![]() ![]() Therefore, energy infrastructure is de facto a natural monopoly. It requires massive investments, but also the permits for building such a large infrastructure. It is almost impossible for another company to erect a second grid. The transmission and distribution grids are central assets. Very large industrial consumers are often connected directly to the transmission grid, though. From there on the electricity is further distributed over the distribution grid towards the end-consumers. In substations around Europe, the power is brought to a lower voltage level in transformer substations. The transmission grid, often called the high-voltage grid, transmits the power over long distances. For this job, extensive infrastructure is required. The transmission and distribution grids connect generation and consumption. Transmission and distribution grid are central assets We perform worse than our neighbor Germany, but better than France. ![]() An analysis by ACER, the Agency for the Cooperation of Energy Regulators in Europe, revealed that the level of market concentration is still quite high in Belgium. The regulating instances who monitor abuse of market power quantify the level of free competition with the so-called concentration ratio CR3. Especially in industries with large capital investments and large infrastructure, the activities are typically in the hands of a few large companies. In reality, a perfect competition seldomly exists. ![]() Households now have the choice to pick the supplier that offers them the best tariff and service. Also in the retail market, where the suppliers sell electricity contracts to the end-user, free competition is in the benefit of the consumer. This should eventually lead to lower prices for the consumer. It means that none of the companies in the generation sector can influence electricity prices on the wholesale market by using their market power. In an ideal setting, both production and supply are fully competitive activities. You can learn more about the function of the different players in the electricity grid in this article. This part of the system is characterized by lower voltage levels and is operated by the distribution grid operators (DSOs). They buy electricity at the wholesale market and it is transported to the customer through the distribution grid to which households and companies are connected. The suppliers (or retailers) take care of the actual provision of electricity to the end consumer. It is operated by the transmission grid operator (TSO). The electricity is transmitted via the high-voltage grid, often referred to as the transmission grid. There are the generation companies who take care of the production of electricity in their power plants. In the current European electricity system, the different stages of in power provision are split up. The European Energy Market - Liberalization & Unbundling DefinitionĮlectricity travels a long way from the place where it is generated to where it is consumed. ![]()
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