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Price Determination of Electricity Supply due to Externalities, Wheeling Charges and Losses

  • Mon 7th Jan 2013
  • Erin
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Title of thesis: Price Determination of Electricity Supply due to Externalities, Wheeling Charges and Losses
Name of student: Peerawat Payakkamas
Thesis advisor(s): Dr. Athikom Bangviwat, Prof. Dr.-Ing. Christoph Menke

Rationale and objective(s) of the research:

Currently, Thailand’s electricity tariff structures apply uniformly to all regions and only account for the cost of the utilities for power generation, transmission and distribution lines, with a few variations in prices due to fuel adjustment mechanisms, voltage levels, and time-of-day consumption. Consequently, the location-specific adverse effects of power generation incurred by the society and the distance-dependent costs of transferring electricity from one place to match “supply” and “demand” are not adequately reflected in the final price to end users. Therefore, this study proposes determination of electricity prices for consumers in different regions of Thailand by incorporating technology-specific power generation costs based on the levelized-cost basis, external costs associated with human health and environmental impacts, and wheeling charges of transmitting electricity from one place to another. The proposed energy and monetary transfer schemes are expected to better compensate the impacts of power generation on the society as well as encourage environmental awareness on future power generation expansion planning. 

Major outputs/findings:

The major findings of this study can be summarized into the following aspects:
(a) By realizing the variation in the combination of power generation options used and the difference in production and consumption levels of each zone, the electricity pricing scheme presented in this study is expected to make electricity prices sounder to the end users of various zones across the country by allowing zones with excess generation to receive compensation (in monetary terms) of the externalities of power generation.
(b) Calculating the final electricity price for end users by taking both externalities and wheeling charges into account can help create awareness on the adverse effects of power generation absorbed by the society as well as electrical energy efficiency (by prioritizing inter-zonal transfer of electrical energy within the country).
(c) The proposed monetary-transfer analysis results in an increase in the final electricity price paid by users in the zones that require importing from other zones to match their deficits. This is expected to promote self-sufficiency of electrical energy and encourage zones in deficit to consider power generation from locally available resources rather than solely relying on importing.
(d) Having electricity priced in such a way that the combination of power generation options of that specific zone, the environmental and human health impacts of power generation are reflected in the total cost of the zone’s own generation is a key to improving community acceptance of the power generation projects and the decisions made by the authorized bodies in that specific area of the country and/or of the country as a whole.
(e) This study can help motivate regulatory reforms of the country’s electricity supply industry, hoping to get both the end users and the electricity authorities to realize the variation in the cost of own electricity generation from one zone to another due to location-specific contexts, and further suggesting on giving the localities the power to arrange their own electricity-related facilities and affairs to suit their own interests. 

Download article here https://www.tci-thaijo.org/index.php/SciTechAsia/article/view/102109/79022