Global Electricity Market Deregulation

Deregulation and privatisation in the electricity sector is now reaching a stage around the world when it is possible to discern some patterns and factors emerging, based on experience rather than hypothesis about what ought to happen. Some outcomes have been good but some have been bad, notably in North America, and electricity market liberalisation has advocates and critics.

The momentum towards liberalisation of the electricity supply industry continues around the world but it proceeds at varying paces. As a region, only the EU is moving systematically in a co-ordinated manner, while other markets are developing new structures on an individual country basis. In February 2006 the European Commission published a critical report drawing attention to a number of aspects in which progress towards electricity market liberalisation is considered unsatisfactory.

The countries of the EU, with the United Kingdom and Scandinavia at the forefront, have been leaders in creating the sea change which liberalisation of the energy markets is bringing. In July 2007 the final stage was reached for most EU countries in which electricity markets have been fully opened to all customers. A number of countries have negotiated ‘derogations’ in which they have delayed or reduced the scope of the change, due to special circumstances in their markets. One of the main reasons for this is the small size of a market, which only justifies the existence of one generator or very few, thus making competition unfeasible. In practice there are many imperfections in the new European structure, due either to original structural conditions or failures in implementing new rules. The EU Commission has been monitoring progress and is implementing new rules. It may be many years before the optimum situation is reached.

Transmission and Distribution - A Global Snapshot

In China, the State Council authorised a huge expansion of capital expenditure in transmission and distribution in the 11th Five-Year Development Plan (2006-10), but for quite a different reason from Europe and North America. The transmission and distribution system is not reaching the end of its life in China, there is simply not enough of it. For the last fifty years China has spent 80% of investment in the electrical sector on generation and only 20% on transmission and distribution, following the Soviet style ideology which gives primacy to heavy industry, in this case power generation. The sudden addition, partly unexpected and unplanned, of 200 GW to Chinese generating capacity in 2006 and 2007 used up any gains that had already been made in transmission and distribution capacity. The Chinese authorities were forced to accept that it is not enough just to produce more electricity, it also has to be transported to the users. The result has been the allocation of $153 billion to be invested in transmission and distribution in China between 2006 and 2010.

India is starting to follow suite with increased capital expenditure in transmission and distribution as well as generation, on a smaller scale than China but still significantly.

The internationalisation which started in Europe and the Nordic regions is now being replicated in other regions of the world. Perhaps the most notable example of this is the Med Ring which has created a circle around the Mediterranean, linking the Middle Eastern countries with North Africa, from Morocco to Spain to the western European networks and on the eastern side through Sudel to south eastern Europe. This will eventually be linked across the Sahara to the various new Power Pools in Central, East and West Africa, right down to South Africa.

Surge in the Transmission and Distribution Industry

Recent times have revealed a surge in the global transmission and distribution market and I predict that the market will remain strong for up to five years. The electricity utilities report a significant expansion of their capital expenditure budgets, some doubling 2005/6 levels for a five year period. The transmission and distribution equipment suppliers have reported considerable growth in the last two years.

Two exceptional factors account for this optimistic outlook for the transmission and distribution industry. In the industrialised countries with mature electrical systems, liberalisation of markets has put pressure on margins and the competitive environment has constrained costs. The electricity utilities have been unwilling to invest in the regulated segments of the electricity industry and have channelled money to the more speculative unregulated segments where profits are to be made. At the same time, regulators have exerted pressure to keep costs down in the interests of the consumer. Operators have been able to keep systems running with sophisticated asset management techniques, avoiding replacement costs. However, a series of embarrassing outages through out the industrialised world in recent years has served a warning that aging systems, many of them 40 years old, cannot soldier on forever. Most of the industrialised countries have announced large increases in capital expenditure budgets.

Advances in the Japanese Gas Meter Market

The Japanese gas sector is evenly split between piped natural gas and LPG. The LPG is delivered from dealers to consumers by tanker or in cylinders. Both are metered with intelligent domestic microcomputer-controlled diaphragm gas Micom meters, which have safety warning devices on them.

Gas utilities in Japan introduced Micom meters in 1983 in order to reduce potential fire accidents. Micom meters have a safety function that interrupts gas supply automatically in an emergency such as an earthquake, as well as a metering function. Installation of Micom meters has reached almost 100%, now that gas utilities are obliged by law to take responsibility for safety functions. The number of gas accidents has been dramatically reduced with the widespread use of Micom meters.

Increasing numbers of Micom meters for both piped gas and LPG have AMR capability, in the latter case this enables the dealer to refill the storage tank with LPG or to deliver new cylinders.
LPG is delivered to large consumers by pipeline.

There are major developments in residential metering in Japan as a new residential ultrasonic gas meter designed by a Tokyo Gas led consortium, together with Osaka Gas and Toho Gas comes to market this year. The meter is being manufactured by Yazaki Corporation, Toyo Gas Meter Co. and Aichi Tokei Denki Co. Ltd, and two electronics manufacturers, Matsushita Electric Industrial and the Toshiba Corporation. The ultrasonic gas meter is an electronic gas metering device designed for domestic use. The measuring principle is the same as that of a standard ultrasonic meter and the structure is very simple, having no moving mechanical parts. The meter has increased functionality, including AMR and added value-services to the consumer.

Tokyo Gas Co. Ltd., started a pilot level introduction of the ultrasonic gas meter and its commercial application in July 2005 and the new meter will come into use in 2008. The new meter has almost identical performance for both natural gas and LPG.