Electricity Distribution System

Industrial

Commercial

Agricultural

DomesticSystem transformer

Distributiontransformer

LV Distribution Substation

Transformer HV Switchgear LV Switchgear

Substation Plant Purchasing Climate – Before Deregulation

- publicly owned, by government or municipality

- no profit motive or private shareholders

- limited measurement of electricity purchases and consumption

- energy efficiency generally a low priority

- mixture of network reinforcement, renewal and extensions

- specialist sub-station engineering and purchasing function

Asset Age Distribution – City Utility

0

5

10

15

20

25

30

35

40

<1950s 1950s 1960s 1970s 1980s 1990s

year

%

Switchgear

Cables

Source: London Electricity

Transformer Purchasing – Before Deregulation

- several approved suppliers, mostly domestic companies

- transformers were manufactured to order

- annual competitive tendering to national or utility specification

- contracts for one year placed, few hundred units with each supplier

- transformers manufactured against agreed delivery schedule

- scope to cut back purchases

Utility Purchasing Cycle - Distribution Transformers

Refurbishment, repair, spares

Invitation to tender

Call-off starts

Development contracts

“Transformer of the future”

months 1 2 3

Contracts awarded

NegotiationEvaluation of bids

Substation Plant Purchasing Climate - Today

- utility is privately owned by investors

- capital-intensive business, with large fixed assets

- facing complex business issues, maximise profits, expand in size

- secure customer base is under attack

- defensive moves to protect share price, avoid acquisition

- focus is on asset management, rather than purchasing and engineering

-regulators starting to have an impact

Transformer purchasing - Today

- installed transformers seen as reliable long-lasting assets

- little pressure to undertake renewal and reinforcement

- purchasing throughout Europe, longer-term contracts

- very competitive market. Contraction of supply side

- financial benefits of energy savings not yet apparent

Energy Efficiency Issues – Utility Transformer Purchasing

- European transformer specification permits a low level of efficiency

- scope for utilities to choose lowest standards (BA’, AA’)

- higher capital cost of energy-efficient transformers

- strong incentive to take short-term viewpoint

- higher efficiency requires justification, meet utility’s financial policy

Losses, Utility Distribution Transformers, Western Europe(PO+PK, 400kVA)

>5000W76%

4500-5000W5%

4000-4500W15%

<4000W4%

Substation Plant Purchasing - Agents for change

- impact of national electricity industry regulators

- climate change goals and pressures

- financial benefits of energy savings becoming apparent

- scope to learn from overseas

- wider recognition of the energy savings achievable

- adoption of high standards which are already available

- use of new materials and manufacturing technology

- on-line metering and condition monitoring

- computation of energy savings

Transformer Purchasing - Future

Ranking of Importance – Distribution Cost Elements, Europe

Key factorNetwork lossesCountry

Capital costs3Sweden

Capital costs4Spain

Capital costs4Norway

Capital costs4Netherlands

Capital costs4Italy

Operational control4Germany

Operational control, overheads3France

Operational control4Austria

Source: Eurelectric