Europia: Europe Clamors for a T&D Utopia

By Kathleen Davis, Associate Editor

Europe’s transmission markets, if personified like a great literary character, would best be labeled “sophisticated, but scattered” these days-­a polished old gent who can’t quite figure out the best way to arrive at his destination. Each individual European country faces two challenges: coloring inside its familiar cartographic lines and coloring outside them. As the EU countries begin to eye the approaching 2007 liberalization-or deregulation, as we say here in the Colonies-there are worries not just about internal structures but about how those structures can be connected together seamlessly as a functioning unit. Still, they continue to draw together those far-flung transmission components and move forward in establishing a single, cohesive market-the old gent will find his way to the party one way or another.

“With the full openness of the European market less than a year away [July 2007], energy is now moving quickly to the heart of the EU’s bid to open up markets,” Antonio Pires Santos, IBM Energy & Utilities Industry’s Southwest Europe Leader told Utility Automation & Engineering T&D.

“The specific impact of the upcoming 2007 liberalization deadline varies from country to country,” Santos added. “Many European utilities are rich in cash and eager to expand beyond their largely national markets. However, there is a strong trend to consolidate within the home market to limit competition.”

And, as we tend to cling to home markets and individuality in these American states, each European country-whether or not a major EU player-has a unique set of transmission components to consider when looking inside, or outside, for the perfect market. Hooking up those varied regions means understanding the game pieces in play.

The Basics: UK

According to the Energy Information Administration, the UK has installed electricity generating capacity of 74 GW and, in 2003, generated 369.9 billion kWh while consuming 346.1 billion kWh (see UK map for more details). The UK relies heavily on conventional thermal sources but also has a strong nuclear component.

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There are a handful of major power players in the UK. British Energy is the largest producer, controlling most of the nuclear power and generating about 20 percent of the total electricity supply. Other players include E.ON UK (the British arm of the German power powerhouse), RWE npower, Scottish and Southern Energy (SSE) and ScottishPower (SP). But, on the transmission side, there’s really one major name in the game: National Grid.

Although there are 12 regional monopolies controlling electricity distribution in the UK, National Grid Transmission (NGT) owns/operates the transmission system in England and Wales. It acts as the Great Britain System Operator (GBSO). SSE and SP operate the grid in Scotland, and Northern Ireland Electricity operates the grid in Northern Ireland. To smooth out market integration and privatization, the New Electricity Trading Arrangements (NETA) were introduced in England and Wales in 2001. The policies were reworked and extended to Scotland under their new name, the British Energy Transmission and Trading Arrangements (BETTA), in 2005. There are plans to incorporate Northern Ireland soon.

According to NGT’s 2006 Seven-Year Statement, which they are required to write up under BETTA, “by the end of 2006/07 the power system in Great Britain will be made up of 159 large power stations, the 400-kV and 275-kV transmission system (and 132-kV transmission system in Scotland) and 14 distribution systems.”

Circuit kilometers (km) of the 22,190 total km of overhead lines include:

  • 400 kV-11,426 km
  • 275 kV-5,965 km
  • 132 kV & below-4,799 km

Circuit kilometers of the 1,140 km of underground cable include:

  • 400 kV-166 km
  • 275 kV-470 km
  • 132 kV & below-177 km
  • DC (Channel Link)-327 km

More detailed information on National Grid’s system can be obtained online at: www.nationalgrid.com/uk.

The Basics: France

Crossing the Channel to French soil, we come upon the second-largest electricity sector in the EU (behind Germany). According to the Energy Information Administration, France produced 536.9 billion kWh of electricity and consumed 433.3 billion kWh in 2003 (see France map for more details). Their biggest power producer is nuclear, and the French are serious exporters of power, the largest net exporter in the EU at 103 billion kWh.

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The major power player in France is the home team, Electricite de France (EdF), a virtual monopoly owned by the French government. Running a distant second is Compagnie Nationale du Rhone (CNR), which operates 19 hydroelectric plants on the Rhone River.

The French grid is operated by Gestionnaire du Reseau de Transport d’Electricite (RTE), a company created in 2000 that is nominally separate from, but controlled by, EdF. After a slew of criticism (mostly from EU governing bodies), France is beginning to privatize. Competition in the entire non-residential sector was in place by 2004, and it’s set to spread to the residential sector by 2007 (to meet EU guidelines).

The technical characteristics of the network, according to RTE, lay out like this:

  • 77,481 km of tower lines (varying from 63 kV to 400 kV)
  • 96,321 km of overhead lines (varying from 63 kV to 400 kV)
  • 3,221 km of cables (varying from 63 kV to 400 kV)
  • 2,571 substations (including operating substations where RTE owns at least one busbar or connecting cell)
  • 1,160 transformers
  • 206,196 MVA rated capacity

More information can be found online at: www.rte-france.com.

The Basics: Germany

If we move northeast from France, we cross into Germany, the largest electricity market in Europe. According to the Energy Information Administration, Germany has an installed electricity generating capacity of 119.8 GW. The country produced 558.1 billion kWh and consumed 510.4 billion kWh in 2003 (see Germany map for more details). Germany relies heavily on conventional power producers (gas, coal), but, like the UK, nuclear is a tough, but steady, minority percentage. Germany liberalized its electricity sector in 1998.

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The “who’s who” in the German market reads like alphabet soup: RWE/VEW, E.ON, EnBW (Energie Baden-Wuerttemburg). The interesting thing about Germany is its lack of a unified grid operator. The companies in charge also operate the national transmission grid. However, there are a number of local distribution companies-many owned by state or municipal governments-which sell electricity to end users. After the EU threatened legal action, Germany enacted a new energy law in July 2005 that gives regulatory oversight to the newly created Bundesnetzagentur.

“The liberalization of the German electricity sector is a success story,” a spokesman for E.ON told Utility Automation & Engineering T&D when contacted about the German T&D market. “Market forces are always superior to state control when it comes to efficiency. Within the electricity market, the grid plays a decisive role as market platform. Of course, being a natural monopoly, privatized grids need to be operated non-discriminatory. That requires unbundling of the grid operation from generation and sales activities.”

He continued, “E.ON Energie’s transmission grid is already part of the UCTE [see the section on UCTE further into this article] interconnected grid. Thus, it’s part of one of the biggest synchronous interconnections worldwide, providing security of supply for some 430 million people. However, increasing trade activities and growing wind power in-feed lead to an increasing demand for transport capacity. In order to meet the growing demand, new lines have to be built. Unfortunately, the necessary approval procedures are very time consuming. E. g., building a new extra-high voltage line in Germany can take 10 years and more in total. Therefore, approval procedures have to be shortened significantly by appropriate legislative measures.”

According to RWE, Germany has 36,000 km of extra high voltage (380/220 kV) transmission lines. RWE clocks in with 11,500 km of that, or about 30 percent. The German market has 75,400 km of high voltage (110 kV) distribution lines, of which RWE has 24,900 km. Overall, there are 1,641,500 km of distribution and transmission lines in Germany. RWE owns approximately 20 percent of the total. (Their percentages of ownership are lower on the medium and low voltage distribution lines than the higher voltage T&D.)

More detailed information can be found at: www.rwe.com.

The Basics: Italy

The famous “boot” of Europe, Italy has 69.5 GW of installed electricity generating capacity. According to the Energy Information Administration, Italy generated 270 billion kWh of electricity, while consuming 302 billion kWh in 2003 (see Italy map for more details). Of all the Western European countries, Italy relies the most heavily on conventional thermal sources. And they import, big time-from Sweden, France and Slovenia mostly. The country began liberalizing its power in 1999.

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Enel, the former state-owned power monopoly, was the major power player in Italy for years. It remains big man on campus, but portions of its structure have been split into smaller companies: Elettrogen, Eurogen and Interpower. Other major players include Edison, Enipower and Acea.

Previously a wholly owned subsidiary of Enel but now a separate company, Terna owns the Italian electricity transmission grid. (Enel has reduced its holdings to satisfy Italy’s energy liberalization goals. As of 2005, Enel only held 5 percent of the shares of Terna.)

On Nov. 1, 2005, Gestore della Rete di Trasmissione Nazionale SpA changed its name to Gestore del Sistema Elettrico (GRTN SpA). The new company, just as the former one, is owned by the Italian Ministry of Economy and Finance. On the same date, GRTN’s electricity dispatching, transmission and grid development assets were transferred to Terna in accordance with Prime Minister’s decree of May 11, 2004. As a result, GRTN is now focused on managing and promoting renewables, an activity that it previously carried out “on the side.”

Although liberalization has now spread across the country to the majority of the retail market, Italy experienced two significant power blackouts (summer and early fall 2003), which analysts blamed on under-investment in Italy’s infrastructure.

Restructuring continues. In late June of this year, HERA, an Italian T&D company for gas, electricity and drinking water in the Emilia-Romagna region, and Enel signed a contract for HERA’s acquisition of Enel’s power distribution grid of 18 municipalities in the Province of Modena, for a total payment of 107.5 million Euros.

The acquisition was the end result of a preliminary agreement signed on March 13, 2006. The assets covered by the transfer comprise over 3,700 km of the Italian grid (with 42 operators) which serves about 80,000 clients in the municipalities of Castelnuovo Rangone, Fanano, Fiumalbo, Guiglia, Lama Mocogno, Marano sul Panaro, Montecreto, Montese, Pavullo nel Frignano, Pievepelago, Polinago, Riolunato, San Cesario sul Panaro, Savignano sul Panaro, Sestola, Spilamberto, Vignola and Zocca.

More detailed information can be found at: www.enel.it.

The Basics: Iberian Peninsula

The countries of Spain and Portugal comprise the Iberian Peninsula and are indelibly linked by both grid and economies. In 2003, Spain produced 247.3 billion kWh while consuming 231.2 billion kWh. In the same year, Portugal consumed 44.3 billion kWh and generated 44.0 billion kWh. Spain depends highly on conventional thermal followed by hydro; Portugal has long depended on hydro, but that has been declining since 1980. Endesa is Spain’s largest source of generation, and Iberdrola retains Spain’s largest slice of the deregulated market. Electricidade de Portugal (EdP) leads in Portugal. Other Spanish players on the Peninsula include Union Fenosa, Hidrocantabrico and Gas Natural.

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Government-sponsored Red Electricia de Espana (REE) owns and operates Spain’s electricity grid. Portugal has two power markets: the Public Electricity System (PES) and the Independent Electricity System (IES). The PES is the regulated market-fixed rates under long-term contracts, while the IES consists of smaller producers, consumers-with unrestricted access by generators and distributors. EdP’s wholly-owned subsidiary, EdP Distribuicao, controls distribution in the PES. Transmission in both Portuguese markets is controlled by national grid operator Rede Electrica Nacional (REN), majority-owned by the Portuguese government. Spain and Portugal formally signed an agreement to create a pan-Iberian electricity market (Mibel) in 2004 which should be getting into full swing this year. Investments and adjustments to the grid continue in the region.

According to REE, during the first half of 2006, a consolidated gross operating profit for the company stands at 330.4 million Euros and implies a 9.7 percent increase over the first six-month period of 2005. They attribute the increase to the larger assets-base coupled with sizeable investments and facilities refitting. From January to June 2006, the investment rate has increased 36.6 percent over that for the first six months of 2005. Of this amount, 145.6 million have been earmarked for grid enlargement and upgrading. Some of the more significant projects are aimed at transmission infrastructure in the Peninsula, including a capacity increase through the northern corridor (between Spain and Portugal), construction of new infrastructures to supply high-speed railways and the REMO project completion (which lays a second exchange cable between Spain and Morocco).

More detailed information can be found at www.ree.es.

The Basics: UTCE

The Union for the Co-ordination of Transmission of Electricity (UCTE) coordinates the interests of transmission system operators in 23 European countries. Their common objective is to guarantee the security of operation of the interconnected power system. Through the networks of the UCTE, 450 million people are supplied with electric energy and annual electricity consumption totals approx. 2,500 TWh. (For the purpose of the major players of this article, the UTCE oversees everyone but the UK.)

According to the UTCE’s System Adequacy Forecast 2006-2015, the system will be “at an acceptable level” over the 2006-2008 period, mostly due to developments in generation. The years between 2008-2010 show “a decrease of firmly decided power plants commissioning; the security margin is slightly decreasing, but [it will] stay at a reasonable level.”

“Between 2010 and 2015 security will be at risk if further investments are not decided in due time,” the report reveals. “More than 10 GW of firm investment decisions would be necessary to counterbalance the potential deficit in generation.”

Additionally, many of the UCTE main block countries (Western Europe) have been exporting. The remaining capacity in that area is “decreasing and barely matches the indicative adequacy margin in 2010. This block could become a net importer under unfavorable conditions.”

The report continues, “Power exchanges inside this area and with Central Europe-made possible after the reconnection of the second UCTE zone in 2004-will be of utmost importance for the reliability of this region.”

The report also lists the need for new 400 kV lines in some countries.

As for interconnections, the report noted that, while necessary to help improve reliability and power deficits in some areas, projects are often “limited or delayed by difficulties to get the necessary authorizations.”

More detailed information can be found at: www.ucte.org.

The Market

Now that we’ve laid out the basics of the major European players in the status quo, let’s take a look at market potential in the area of technology: what’s going on right now, what we think will pop up in the near future.

Utility Automation & Engineering T&D asked Chuck Newton of Newton-Evans Research Co. to run the European numbers for two major categories of T&D technologies: RTUs and PLCs, and EMS, SCADA and DMS. He based his estimates on country-supplied data, utility-supplied data, survey-based data, World Bank and UN data and his own company’s estimates.

Looking at transmission substations first, Newton-Evans pegged the Western Europe total around 11,204 (compared to 17,225 in North America, 11,437 in Central and Eastern Europe, and 64,223 for the world in total). Of those Western European transmission substations, 10,800 are RTU/PLC equipped. In the area of distribution substations, Newton-Evans estimates Western European numbers around 41,930 (compared to 50,720 in North America, 32,205 in Central and Eastern Europe and 209,328 for the world in total). Of those distribution substations in Western Europe, only 27,000 are RTU/PLC equipped. Both numbers, however, are on the rise.

According to Newton-Evans, 92 percent of all transmission substations in the region are remotely monitored/controlled by RTUs and/or PLCs or bay controllers. That’s up from 87 percent in previous studies. Additionally, 55 percent of all 30 kV and above distribution substations are remotely monitored by RTUs or PLCs, up from 45 percent in previous studies. (Newton noted that approximately 35 to 40 percent of installed RTUs or PLCs are at least a decade old.)

Data on EMS, SCADA and DMS in Western, Central and Eastern European are summarized in a series of tables and figures.

Table 1 (pg. 14) provides a forecast of EMS, SCADA and DMS-related spending by European electric utilities for the 2003-2007 period.

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“During this five-year period, at least $402 million and as much as $501 million will be spent for EMS-related systems, equipment and services,” Newton said. “The same table suggests that at least $293 million and as much as $412 million will be spent over the same five years for SCADA and DMS systems, equipment, software and services among European utilities. PX/ISO/RTO spending is forecasted to be in the range of $2841-377 million over this period.”

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Table 2 (pg. 18) provides a forecast of EMS, SCADA and DMS-related spending by Western European electric utilities for the 2003-2006 period, and Table 3 (pg. 22) provides a forecast of EMS, SCADA and DMS-related spending by Central and Eastern European electric utilities for the 2003-2007 period.

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Figure 1 (pg. 16) indicates likely spending ranges for EMS activities and systems over the 2003-2007 period, for all European sub-regions (Western, Central and Eastern), and Figure 2 (pg. 18) looks at likely spending ranges for SCADA activities and systems over the 2003-2007 period for all European sub-regions.

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Figure 3 (pg. 22) indicates likely spending ranges for DMS activities and systems over the 2003-2007 period for all European sub-regions, and Figure 4 (this pg.) looks at likely spending ranges for PX/ISO/RTO activities over the 2003-2007 period for all European sub-regions.

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Finally, Table 4 (this pg.) presents known EMS/SCADA/DMS procurement activity during 2003-2005 and total forecasted EMS/SCADA/DMS procurement activity during this time period for the Western European region.

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When we asked IBM’s Santos to add to Newton’s European views, his answers spoke more toward strategy than details of technology.

“The European energy market is going through a big transformation due to three key vectors: competitiveness, environment and security of supply,” Santos commented.

“The creation of the internal market, the increase in competition, and the need for more reliable interconnections will drive the changes needed in the European electricity grid. Research and energy industry innovation are critical factors to key to achieve these objectives,” he added.

According to Santos, IBM has noticed a trend in Europe for replacing legacy systems with commercial applications, as well as a number of business model reviews. He expects that, over the next year, utilities will push cash into application consolidation, application integration and business process management.

“High energy prices and volatility will likely lead to increased investments in areas such as optimization, demand/load response, energy procurement/flexibility, energy efficiency/management, renewable energy and consumer education,” Santos stated. “Looking ahead to after 2007, we see the focus shifting from application portfolios to operational efficiency. The EU push for more open markets will create opportunities for new systems and enhanced business processes, but uncertainty about what the regulations will look like is slowing investments today.”

When asked how a country could weather that uncertainty, Santos bowed to the factors identified by Eurelectric, the pan-European association of the electricity industry (www.eurelectric.org), as necessary to make a smooth transition to a liberalized Europe:

  • implement the existing legislative package, fully and quickly;
  • unbundle;
  • develop regional markets;
  • expand liquid wholesale markets;
  • create common rules for market transparency;
  • make cooperation between players seamless.

Santos concluded, “Energy challenges are common to all of Europe. They require a European response. If the European Union can take a common approach on energy, and articulate it with a common voice, Europe can lead the global energy debate.”

Chuck Newton contributed significantly to this article. We thank him.

Editor’s Note: For more information on technology and the European market, please see Bob Fesmire’s article on WAMS on page 32 in this issue. Additionally, UA will feature an interview with an EU spokesperson about the market in our Oct. issue.

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Country Population
Millions)
(mid-2005)
GW Electric Capacity Estimated
Transmission Substations #
Estimated
Distribution Substations #
Austria 8 18 175 450
Denmark 5 12 225 585
France 61 111 1,191 9,400
Germany 82 119 2,600 8,500
Greece 11 11 >410 1,420
Ireland 4 5 120 260
Italy 58 78 2,032 4,550
Portugal 11 11 120 455
Spain 40 55 1,750 5,200
Switzerland 7 17 340 1,040
United Kingdom 60 79 600 2,400
European
Totals:
395 629 11,204 41,930
Source: Newton-Evans Research Company Estimates (7/2006)

COUNTRY Transmission Line KM Distribution
Line KM
Austria 9,400 90,000 (e)
Denmark 6,000 61,000
France 95,000 1,250,000
Germany 115,000 1,550,000
Greece 10,000 65,000 (e)
Ireland 2,000 83,000
Italy 58,000 980,000
Portugal 6,000 180,000
Spain 51,000 950,000
Switzerland 8,000 77,000 (e)
United Kingdom 14,000 770,000
European Totals: 461,800 6,891,000
Source: Newton-Evans Research Company Estimates (7/2006)
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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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