressure, falling water, wind, etc. is used to provide the rotation, which in large power stations can be at 50 turns per second, the same as the grid supply (‘synchronized’).

In an AC generator the current is supplied to the external circuit by two so-called ‘brushes’, spring-loaded graphite blocks that press against two copper ‘slip rings’, which rotate with the axle.

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Developing the UK’s energy infrastructure 13 In power stations the stator coils are in three sets and the rotor coils are in three sets at 120 degrees to each other. This effectively produces three varying supplies that when superimposed provide a steadier power supply, which is known as a three-phase supply.

Panel 1.2 AC/DC

Current describes the drift of electrons (and in some cases other charged parti-cles) under the influence of an electric field. For many of the electrical effects we require, such as the heat and light produced by the current in a wire, the direction of movement of the electrons is not important. The drift can be in one direction, which is known as direct current (DC), and is produced, for exam-ple, by a battery in a circuit. However, electricity is more usually generated and transmitted as an alternating current (AC). When necessary AC can be ‘rectified’ to produce DC.

AC has at least three advantages over DC in a power-distribution grid: • Large electrical generators generate AC naturally, so conversion to DC

would involve an extra step.

• Transformers must have alternating current to operate, and the power-distribution grid depends on transformers.

• It is easy to convert AC to DC but expensive to convert DC to AC, so, if you were going to pick one or the other, AC would be the better choice.

Panel 1.3 Transformers

A transformer changes an alternating voltage from one value to another using the mutual-inductance principle. It can be used to increase (step up) or decrease (step down) the voltage and current. Electricity substations gen-erally house transformers that are stepping down the supply for domestic or commercial use.

In a transformer two coils called the primary and secondary windings are wound around an iron core. When an alternating current passes through one coil, known as the primary, it results in a fluctuating magnetic field, which induces an alternating current in the other, secondary, coil.

The amount of voltage induced in the secondary coil depends on the num-ber of turns in the two coils. If they have equal numnum-bers of turns, the voltage induced in the secondary coil is equal to that in the first. If the number of turns in the secondary coil is twice that in the primary, then the voltage induced will be Continues

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14 Local energy

Panel 1.3 Continued

‘stepped up’ and will be double that in the primary coil. If the number of turns in the secondary coil is half that in the primary coil the voltage induced in the secondary coil will be ‘stepped down’ to half that of the primary coil.

Panel 1.4 Power units

How much work can you get done in a second? If you are a car, how far can you drive? If you are an electric current, what kind of appliance could you run? For an engineer, power is defined as the energy available to get work done in each second. Now we refer to it in watts (shortened to W), although it may have been easier to understand when it was referred to as horsepower.

For electricity, the power available depends on two characteristics: the ‘cur-rent’ through the wires, which measures how much electricity is flowing; and the ‘voltage’, which measures how much ‘push’ it has. Compare it to the traffic on its way around the M25: the current is more or less the number of cars pass-ing at a spass-ingle instant and the voltage is more or less their speed. To get an idea of the amount of power available, you need to know both. Similarly, you can calculate electrical power by multiplying the voltage and the current together. A watt is a fairly small unit – there are around 750 W to the horsepower. To get an idea of how much power you are using, consider the examples here.

The amount of power that can be provided by an electric generator varies hugely. The large power stations that dot British coalfields are each sending several hundred million watts into the grid. Local renewable-energy projects are often sized at a few thousand watts, while new wind turbines are up to a million watts.

Another way of looking at power is not how much is being used at any one second, but how it adds up over time. This is also the ‘unit’ on your electric-ity bill – kWh, where k is just shorthand for 1 000. It’s a measure of the total electricity you have used – and how much you are paying, so it’s something to remember when you want to save energy. A low-energy light bulb doesn’t seem to draw much less power than an old-fashioned one. But multiply that by the number of hours it operates and you will see significant savings over a year.

1 W (calculator) 40 W (light bulb) 100 W (TV) 1 000 W (iron) 1 000 000 W (factory) 80 000 000 W (UK capacity)

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Developing the UK’s energy infrastructure 15 In scientific text there is a standard shorthand, accompanied by a standard symbol, so that engineers and researchers from Moscow to Manchester can be quite confident that they are talking about the same size.

p pico trillionth n nano billionth µ micro millionth m milli thousandth 0 k kilo thousand M mega million G giga billion T tera trillion

Once you start to pick it apart, it becomes fairly easy to work out that 1 kg is 1 000 grams, 1 MW is 1 000 000 watts, and so on. And although tera may seem like a lot, the UK uses several hundred terawatt hours of electricity every year and the USA uses nearly 3 500 TWh, so it is barely big enough.

Mega is the one representative of this group that has infiltrated nontechnical speak to any extent.

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Chapter 2 The electricity system

2.1 Supplying and delivering power

The UK’s electricity supply system works in much the same way as the supply of any other commodity. Electricity is ‘manufactured’ at power stations, and bulk supplies are transported across the high-voltage transmission network. Retailers (‘suppliers’) buy the bulk power and sell it on to domestic and commercial customers, to whom it is supplied via a low-voltage local network operated by a distribution network operator (DNO).

The generators, high-voltage network operator (National Grid), DNOs and retailers are very different companies.

2.2 Generating power for the market

The generators and retailers operate in a competitive market, making contracts directly with one another to buy and sell power. The amount of electricity that is required can vary markedly. Generally the highest demand is in the winter, when people tend to be inside and it is dark for longer, so they are using more appliances. Although there are heavy industries that require large amounts of power continuously, it is usually domestic use that governs the peak load. So the highest peak is on winter evenings between 6 p.m. and 9 p.m., when most people are arriving home, making dinner and using domestic appliances, and there is a smaller peak in the early morning.

The overall load in summer is lower than in winter but the increase in hot summers and the growing use of air conditioning have meant that the summer peak is increasing. This has important implications for the way the UK electricity system is managed. In the past, major repair and maintenance projects were planned for the summer months, when demand for electricity was traditionally low, so some plants could be out of action for weeks or months.

In July 2006, electricity demand increased dramatically in response to a weeks-long heat wave, as homes and businesses turned up existing air conditioning and stripped DIY stores of new air-conditioning units and electric fans. With avail-able capacity at its summer low, the National Grid had to warn that the system was dangerously close to its limit and appeal for demand reductions. In the long term, this may require generating companies to alter their traditional maintenance strategies.

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18 Local energy

While the electricity being used varies dramatically, from up to 60 GW on a winter’s evening to around 30 GW at low-demand periods, the amount of electricity being supplied to the system is also changing.

2.3 Power-station characteristics

Different types of power station have different characteristics. This diversity is gen-erally regarded as a benefit, as it helps the system to meet the varying demand. It is also an economic benefit, as it means the system as a whole does not rely on a single fuel such as gas, and there is some protection from price rises of a single fuel.

So-called thermal power stations are those that rely on burning to turn a gas or steam turbine.

2.3.1 Coal

Coal was for many years the most common thermal fuel and still provides up to a third of the UK’s power generation and around half of all the electricity generated worldwide. It is attractive to power companies for several reasons. First, it is a relatively flexible form of generation, meaning that most plants can operate at less than their full capacity if required (at ‘part load’), and the amount of fuel burned and the electricity output can be varied from hour to hour to follow changing demand. Fuel is fed in constantly during the operation.

A second attribute valuable for generating companies is that coal can be bought from a wide variety of suppliers and transported by ship and rail. What is more, the coal can be stockpiled so there is a reserve in case of need.

Coal, however, produces the most carbon dioxide emissions of all generating types, along with other harmful emissions such as sulphur dioxide, nitrogen oxides, mercury and particulates. New coal plants will include additional systems to reduce most of those emissions, and similar cleanup systems have been ‘backfitted’ to exist-ing stations. However, they do affect the economics of runnexist-ing the plant, as they reduce operating efficiency, meaning that more coal has to be burned to produce each unit of electricity.

2.3.2 Gas

The UK generators began building gas-fired turbines in the 1990s, and gas now meets nearly half of UK electricity demand. Gas and compressed air are combusted directly into a turbine, which works on the same principle as a steam turbine, connected directly to a generator. The gas turbine is much more efficient than a steam turbine, both because it is operating at a much higher temperature and because there is no ‘steam raising’ where energy can be lost. Gas turbines can be started up and shut down, if necessary, over a period of several hours to less than an hour, so they can be brought on line to meet peak loads, and in fact some are used specifically to meet peak loads, being started up and shut down twice each day. They have been less flexible than coal plants once in operation, although more recent versions are being designed

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The electricity system 19 to operate more economically at part-load, but they can be sized at between one and several hundred megawatts, so they can allow mid-scale additions or removals of capacity from the system. They require constant fuel feed-in during operation.

In recent years so-called ‘combined cycle’ gas-fired plants have been used. These plants make use of the ‘waste’ heat from a gas turbine. Although it is referred to as waste, because the conventional gas turbine burns gas at such a high temperature (the turbine inlet temperature is around 1 000◦_{C), the gas being expelled is hot enough}

to produce steam that, in its turn, can be used in a steam turbine. This dramatically increases the power available from the plant. There is some loss of flexibility in oper-ation as there are more processes to manage, so combined cycle plants are generally used in constant operation (known as base load).

In recent years other fuels have been used to produce thermal power, including biomass (e.g. wood and straw), or methane gas produced from sewage or abstracted from landfill.

2.3.3 Nuclear

Nuclear stations vary in size but some are among the largest power stations on the grid – Sizewell B, the largest, is rated at 1 400 MW – so they provide an enormous input of power. What is more, they can provide that power over a long period, as fuel loading is infrequent. They can operate for one or two years between shutdowns, depending on the operating regime, and at very predictable cost as the fuel is a relatively minor part of their operating cost. But they are extremely inflexible in operation. Although it is possible in some cases to vary their output slightly, it is technically and economically undesirable. It is a favourable option in countries where there are energy-intensive industries with continuous high demand, such as Sweden and Finland, or where there are neighbouring markets where oversupply can be exported, as happens with France’s large nuclear capacity. The UK has around 20 per cent nuclear on the system. Nuclear plants are also the slowest option to bring into operation, as they can take several days to bring up to full power.

Thermal and nuclear generators include large rotating machinery (the turbine) that produces the electricity; in the context of the grid, this means they add stability to the operation. In theory, electricity flows through the grid at a steady frequency of 50 Hz and maintains a constant voltage. In practice, these parameters are maintained thanks to painstaking management and balancing actions, and by ensuring that, as far as possible, all the generators and loads connected to the system tend to return to that steady state after any disturbance. In practice, the flow of electricity is frequently changed, not just by new loads or generators connecting to or disconnecting from the grid but also by any number of disturbances on various scales. The result can be sudden changes in frequency or voltage and they can affect large power equipment as much as domestic-scale appliances such as PCs (computer shops sell sockets with built-in protection against such ‘spikes’ and disturbances in the supply). This issue of ‘power quality’ is discussed in Chapter 8.

Power plants are often set up to detach automatically from the grid if there are large disturbances in the grid supply, as a self-protection measure. Disconnection, in

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20 Local energy

turn, creates a new disturbance, so faults can propagate and the effect can spread. However, the heavy rotating machinery in thermal and nuclear plants has a certain amount of momentum that will carry them through grid disturbances (this is known as fault ride-through) and this adds stability to the grid as a whole.

2.3.4 Hydropower

Hydropower has among the fastest responses in the system. There is no fuel to burn, so as long as there is water in the associated reservoir or river it is only a matter of opening the gates within the plant, so water passes through the turbines, and generation is available within seconds to minutes. This is the attribute employed by pumped-storage plants: water is pumped uphill to a reservoir at times when there is excess power available on the grid, and released to generate at peak times. However, from a ‘fuel’ point of view, over the year there are periods when water levels are low and this can force so-called run-of-river plants – those where there is no reservoir – out of operation. Operators of hydro plants with water stored in reservoirs have to decide whether to use their stored water to generate now, or save it for a later date when it may be needed more.

This is a mainly financial decision in a mixed system such as the UK’s, but far more important in countries such as Norway that have a very high reliance on hydropower. Elsewhere it has led to accusations that hydro companies are ‘gaming’ the market – holding back water supplies unnecessarily to exacerbate a power shortage and force up the price of electricity.

2.3.5 Wind power

Wind power now provides a small proportion of the UK’s power. Since it is available only when the wind is blowing, it is impossible to guarantee that power is available when it is most needed (at peak times, for example). The power has to be accepted on to the grid whenever the wind blows, and other forms of generation have to be cycled up or down to adapt. In the UK this is easily accepted on to the grid, as wind penetration is very low and wind forecasting is very good, not least because in the current market decisions on how much power is available and required are calculated within an hour of dispatch, and over such timetables short-term prediction is extremely reliable.

Wind farms can offer fast response in some circumstances: if a large wind farm is in operation and expected to be so for the next hour, it can provide an extremely fast response to changes in demand on the grid over the short term. In that case the wind farm would be gradually ‘turned down’ in advance of an expected peak by altering the pitch of the blades so less wind is ‘caught’, and then turned up quickly by returning the blades to maximum pitch, then kept there as slower-response forms of generation such as coal stations are brought up to power.

However, predicting whether the wind farm will operate over days, weeks or months is progressively less reliable. Recent work has confirmed that there is almost never a situation when there is no wind blowing anywhere in the UK, but there are frequent periods when smaller regions have no wind. As a result, there is a limit

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The electricity system 21 to how much conventional generation they can replace on the system and, although estimates vary depending on other grid characteristics, its value may begin to decrease above 10 to 20 per cent wind. In recent years the National Grid has estimated that, although the natural variability of wind power would eventually add to the cost of operating the UK system, the technical effect of the variability is insignificant up to at least 10 per cent wind penetration, as the variability is barely detectable within the natural variability of the mixed system as a whole. Grid stability may also be affected at high wind penetration because wind is generally designed to disconnect in the event of a fault, although the ‘fault ride-through’ of conventional generation can now be replicated using electronic systems.

2.3.6 Coping with grid variation

The UK’s power system is well placed to cope with all these different sources, and indeed their diversity gives system operators a useful set of different options to meet the system’s varying needs.

Power plants do not operate continuously. As we have seen, some are designed to operate only during peak periods and are expected to shut down twice a day. There are other types of planned closure: they have to be shut down at regular intervals to allow maintenance work to be carried out, for example. Maintenance shutdowns vary in frequency and length depending on the type of plant involved, but can vary from a few days to a few weeks if there is major work to be done. Most of these maintenance ‘outages’ are currently planned for the low-demand periods in the summer, which also means that the total amount of electricity available to the system at such times is much lower. This can mean demand surges are difficult to meet, even though the surge is still much lower than the winter peak: this was the case in summer 2006, when demand for air conditioning during July’s hot weather meant the system operator had to send out an emergency call for more power.

As well as planned outages, plants can suffer unplanned shutdowns for a number of reasons. They may be shut down as a self-protection measure if there are disturbances on the grid that could affect the power station. Alternatively, problems inside the power station or in the switchyard (which connects the station to the power lines) could shut the plant down.

As well as plants coming in and out of service, they also have different operating characteristics depending on local conditions. Wind is the most obviously affected: it does not generate if the wind does not blow. But it is not the only plant where weather has an important role to play. Gas turbines, for example, are greatly affected by the external temperature. They work by burning natural gas or a fuel oil with a fixed volumetric rate of compressed air, so a turbine’s power output is directly proportional to the mass rate of the compressed air that enters the system. When the weather gets hotter, the mass rate of the compressed air decreases because warmer air has a lower density, so the turbine’s power output decreases. The effect is marked when the surrounding air temperature is above 30◦_{C. If surrounding temperatures are above}

40◦_{C – unlikely in the UK but common in other countries – power supplied can drop}

Local energy

Local Energy

Distributed generation

of heat and power

Local Energy

Distributed generation

of heat and power

Janet Wood

Contents

Chapter 1

Developing the UK’s energy infrastructure

1.1 The development of electric power

1.2 Regulating the industry

1.3 Coordinating the supply

1.4 Centralizing power stations

1.5 Managing the expansion

1.6 The Central Electricity Generating Board

1.7 Monopolies and private companies

1.8 Breaking up the monopoly

1.9 The effect of competition

Panel 1.1 Generators

Panel 1.2 AC/DC

Panel 1.3 Transformers

Panel 1.3 Continued

Panel 1.4 Power units

Chapter 2

The electricity system

2.1 Supplying and delivering power

2.2 Generating power for the market

2.3 Power-station characteristics

2.3.1 Coal

2.3.2 Gas

2.3.3 Nuclear

2.3.4 Hydropower

2.3.5 Wind power

2.3.6 Coping with grid variation