US 18275
Trainee Workbook
Unit Standard 18275
Demonstrate knowledge of the New
Zealand electricity supply industry
Level 2 Credits 2
Name:.........................................................
www.esito.org.nz
Contents
Glossary............................................................................................................................................................ 3
1. Introduction.............................................................................................................................................. 4
2. Knowledge check....................................................................................................................................... 5
3. The big picture.......................................................................................................................................... 6
4. Generation................................................................................................................................................ 7
Introduction.............................................................................................................................................. 7
1. Hydro generation.................................................................................................................................. 8
2. Thermal generation............................................................................................................................. 10
3. Alternative fossil fuel generation........................................................................................................ 12
4. Renewable energy generation............................................................................................................. 13
Wind ....................................................................................................................................................... 13
Solar ....................................................................................................................................................... 15
Wave Motion .......................................................................................................................................... 16
5. Transmission............................................................................................................................................ 17
Transmission lines and the National Grid................................................................................................ 17
Types of transmission lines..................................................................................................................... 18
Control centres........................................................................................................................................ 20
Substations.............................................................................................................................................. 21
6. Distribution............................................................................................................................................. 23
Distribution connects the consumer to the source................................................................................. 23
7. Electricity retailing................................................................................................................................... 24
The electricity market............................................................................................................................. 24
Electricity users – retailers and consumers............................................................................................. 27
Pricing..................................................................................................................................................... 28
The flow of electricity and money........................................................................................................... 29
8. How do you fit in?................................................................................................................................... 30
Introduction............................................................................................................................................ 30
Complete your qualification!................................................................................................................... 30
11. Make connections................................................................................................................................... 32
12. Answers to activities............................................................................................................................... 33
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US18275 | edition 1 | April 2012
Glossary
The words in this glossary are in green throughout the book.
When I see this word… It means…
Bar
Bar is a term used when measuring the amount of pressure applied.
Contestable
Competitive.
Disconnectors
Break a connection.
Isolate
To set something apart from anything else.
Participant
Person taking part.
Penstock
A pipe that takes the water from a dam to the turbines of a generator. A penstock can be up to 1 metre in diameter.
Reservoir
An artifical (man-made) pond, where water is collected and stored.
RPM
Rotations per minute.
Spillway
A spillway is part of a dam that allows water to flow freely over the dam
without flowing through the turbines. Spillways may be used on dams with
floodgates as an additional means to control release of water during flooding
or maintenance.
Spinning reserve
This is back-up generation that can be made available to a transmission
network at short notice. Spinning reserve can be used to cover increases in
load, where this is required, or when there is loss of generation from other
sources. For instance, loss of generation can occur when there is a sudden
drop of wind at a wind farm.
Stator
The stationary part of a rotor which holds copper coils and assists in
producing current.
Stakeholders
Groups that have an interest (financial or otherwise) in a business or
organisation. In this case it relates to the electricity supply industry.
Tailgate
This term is used in the electricity supply industry. It refers to meetings which
take place before a job starts so that workers can share information, identify
hazards and develop control plans if required.
Transformer
Device used to change the voltage of electricity by stepping it up or down.
US18275 | edition 1 | April 2012
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1. Introduction
Unit standard objectives
Unit standard 18275 forms part of the National
Certificate in Electricity Supply (Level 2). It is an important
introduction to the electricity supply sector.
Use this workbook to help you demonstrate knowledge
of the:
xx major sectors in the New Zealand electricity supply
industry
xx key industry relationships in the electricity supply
industry in New Zealand.
Prerequisite
There are no prerequisites for this unit standard.
Getting started
Icons are used throughout the ESITO trainee workbooks. The most common are listed below.
!
Pay attention: This information will be important.
Activity: The activities will help you prepare for the assessment task. The activity asks you to:
xx think about your past experiences
xx think about the information and ideas you have been studying
xx think about how you can use new skills in the future.
Website: This icon refers to the world wide web
Additional information that might be of interest. Sometimes, this space is used to explain ideas in
more detail.
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US18275 | edition 1 | April 2012
2. Knowledge check
This section looks at your prior knowledge and prepares you for what’s to come. Answer the questions to
find out what you do and don’t already know.
Explain in your own words how electricity is generated.
What are three renewable energy resources that you’re already aware of?
1
2
3
Name the two systems of electricity transmission operating in New Zealand.
1
2
Which companies supply electricity to consumers, in your region?
Name six New Zealand generation companies.
Generation
companies
Explain the National Grid, in one sentence.
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3. The big picture
It only takes a simple flick of a switch for most people in New Zealand
to have instant access to electricity. This workbook looks at the four
sectors in the electricity supply industry that makes this possible.
1 Generation (produces electricity)
2 Transmission ( moves electricity from generators to load
centres)
3 Distribution (moves electricity from load centres to the consumer)
4 Electricity retailing (the buyers and sellers of electricity)
First, let’s take a look at the big picture. The diagram below illustrates the flow of
electricity and the sectors that work together to generate it, move it and use it.
1. Generation
This is where the electricity is
produced. It is also known as the
source.
Transmission
lines
2. Transmission
This is the sector that moves the
electricity from the generation source
to the major centres of use. These
centres of use are also known as load
centres and include substations and
large industrial companies.
Substations
Domestic users
Distribution
companies and
retail companies
Power stations
Industrial companies
3. Distribution
This is the sector that moves the
electricity to the end users.
4. Electricity retailing
This sector includes the electricity
market and the consumers who use
the electricity, in homes or in business.
We look at each of these sectors in turn.
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US18275 | edition 1 | April 2012
4. Generation
Introduction
Apart from lightning, electricity does not
exist in a natural form. It must be generated
as it is needed, using one of the following
methods:
xx the reaction of chemicals (battery),
xx heat (thermo-couple based fuel cell)
xx the movement of an electrical
conductor and a magnetic field.
The majority of electricity used today is generated by the movement of a loop of wire,
or disc of copper, between the poles of a magnet. The magnetic poles are spun inside a
generator, by turbines that are powered by a variety of fuel sources that include water,
fossil fuels and renewable energy resources. Fossil fuels include coal, natural gas, bio
gas and diesel. Renewable energy sources include wind, solar energy and wave motion.
The fuel source will determine the method used for the generation of the electricity.
This section of the workbook looks at the following methods of electricity generation.
1 Hydro generation.
2 Thermal generation.
3 Alternative fossil fuel generation.
4 Renewable energy generation.
The major generation companies in New Zealand are either are state owned
enterprises, publicly owned or controlled from Australia. Generation companies can
also be retailers.
4.1 Name six of the generation companies in New Zealand.
Generation
companies
US18275 | edition 1 | April 2012
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4. Generation
1. Hydro generation
Hydro generation uses water flowing through a dam to turn a turbine, which turns a
generator, which creates electricity. The flowchart below gives a basic outline of how
the process works.
Hydro generation flowchart
Dam — The dam holds back river water and
creates a large reservoir (lake).
Intake — Gates open on the dam and water
flows through the penstocks.
Turbine — The water pressure on the large
blades of a turbine produces a rotational
movement, which drives the generator. The
turbine is referred to as the prime mover.
Generator — As the turbine blades turn, they
move the electromagnets of the rotor inside
the generator. The giant electromagnets
rotate past the stator copper coils. The stator
produces an output of alternating current
(AC), with a voltage of 11kV.
Transformer — A transformer steps up the 11kV output to 110kV or 220kV, for
insertion into the transmission lines. These lines move the electricity from the
generators to the distribution network and the consumers.
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US18275 | edition 1 | April 2012
4. Generation
Water pressure on the turbines
The force produced by the water on the turbine blades is determined by the ‘head’ of the
dam and the pressure of the water flowing through the turbine. The ‘head’ is the distance
between the bottom and the top of the dam. In most cases, the length of the penstocks is
equal to the head of the dam.
There are two options for producing the force of water required to generate electricity.
Option one combines a high head (high water pressure) with a low water flow through
the turbines. Option two combines a low head (lower water pressure) with a high water
flow through the turbines.
The highest dam in New Zealand is the small 32MW Cobb power station, northwest of
Nelson, at 595 metres. The Cobb has a high head and uses a low water flow. The lowest
dam is Waipapa, on the Waikato River, at 34 metres. Waipapa has a low head and uses
a high water flow.
Spillways
In the case of high lake levels occurring, excess water can be discharged over spillways
as ‘outlfow’. This excess water does not pass through the turbines. The spillway is also
used during maintenance periods, to maintain the river flow for other hydro stations.
4.2 Match the words to the definitions below.
Dam
Move the electricity to the consumers.
Intake
Attached to a generator and turns the water.
Turbine
Holds back water and creates a large reservoir.
Generator
Excess water discharged over the spillways.
Transformer
Gates that open on the dam to let water flow
through.
Transmission
lines
Produces AC from the stator copper coils and
rotating magnets.
Outflow
Steps up the 11kV generator output to 110/220 kV .
4.3 What part of a hydro station is the prime mover?
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4. Generation
2. Thermal generation
Thermal power stations are fuelled by the following sources.
xx Heavy engine oil
xx Coal
xx Geothermal energy
xx Natural and bio gas.
The energy created by these fuels is used to turn water into steam, which is the prime
mover in thermal power generation. Once the steam is created, it passes over the
blades of a turbine, making the turbine spin.
Steam turbines are used where energy is available naturally as geothermal steam, or
where fuel can be burned in a boiler. Steam turbines are fuelled by natural gas, heavy
oil or coal.
In nuclear stations, the heat from a reactor is used to produce steam, and the steam is
then used to drive steam turbines and generators.
Steam flow process
Steam is generated in a boiler at
temperatures of 600°C and pressures
of 200 plus bar.
This high pressure steam is directed
to the turbine blade which produces
a rotational force to drive the
generator. The pressure of the steam
reduces as energy is removed. The
steam is eventually condensed back
into liquid and pumped into to the
boiler to be reheated into steam.
Mechanically the basic steam turbine is a more efficient option than any other heat
engine as it only has one moving part - the ‘main bearings’.
A steam-driven generator can be very efficient depending on the type of turbine and
the shaft speed.
4.4 What is the only moving part in a basic steam turbine?
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US18275 | edition 1 | April 2012
4. Generation
Geothermal
In a geothermal station, the steam is sourced directly from inside the earth.
Fluid from a depth of up to 2.5km is brought to the surface. At the surface this fluid
is separated into steam and water vapour. Steam drives the turbine to generate
electricity, then is condensed and pumped back into the ground along with the water.
The only greenhouse gas emission of any quantity is hydrogen sulphide.
New Zealand has several geothermal power stations, many of which are in the Waikato
region. There are plans to build others and expand existing stations in the Waikato, Bay
of Plenty, and Northland regions.
Gas turbine stations
These stations use a gas turbine jet engine.
The jet engine is directly linked to the
shaft that is used to drive the electricity
generator. The jet engines are industrial
versions of those used on aircraft and
will run on natural gas, bio gas or a range
of fuel oils. Gas turbine stations are
more costly to run than conventional
thermal power stations and are used to
supplement electricity created elsewhere. This generally occurs at times when there is
a need for peak electricity generation.
The Huntly Power Station operates a 48MW open cycle gas turbine. The waste heat is
not used.
At the Te Rapa Dairy factory, Contact Energy operates a 44MW gas turbine on site. The
waste heat is used to generate steam for the factory.
Combined cycle generation
Combined cycle generation uses two prime movers, from one fuel source, to drive the
shaft of a generator. It uses the energy from gas turbine jet engines and also uses the
recycled heat exhaust energy from those engines. The heat exhaust energy is passed
through a thermal boiler unit, known as a heat recovery steam generator (HRSG). This
thermal boiler unit then produces super-heated steam, which rotates a steam turbine.
The steam turbine is linked to the same drive shaft of the generator as the jet engine.
Combined cycle generation is more efficient than a gas turbine station as it recycles the
energy which is otherwise emitted into the atmosphere. An example of a combined cycle
gas turbine is the 400MW at Huntly Power Station, previously known as the e3p project.
US18275 | edition 1 | April 2012
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4. Generation
3. Alternative fossil fuel generation
Diesel
Diesel engines may be used as standby units.
xx Major steam stations use diesel engines to supply supporting power for start-up
when they are isolated from the main system. This is known as Black Starting.
xx Portable generators that use diesel engines can be used to power substations
when distribution lines are out for service or have major failures.
xx On site diesel powered generators are used where supply continuity is critical, for
example, hospitals and telephone exchanges.
Diesel engines can be brought on load quickly and are generally limited to under 5MW
generating capacity.
Landfill gas generation
Producing electricity from landfills involves using modified diesel engines along
with the gas extracted from landfills. The gas is accessed through linked vertical and
horizontal wells which are sunk into the completed landfill. Blowers extract mainly
methane gas. The moisture is then removed by filters before the gas is supplied to the
engines. The life of a landfill gas generation operation is limited to 10 to 20 years.
There are a number of landfill gas generation operations in use in New Zealand. An
example is the 10MW combined output from the Greenmount and Rosedale landfill
sites in the Auckland region. The installations tend to be of portable design and can be
shifted to new sites when a field reaches the end of its life. City sewage processing also
produces methane and there are a number of these sites in New Zealand.
4.5 In your own words, explain how the following work.
Thermal generation
How it works…
Steam flow process
Geothermal station
Gas turbine station
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US18275 | edition 1 | April 2012
4. Generation
4. Renewable energy generation
The world’s natural energy resources, such as fossil fuels, are not endless. In addition,
renewable energy generation is becoming attractive as oil costs rise and the negative
side effects of traditional energy systems become apparent.
Research is continually seeking to find renewable methods to generate electricity.
Solutions range from wind, solar, hydro, and wave through to nuclear energy.
Alternative energy generation pursues the following goals.
1 Increased efficiency of energy production.
2 Reduction of energy costs.
3 Minimising the impact on the environment.
4 Using energy sources that are renewable.
4.6 What are two advantages of combined cycle generation?
1
2
Wind
Wind energy offers two important advantages.
1 It is sustainable in the long term.
2 Environmental impacts are minimal, in comparison to other forms of generation.
Wind generators can operate at wind speeds ranging from 12km per hour (gentle breeze)
to 90km per hour (a strong gale). Many New Zealand areas record annual wind speeds of
over 30km per hour, so wind has the potential to generate a great deal of electricity.
Wind turbines have been designed to survive 200km/hour wind speeds. However, to
avoid damage, the turbine automatically shuts down in very high winds (over 80km per
hour). To shut down the turbine, the blades are feathered so only the smallest amount
of resistance is offered to the wind.
The downside to wind generation is that it is not as cost effective as hydro generation.
However, as wind technologies continue to improve, it is expected that wind generation
will become more affordable and more widely used.
Wind turbines can be as high as 120 metres tall and the complete structure can weigh
over 200 tonnes.
US18275 | edition 1 | April 2012
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4. Generation
Wind — Rotor blades
Rotor blades capture wind energy to
produce the rotational force needed to
drive a generator. A rotor blade can be
up to 60 metres long and is usually made
from fibreglass-reinforced polyester.
The blade angle alters the level of
output. In low winds they have their
widest surface against the wind. As the
wind speed increases, the blades pivot
(feather), offering less reaction to the wind
pressure.
Blades can rotate at different speeds. In
winds up to 23km/hour they rotate at
33 revolutions per minute (rpm). Winds
higher than that automatically switch the
rotation speed to 44 rpm and trigger a
second generator to process the increased output.
Wind turbines have a major maintenance problem with their gearbox. The low speed
rotor blade shaft can be stepped up to shaft speeds in the range of 600 to 1500 rpm
depending on the type of generator used. This puts a lot of wear on the gearbox and
causes most of the maintenance costs and downtime. Worldwide development is taking
place looking into using direct drive permanent magnet generators that will run at rotor
blade shaft speeds. As a result the high maintenance gearboxes can be removed.
Wind — the control process
An on board controller device is remotely used, from a control centre, to start the
turbine and to synchronise it to the National Grid once the wind speed has reached the
level needed. The controller will shut down the generator if the wind speed is too high,
to prevent overloading of the generator or gearbox. Shutdown occurs by controlling the
angle of the blades.
The speed of the rotor blade shaft must be fairly constant while generating electricity
into the National Grid, so that the Grid remains stable.
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US18275 | edition 1 | April 2012
4. Generation
Wind — the disadvantages
There are a number of disadvantages to generating power through wind.
xx Wind patterns are random, so power generated this way cannot be included as
part of the daily production plan.
xx Power output from a wind farm can change minute by minute, which means that
spinning reserve needs to be available to make up for the loss of wind generation.
xx The mechanical maintenance costs are high.
Solar
Using solar energy is still a relatively
expensive way to produce large amounts
of electricity, but it is excellent at providing
energy for remote off grid situations or in
eco-sensitive environments. Photovoltaic
panels (PV) convert sunlight directly into
electricity and are the only commercial
option for generating electricity from solar
energy.
As technological improvements occur, PV panels have the possibility of offering future
benefits, such as:
xx reduced generation costs
xx low eco emissions
xx improved reliability
xx modular design, offering ease of expansion and installation.
The PV market in New Zealand is growing slowly and examples can be seen at some BP
service stations and the Auckland airport. As at 2012, PV generated electricity in New
Zealand is approximately twice as expensive as wind power energy to produce.
US18275 | edition 1 | April 2012
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4. Generation
Wave Motion
Just as wind energy technology has advanced, generating electricity from the broad
rolling motion of the waves offers many possibilities. The paragraphs below give two
examples of research projects that are attempting to generate electricity from wave
motion.
One method being trialled uses a buoy, fitted with an internal electricity generator.
The buoy is anchored to the sea floor and as it moves up and down with the waves
the internal generator produces electricity. The electricity is sent to the shore using
submarine cables. The minimal size and placement of the buoy is considered an
advantage, as it has a low environmental and social impact.
The image that you see on the right is of
another research project. This project
relies on the movement of hydraulic
fluid to generate electricity. Wave action
causes sections of steel tube to move
against each other, acting like a pump.
This pumping action forces hydraulic
pistons inside the tube to rotate the
prime mover that is connected to the
electricity generator. As in the previous
example, the generator is connected to
shore using submarine cables.
4.7 What do you think are the advantages and disadvantages of renewable wind
and solar energy sources? List them below.
Energy source
Advantages
Disadvantages
Wind
Solar
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US18275 | edition 1 | April 2012
5. Transmission
Transmission lines and the National Grid
The purpose of the transmission system is to connect the generated power to the
distribution network and some large industrial users of power.
The National Grid system carries electricity around the country and is made up of
over 12,000 km of high-voltage (HV) transmission lines and more than 170 electrical
substations.
The National Grid transmission lines connect power stations to substations, feeding the
local networks that distribute electricity to homes and businesses. Some large industrial
users of electricity receive their power directly from the National Grid.
The National Grid is owned by Transpower which is a state-owned enterprise.
Transpower is responsible for the operation and maintenance of the National Grid.
Transmission
lines
Substations
Domestic users
Distribution
companies and
retail companies
Power stations
Industrial companies
US18275 | edition 1 | April 2012
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5. Transmission
Types of transmission lines
The National Grid uses two systems of electricity transmission. They are the alternating
current (AC) system and the direct current (DC) system. In alternating current, the
movement of electric current periodically reverses direction. In direct current, the flow
of electric current is in one direction only.
Alternating current (AC) system
Alternating current is commonly used by electricity generators as it is easy to produce
and voltages can be stepped up or down using transformers. With the AC system there
will always be some electricity lost in transmission. However, transmission loss can be
reduced by transmitting the energy at high voltages. New Zealand transmission lines
carrying alternating currents carry voltages of:
xx 320kV
xx 220kV
xx 110kV
xx 66kV
xx 50kV
xx 22kV
You can tell if a transmission line is carrying an alternating current by counting the
number of insulators and conductors it holds. Alternating current is transmitted
using insulators and conductors in sets of three. Each pairing of an insulator with a
conductor is referred to as one phase. Each set of three is referred to as a ‘three-phase’
transmission. Where a large amount of electricity is needed, additional conductors can
be added to a single insulator to make multiple circuits. Higher voltages need longer
insulators.
Insulator
Three-phase
transmission
Multiple conductors
per insulator
Insulator
Structures that carry alternating current
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US18275 | edition 1 | April 2012
5. Transmission
Direct current (DC) system
Part of the National Grid uses direct current (DC), instead of alternating current, to
transmit large amounts of high voltage electricity for export and import between the
North and South islands. This is because the electricity lost in transmission is less for
direct current than for alternating current.
The DC transmission system that transmits electricity between the islands is referred to
as the High Voltage Direct Current (HVDC) link. The HVDC link connects Benmore hydro
station, in the South Island, to Haywards substation, in Wellington. The HVDC link is
575km long and 35km of this is a submarine cable across Cook Strait. The HVDC link can
transmit over 1000MW of electricity, at a voltage of 350kV.
350kV High Voltage DC Link between the North and South Islands
North Island
AC System
South Island
AC System
Benmore
Submarine
Cable
Haywards
Energy is generated at Benmore, as AC. It is converted to DC to
feed the HVDC link, for export through to Haywards substation. At
the Haywards substation, the HVDC is re-inserted into the AC
system of the National Grid. This shift between AC and DC systems
happens in reverse when electricity is exported from the North to
the South Island.
You can tell if a transmission line is carrying direct current. DC is
transmitted using only two insulators and two sets of wires, as
opposed to the three-phase system used by alternating current.
5.1 Complete the activity below.
a What are the two different systems of electricity carried on the National Grid?
1
2
b Who owns and manages the National Grid?
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5. Transmission
The largest transmission project since 1960 is the 400kV overhead transmission
line between a new substation at Whakamaru to a new switch station in South
Auckland. As part of that same project, four underground 220kV cables will link
the line from the existing Pakuranga substation to the Albany substation.
Control centres
Control centres monitor
changing demands for
electricity and control the
flow of electricity to avoid
overloading the system and
causing damage or power
outages (power cuts).
The distribution demands
on a generation station or
substation change daily due
to a number of factors, such
as patterns of customer use,
system outages, repair work
and weather.
An operator in a control centre is responsible for the flow of electricity in their area –
whether it is generated, transmitted or distributed. Much of the role of an operator
consists of monitoring the system and performing routine duties but if there is a
disturbance in the system it is their responsibility to restore power as quickly and safely
as possible.
The National Grid is controlled from the main control centre in Hamilton. Because the
main control centre has such an important role, it is supported by another control
in Wellington. A control centre in Christchurch, Islington, also supports Hamilton by
dealing mainly with much of the electricity needs in the South Island.
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US18275 | edition 1 | April 2012
5. Transmission
Substations
Transpower substations link the transmission network together and also link the
transmission network to the distribution network.
As mentioned in the last section, generation voltages are stepped up for insertion into
the National Grid. This is done by substations, which step up the lower generation
voltage (11kV) into the high transmission voltage of the National Grid (110kV or 220kV).
In order to make the electricity available for distribution to users, the substations
step down the higher transmission voltages to the lower voltages that must be used
in the local distribution networks. Within a local distribution network, electricity can
flow through several distribution substations before it connects to the end users. The
distribution voltage will change down in several steps.
5.2 What is the purpose of a step-down transformer?
Transmission
lines
Substations
Domestic users
Distribution
companies and
retail companies
Power stations
Industrial companies
Substations also perform the following functions. They:
xx allow sections of the network to be shut down for maintenance
xx automatically shut down an area during dangerous situations
xx isolate sections of the load, or transmission, or fault system using disconnectors
xx provide protection against overload and system faults using circuit breakers (CBs)
xx provide voltage and power factor control
xx direct essential supplies directly to hospitals and critical industries
xx connect the transmission lines together.
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5. Transmission
Carrier networks
Substations are not normally staffed. They link to control centres through the use of
carrier networks.
Carrier networks are communication lines which allow data to be transmitted between
substations and control centres. They allow control centres to send or receive
information about the load on a substation.
5.3 In your own words, list five functions carried out by substations.
1
2
3
4
5
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US18275 | edition 1 | April 2012
6. Distribution
Distribution connects the consumer to the source
The distribution network connects the consumer to the energy source. It uses overhead
conductors or underground cables to carry the electricity from the transmission
substations (and small generating stations) to the various consumers. The distribution
substations transform the voltage along the way, as needed, to suit the consumer.
There are a number of distribution companies throughout New Zealand, varying from
publicly listed companies to community-owned trusts. Distribution companies are
commonly referred to as Lines companies and their distribution lines carry voltages of:
xx 33kV
xx 22kV
xx 11kV
xx 230/400V.
Transmission
lines
Substations
Domestic users
Distribution
companies and
retail companies
Power stations
Industrial companies
Most customers are directly connected to the low distribution network voltages of 230V
or 400V. Industrial sites may be connected to both. Some customers have distribution
transformers on site. These convert the distribution 11kV to the 230V or 400V needed
for the onsite customer. On site conversion reduces transmission loss.
The overall arrangement of a distribution network is affected by its location and load.
Generally, a distribution network will have a number of radial feeders. Radial feeders
are used so that should there be a fault, the fault area can be isolated and customers
around the fault would still have their supply. Country areas are less likely to have
supplies maintained during a fault because there are fewer or no radial feeders.
6.1 Provide, in your own words, a brief definition of the distribution system.
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7. Electricity retailing
The electricity market
The New Zealand Electricity Market (NZEM) is the term for the markets operated by
M-Co (the Marketplace Company), where electricity is bought and sold every day. This
is known as the ‘spot market’. The trading of electricity is governed by the NZEM Rules
and a set of industry rules called MARIA (the Metering and Reconciliation Information
Agreement).
Approximately three quarters of New Zealand’s electricity is traded through the NZEM.
The remainder is covered by contracts arranged directly between generation companies
and consumers.
The main role of the NZEM is to make sure that electricity supply meets demand at all
times, in the most cost effective way. They also make sure that the market is operated
fairly and honestly.
7.1 What is the role of the NZEM?
How the electricity market works
Electricity generation companies compete with each other to supply electricity to
retailers and consumers. Generation companies offer electricity to the market, where
it goes into a pool. Retailers bid for electricity from the pool to supply their customers.
Retailers may be power companies or major industrial users of electricity.
Each trading day, the purchasers submit bids and the generation companies submit
offers. The bids and offers are for the trading period of the following trading day. The
bids state the price that the purchaser is prepared to pay for electricity. The offers state
the price for which the generation company is prepared to generate and sell electricity.
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7. Electricity retailing
Stakeholders in the electricity market
There are many groups involved in the buying and selling of electricity, to bring it into
our businesses and homes at the ‘flick of a switch’. For example, once the retailer has
purchased electricity, Transpower and the Lines companies deliver it to customers,
through the National Grid and the local electricity distribution networks.
The main stakeholder groups are listed below.
Generation companies – generate electricity and insert it into the National Grid.
Transpower – owns and operates the National Grid.
Electricity retailers – the power companies and major industrial users of electricity that
submit bids to buy electricity, then sell it on to consumers.
Distribution companies – own the low voltage power lines that connect the National
Grid to homes and businesses. Distribution companies generally sell their services to
retailers.
Consumers – buy electricity from their choice of retailer. Large consumers of electricity
may access electricity directly from the National Grid.
Traders – buy and sell generated electricity from the NZEM. Traders include buying
groups that act on behalf of power companies and industrial users.
Service providers – are people who have contracts to provide services to the NZEM.
These include the market administrator, grid operator, scheduler, dispatcher, pricing
manager, registry, reconciliation, and clearing manager.
Market Surveillance Committee – supervises the business conduct of all market
participants.
M-co – provides on-going services to the NZEM through contestable contracts. M-co
administer the market, host and manage the trading and information systems, and
provide secretarial services, along with pricing, clearing and settlement functions.
Now that you have read through the stakeholder groups, complete activity 7.1 over
the page. Try to complete the whole diagram from memory, before looking back to
this page to check your answers.
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7. Electricity retailing
7.1 In the spaces provided under each stakeholder heading, write down the functions of that group.
Transpower
Distribution companies
Electricity retailers
Traders
Stakeholders
Consumers
Service providers
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Market Surveillance Committee
M-Co
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7. Electricity retailing
Electricity users – retailers and consumers
Electricity users fall into two groups, retailers and consumers.
Retailers
Retail companies sell electricity to consumers, who are also known as ‘end-users’.
Retailers trade in the NZEM to buy electricity from the generation companies and some
buy directly from the generation companies themselves. Some generation companies
are also retailers. The retailer pays Transpower and the Lines companies to deliver
electricity to the consumer. These costs are passed on to the consumer.
The Electricity Industry Act 2010 has promoted further competition in the electricity
marketplace and customers can easily switch between electricity retailers.
For a list of all the energy retailers in New Zealand, and to compare all major
electricity suppliers, go to the Switchme website. http://www.switchme.co.nz/
residential/power-companies.phpConsumers
Consumers
Consumers purchase electricity from the retailers. Retailers have responsibilities to
their consumers and consumers have the right to expect that retailers will meet their
customer responsibilities. To meet customer responsibilities, the retailer must:
xx measure electricity usage through the use of meters
xx bill the consumer based on the amount of electricity they’ve used
xx ensure that Distribution companies carry out the line maintenance needed to get
electricity to the consumer.
Electricity meter measuring electricity usage.
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7. Electricity retailing
Pricing
There are two main types of electricity price in New Zealand,
wholesale and retail.
The wholesale price
The wholesale price is the price that purchasers pay generation companies. The
wholesale price depends on the competition within the electricity marketplace.
The retail price
The retail price is what consumers pay retailers for supplying them with electricity.
The basic unit for charging electricity costs is the kilo-Watt hour (kWh) and one kWh is
referred to as one unit of electricity. Compare the following calculations.
xx Ten 100W lamps used for one hour will use one unit of electricity,
xx One 1000W heater used for one hour will use one unit of electricity.
The retail price includes costs for purchasing and distributing the electricity. These costs
include generation charges for the amount of power used and the cost of generation;
transmission and distribution costs, to pay for the cables and wires that transport
electricity; and retailer costs for selling the electricity and providing support services
such as on-going maintenance and line rental.
7.2 Complete the activities below.
a What is the role of electricity retailers?
b What is the basic unit used for charging for electricity?
c How much does your retailer charge you for a unit of electricity? Check your bill.
d One 1000W heater used for one hour will use one unit of electricity. Based on the
cost of a unit of electricity, how much will it cost to run a 1000W heater for three
hours?
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7. Electricity retailing
The flow of electricity and money
As each of the stakeholder groups comes into contact with each other, a business relationship is formed.
The groups depend on each other to complete their role effectively. The relationships keep electricity
flowing through its cycle of generation through to where it is being used at home and at work.
The diagram below shows the relationship between electricity and money flow within the industry.
Generation companies supply electricity.
They sell electricity to the NZEM, as well
as to large industrial users.
NZEM regulates, and
acts as the go between,
for the sale and
purchase of electricity.
Transpower owns the transmission
network. Transpower is paid to deliver
electricity, across the whole country,
through the National Grid.
Lines companies are generally paid
by retailers to deliver electricity to
consumers. Lines companies maintain
the local distribution networks.
Consumers pay retailers for the electricity
that is delivered to their homes and
businesses.
Electricity Flow
US18275 | edition 1 | April 2012
Retailers trade in the
NZEM and supply
electricity to consumers.
They pay transmission
and distribution costs and
pass these costs on to
consumers.
Money flow
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8. How do you fit in?
Introduction
Trainees are vital to the electricity supply industry, for the safe and continuing supply of
electricity that New Zealand depends upon. You have a vital role in making sure that your
training is completed.
Complete your qualification!
As a trainee, you are expected to take responsibility for your own learning. This does
not mean that you are on your own, as you always be supported throughout the
time it takes for you to become qualified. Being responsible means that you need to
keep yourself on target for completing your qualifications. There are many different
resources provided to help you do this, some of which are listed here.
xx Your supervisor or trade coach will have overall responsibility for your learning
and safety and will provide you with support and direction.
xx Your ESITO training plan outlines the training which must take place before you
can become qualified in your area of study.
xx Learning resources are available from your employer and ESITO.
xx Many of you will attend courses away from your workplace. These courses will be
blocks of time dedicated to particular skills.
xx The company that you work for may have other training options available to you.
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8. How do you fit in?
So that you will get the most benefit from the training provided for you, make sure you
take responsibility to meet the expectations placed upon you.
xx Complete your training within the time frames given to you.
xx Learn to work safely and to look after the safety of others.
xx Actively seek to learn more skills and take every opportunity to do so.
xx Complete any workplace documentation required, such as tailgate meeting
reports, incident reports, hazard identification reports.
xx Meet the expected outcomes of the qualifications you undertake.
xx Where it applies, meet the EWRB registration requirements.
Meeting these expectations will make sure that you have a safe and satisfying career
within the electricity supply industry.
8.1 Where would you go, or who would you go to, to find out more information
about the qualification you’re completing?
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11. Make connections
Think about how the information you have read applies to what you do at work. Read the questions and
answer in the spaces provided.
Why is it important to find and use renewable sources of energy?
Which sources of electricity generation do you know of, in your region?
Who are the main retailers in the electricity market?
Electricity retailers
How can you tell if a transmission line is carrying an alternating current (AC) or a direct current (DC)?
New Zealand transmission lines carry AC voltages of ...? Tick the answers you think are correct and check
back through this book if you are not sure.
310kV
110kV
50kV
320kV
70kV
22kV
220kV
66kV
20kV
120kV
60kV
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US18275 | edition 1 | April 2012
12. Answers to activities
4.1 Answers could include major generation companies: Meridian, Genesis, TrustPower, Mighty River Power
and Contact Energy. Other companies are: Pioneer Generation, Energy 3, NZ Windfarms and CBD Energy/
Chatham Islands Enterprise Trust. The list is not exhaustive.
4.2
Dam
Move the electricity to the consumers.
Intake
Attached to a generator and turns the water.
Turbine
Holds back water and creates a large reservoir.
Generator
Excess water discharged over the spillways.
Transformer
Gates that open on the dam to let water flow through.
Transmission
lines
Produces AC from the stator copper coils and rotating magnets.
Outflow
Steps up the 11kV generation output to 110/220 kV.
4.3 The turbine.
4.4 The rotor.
4.5 The answers could be similar to:
Thermal generation
How it works…
Steam flow process
Steam is produced from a boiler. The steam is directed to a turbine blade,
which rotates and drives a generator.
Geothermal station
Steam comes from inside the earth. Fluid is brought up and separated into
steam and water vapour. The steam is directed to a turbine.
Gas turbine station
Uses a gas turbine jet engine to drive an electricity generator. Runs on
natural gas, bio gas or fuel oil.
4.6 Answers could include:
xx More efficient way of using a jet engine as there are two prime movers on the same shaft.
xx An increased electrical output for the same fuel supply.
xx Makes use of the heat from the jet engine exhaust.
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12. Answers to activities
4.7 The answers could be similar to:
Energy source
Advantages
Disadvantages
Wind
xx Access to wind is free.
xx Wont work if there’s no wind.
xx New Zealand has many windy areas so
there is the potential to use wind to
generate a lot of energy.
xx Can kill birds.
xx No emissions.
xx Can be noisy.
xx People think wind farms are ugly and
don’t want them on land near them.
xx Can’t guarantee the wind will blow.
Solar
xx Access to sunlight is free.
xx Won’t work if there’s no sun.
xx No emissions.
xx Need big panels which take up a lot of
room.
xx Can be an eyesore.
xx The cost of harnessing solar energy is
currently expensive.
5.1
a Alternating current and direct current (high voltage direct current).
b Transpower.
5.2 Step-down transformers lower the transmission voltage to the voltages required by the distribution
network.
5.3 Answers can be any of the list on page 21.
6.1 The distribution system connects the consumer (or user) to the energy source. The electricity is
delivered through the transmission system into substations, where the voltage is lowered to suit the
distribution networks. Distribution substations further step down the voltage as it is needed.
7.1 The role of the NZEM is to provide a marketplace for the electricity industry to buy and sell electricity in
an environment which is fair and honest. NZEM makes sure that all parties involved consistently meet the
demand for electricity by consumers.
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12. Answers to activities
7.2
a Retailers sell electricity to consumers. They provide metering that measures the electricity used by
each household or business.
b The kilo-Watt hour (kWh)
c Will depend on your area.
d Calculation will depend on the rate, but should follow as: (1000 W x 3 hours) x your area rate = answer
8.1
1 You could ask your supervisor or coach/mentor.
2 You could ask the ESITO Customer Services Manager that covers your area.
3 You could visit the ESITO website: www.esito.org.nz
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© 2012 ESITO