If peer-to-peer trading becomes widespread, it
may reduce the role of intermediaries operating
the electricity system. Some commentators suggest that blockchain could automate the active
participation of large numbers of distributed
energy resources, such that an intermediary like a
virtual power plant is not required. In future,
peer-to-peer electricity trading might take place
not only within a microgrid, but between resources at the level of the distribution system, and
potentially the transmission system. It is theoretically possible that sufficient automation might
reduce the role of system operators in distribution
or even transmission, though it is likely that their
core roles, managing network constraints and
maintaining system security, will remain.
2.2.8 Country Case Studies
This section presents six case studies of network
arrangements across five countries: China, the
USA, the UK, Germany and Australia. China’s
experience illustrates the challenges in providing
efficient network infrastructure under complex
institutional arrangements and limited use of
strategic planning of infrastructure investments.
The USA provides a contrasting example of a
large territory, with multiple separate transmission systems, that has gone through the liberalisation process under the oversight of a central
regulator. PJM, one of the larger US independent
system operators, is considered the leading
example of state-of-the-art network arrangements. The electricity transmission network in
the UK is owned by three separate transmission
companies, one of which (National Grid) is also
the operator for the whole system. As a TSO,
National Grid is subjected to innovative
performance-based regulation, though the UK is
now moving closer to the ISO model. Germany,
like the USA, has several transmission systems,
which participate in wider transmission planning,
both nationally and with other European system
operators. Australia has highly progressive markets for system services, facilitating electricity
storage and enabling its use as an alternative to
new transmission investments. Each section
below discusses for each country the institutional
arrangements, the processes for transmission
planning and delivery, the extent to which locational pricing has been implemented, and recent
developments to prepare for the future challenges
of decarbonisation and decentralisation.
(1) China
(1) Institutional arrangements
Liberalisation of China’s electricity sector has
progressed in three distinct phases. Before the
start of the liberalisation process, the then Ministry of Electric Power owned and operated the
generation, transmission and retail of electricity.
In 1985, the generation market was opened to
private investment to address severe power
shortages. Then, in 1996, the ministry was
abolished, the State Power Company was established, and the State Economic and Trade Committee took over the regulatory functions of the
ministry. As a result, the electricity business was
separated from government functions. In 2002,
generation was unbundled from transmission and
retail; two grid companies, State Grid Corporation of China and China Southern Power Grid,
were created; and the State Electricity Regulatory
Commission (SERC) was established. Taking the
liberalised electricity markets as a model, the
reform aimed to create competitive wholesale
markets and regulated network tariffs.
After a decade of relatively limited reforms, a
new phase of reform is now underway. SERC,
which would lead the liberalisation of the electricity sector, was folded into the National Energy
Administration in 2008, which is part of the
National Development and Reform Commission
(NDRC). As the leading planning agency under
the Chinese State Council, NDRC defines policies
for China’s economic and social development.
Transmission and retail of electricity has remained
vertically integrated. Prices and network tariffs are
still regulated centrally. In 2015, the Communist
Party Central Committee and the China State
Council published a statement committing to
electricity market reform and the introduction of
competitive wholesale and electricity markets.
The Chinese electricity sector has a complex
institutional framework. Several institutions have
overlapping authority over the sector, and there is
104
W. Xiaoming et al.
may reduce the role of intermediaries operating
the electricity system. Some commentators suggest that blockchain could automate the active
participation of large numbers of distributed
energy resources, such that an intermediary like a
virtual power plant is not required. In future,
peer-to-peer electricity trading might take place
not only within a microgrid, but between resources at the level of the distribution system, and
potentially the transmission system. It is theoretically possible that sufficient automation might
reduce the role of system operators in distribution
or even transmission, though it is likely that their
core roles, managing network constraints and
maintaining system security, will remain.
2.2.8 Country Case Studies
This section presents six case studies of network
arrangements across five countries: China, the
USA, the UK, Germany and Australia. China’s
experience illustrates the challenges in providing
efficient network infrastructure under complex
institutional arrangements and limited use of
strategic planning of infrastructure investments.
The USA provides a contrasting example of a
large territory, with multiple separate transmission systems, that has gone through the liberalisation process under the oversight of a central
regulator. PJM, one of the larger US independent
system operators, is considered the leading
example of state-of-the-art network arrangements. The electricity transmission network in
the UK is owned by three separate transmission
companies, one of which (National Grid) is also
the operator for the whole system. As a TSO,
National Grid is subjected to innovative
performance-based regulation, though the UK is
now moving closer to the ISO model. Germany,
like the USA, has several transmission systems,
which participate in wider transmission planning,
both nationally and with other European system
operators. Australia has highly progressive markets for system services, facilitating electricity
storage and enabling its use as an alternative to
new transmission investments. Each section
below discusses for each country the institutional
arrangements, the processes for transmission
planning and delivery, the extent to which locational pricing has been implemented, and recent
developments to prepare for the future challenges
of decarbonisation and decentralisation.
(1) China
(1) Institutional arrangements
Liberalisation of China’s electricity sector has
progressed in three distinct phases. Before the
start of the liberalisation process, the then Ministry of Electric Power owned and operated the
generation, transmission and retail of electricity.
In 1985, the generation market was opened to
private investment to address severe power
shortages. Then, in 1996, the ministry was
abolished, the State Power Company was established, and the State Economic and Trade Committee took over the regulatory functions of the
ministry. As a result, the electricity business was
separated from government functions. In 2002,
generation was unbundled from transmission and
retail; two grid companies, State Grid Corporation of China and China Southern Power Grid,
were created; and the State Electricity Regulatory
Commission (SERC) was established. Taking the
liberalised electricity markets as a model, the
reform aimed to create competitive wholesale
markets and regulated network tariffs.
After a decade of relatively limited reforms, a
new phase of reform is now underway. SERC,
which would lead the liberalisation of the electricity sector, was folded into the National Energy
Administration in 2008, which is part of the
National Development and Reform Commission
(NDRC). As the leading planning agency under
the Chinese State Council, NDRC defines policies
for China’s economic and social development.
Transmission and retail of electricity has remained
vertically integrated. Prices and network tariffs are
still regulated centrally. In 2015, the Communist
Party Central Committee and the China State
Council published a statement committing to
electricity market reform and the introduction of
competitive wholesale and electricity markets.
The Chinese electricity sector has a complex
institutional framework. Several institutions have
overlapping authority over the sector, and there is
104
W. Xiaoming et al.