Regulation of the Power Sector – Ignacio Pérez-Arriaga (ed.)

Grids limit the operation of the electricity system in many ways. The most typical limitation is congestion, which occurs when the maximum current that can be handled by a line or other facility is reached, thus determining the amount of electric power that can flow through the element in question. The underlying cause for the limitation may be thermal, and therefore dependent upon the physical characteristics of the facility. It may also be related to the characteristics of system operation as a whole; for instance, provisions to guarantee security in the system’s dynamic response to disturbances or to stability-related problems that usually increase with line length.

Another typical grid constraint is the need to maintain voltages within certain limits at all nodes, which may call for connecting generating units near the node experiencing problems. The maximum allowable short-circuit power established may also limit grid configuration. Generally speaking,
the main effect of grid constraints is to condition system operation and in so doing to cause deviations from economically optimum operation. The most common constraints in distribution grids are related to voltage and maximum line capacity.

“Regulation of the Power Sector” is a comprehensive technical book on the electricity sector, aimed at specialists and advanced students. It encompasses several scholarly fields, including law, economics, regulation, physics and political science.

It is divided into 14 chapters, as follows: I. Technology and Operation of Electric Power Systems; II. Power System Economics; III. Electricity Regulation: Principles and Institutions; IV. Monopoly Regulation; V. Electricity Distribution; VI. Electricity Transmission; VII. Electricity Generation and Wholesale Markets; VIII. Electricity Tariffs; IX. Electricity Retailing; X. Regional Markets; XI. Environmental Regulation; XII. Security of Generation Supply in Electricity Markets; XIII. Electricity and Gas; XIV. Challenges in Power Sector Regulation.

The first electromagnetic generator, invented by Michael Faraday in 1831.

The authors cover pretty much everything in terms of background in energy regulation, with a focus, but not exclusive, to European regulation and market design. The book reads as a manual and goes into detail in explaining why some regulatory decisions were taken. However, it does not push a message or contributes to the scholarly debate, it is more a stocktaking exercise.

The book makes the basis for the Regulation of the Power Sector course at the Florence School of Regulation, a 6-months intensive training for professionals in the area.

The authors are mostly academics and former regulators with plenty of practical examples. What is impressive is that they managed to have a very balanced approach in a highly divisive area.

The volume is not an easy read, some diagrams and formulas taking some time to digest, even for specialists. This is because the book encompasses a very wide range of fields, from formulas taken from the field physics to economic calculations.

For energy professionals, I commend the book, as a very comprehensive summary of energy regulation, theories and basics of the power system. It refreshes knowledge and fills some gaps, in a balanced way.

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