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Electricity production in Australia

Question:

Discuss About The Force Drives Blades Of Wind Power Turbine?

The electricity industry is one of the most important industries of Australia. Since the entire power supply of Australia is dependent on this industry, hence the sector has a key role in the Australian economy. The sectors of the electricity are involved in the generation of electricity, along with its transmission and distribution ("ABC Australian Broadcasting Corporation", 2017). The retail sales of the electricity are also involved as a part of the activity of the electricity supply industry. The social, industrial as well as commercial success of Australia is dependent on the reliability of the electricity supply. In this way, the economy of Australia is significantly dependent on the electricity industry.

The production of electricity has changed significantly over the years. Electricity could be produced, either by chemical means or by mechanical actions ("ABC - Australian Broadcasting Corporation", 2017). The electricity production by the chemical means relies on the flow of the charged particles from the cells in a battery. This type of production of the electricity is expensive in the modern day ("Australian Energy Regulator |", 2017). This is because; the rise in the demand of the electricity has forced the electricity industry to look for alternative sources of energy production. With this process of electricity production, only a limited amount of electricity could be successfully produced ("ABC - Australian Broadcasting Corporation", 2017). In order to meet the increased demand of the production of electricity, mechanical actions are used widely. Powerful magnets spin very fast inside the coils of conducting wires. Gas, water turbines or steam usually drives these, thus assisting in electricity production. In the present day situation, more than 90% of the electricity produced in Australia is obtained by burning of fossil fuels, such as gas, oil and coals. The chemical energy that is stored in the fossil fuel that is used to heat water as well as produce steam ("ABC - Australian Broadcasting Corporation", 2017). This steam is then forced under high pressure through a turbine that drives the generator, to produce enough electricity for supply all over Australia. This complete process helps in conversion of the chemical energy into kinetic energy and then eventually to electrical energy. The kinetic energy of water, falling from a great height, drives the blades of the turbine that produce electricity ("ABC - Australian Broadcasting Corporation", 2017). The use of wind energy is also seen in the production of modern day electricity. The kinetic energy of the wind force drives the blades of the wind power turbine, to produce electrical energy. Before the period of the 1800s, the production of electricity was majorly depended on wood, water, sun and wind as their energy sources. However, in the 19th century, the introduction of coal-fired power was first introduced. In the 20th and the 21st century, the use of accounting of fossil fuels for the production of electricity was mainly used ("Australian Energy Regulator |", 2017). However, with the increase in the need for the production of electricity, the solar and tidal energy was also being used.

The use of wind energy in electricity production

Figure 1: Electricity distribution in Australia

(Source: "Australian Energy Regulator |", 2017)


The distribution of electricity is also important, as the effective transportation is important for the successful utilization of electricity. The speed of electricity is similar to that of the speed of light ("ABC - Australian Broadcasting Corporation", 2017). Though as users, people see that the electricity supply comes to the electrical appliances instantaneously as soon as the application is switched on, yet a number of stages are followed ("ABC - Australian Broadcasting Corporation", 2017). A transformer coverts the electricity, that is produced in a generation plant. The electricity then arrives to a location, where a substation transformer changes the high voltage to a lower voltage, for distribution. The distribution channels then carry the low voltage electricity to the consumers. The consumers then use it, according to their needs. The distribution of the electricity has changed over the years ("ABC - Australian Broadcasting Corporation", 2017). With the rise in the use of the various electrical gadgets such as air-conditions, the demand in various states of Australia has risen. The increase in the number of households also resulted in the changes in the distribution of electricity all over Australia. Statistics show that with the increase in the demand in the household, the deficit in the supply to the industries is witnessed. The increase in the use of air-condition have increased the demand in the household for the supply of electricity increased ("ABC - Australian Broadcasting Corporation", 2017). However, with the increase in the use of solar energy and other cost effective forms of energy, the demand in the electricity is seen to be lowered.    

The modern electricity distribution networks are expensive as well as geographically specific. This means that the distribution of the electricity is confined to geographical limits, and hence natural monopoly is established ("ABC - Australian Broadcasting Corporation", 2017). Moreover, the electricity industry is highly regulated as the access to reliable supply of electricity is considered important by the government. The Australian Energy Market Commission (AEMC) regulates the distribution of electricity all over Australia. However, in the past, the National Electricity Market regulated the industry ("ABC - Australian Broadcasting Corporation", 2017).

Thus, significant changes in the past and the present power generation in Australia have been witnessed. The changes are appropriate in order to ensure that demand of the electricity among the people of Australia is met. Moreover, the electricity distribution industry is dominated by the state-owned enterprises, such that stability could be maintained over time ("ABC - Australian Broadcasting Corporation", 2017). The most significant impact of the capacity extension, over the past five years has been on the cost structure of the industry.    

Distribution of electricity in Australia

Procurement management practice is a systemic approach where business organization secured goods and raw materials, from respective suppliers which will ensure that they have enough resources to sustain the future of the company.  It is essential for all companies to procure their resources in order to improve upon their value and business practice. Edquist et al., (2015), have added in the context that securing the resources in form of procurement management practice will help to save both time and money for the company. The procurement management can help a company to identify all the issues related to purchasing products suppliers and thereby able to make a business deal with all third party organizations. It is also possible to ensure Proper delivery of the required resources within definite time. According to McMurray et al., (2014), securing the dealership with all suppliers is the primary step of procurement management, which can help you identify all the major relevant issues. It is also essential in this context for the company to maintain effective communication with the suppliers, which will help them to resolve all issues related to securing management. The procurement of goods and other resources from external supplier on outsourcers is a critical path, which decides upon the success of the project (Sanchez et al., 2013).

With the demand of electricity going up in Australia, all the power supplying companies need to implement effective procurement management practices in order to ensure that there is no shortage of supply that can lead to a crisis situation. In the current time, most of the supply of power generation in Australia is either from power generating plants or production from natural gases. This power is then provided to the houses with the help of retail servicing, which are responsible for maintaining the billing service. There are separate forms of business, in each component of electricity supply chain of Australia. It is essential for every Organization in this entire system of power supply chain to have effective strategy of procurement practice,  which will ensure that the growing demand of power generation are fulfilled. It is also relevant to mention that due to the Global change in electricity supply market, new types of procurement strategy are necessary in the context that it can have huge impact on the entire system of distribution.

The procurement strategy that needs to be implemented in the Australian electricity supply chain is dependent upon the centralized power. The companies of power distribution in Australia need to adopt short term contract policy during the time the prices of electricity supply goes higher (Lember, et al., 2013). It is essential for every company of Electric Supply Chain within Australia to have separate Department, who will be in charge of making and implementing procurement strategies. Procurement officer should also be recruited in order to ensure that proper planning for the future resources are done properly.

Electricity distribution networks in Australia

The government in Australia has from the State Procurement Board, Who is in charge of monitoring on the procurement strategies implemented by Electricity Distribution agents at various levels. The major component of the procurement strategy implemented by various supply chain is to ensure that there are alternative sources, from where it is possible to generate electricity (Dowling & Kent, 2015). With the growth of the non conventional mode of electricity generation, all the major companies in the Australian Electricity Board are implementing strategies that will help them to get the power supply from alternative sources other than the forms of regular modes. It is also the responsibility of the electricity supply agent to strictly follow the policies of State Procurement Board, which will help them to meet up with their business demands. The major policies that are implemented in this process are the fact that it is only the public authority, which will be in charge of making supply contracts related to power distribution.

State Procurement Act 2004 is one of the major government policies in this context which are responsible for managing the entire contract between Electricity Distribution companies and supply chain organizations. All forms of Electricity Distribution which includes solar power or Thermal form of electricity generation are included within this act (Ravenswood & Kaine, 2015).

In order to encourage the increase uses of renewable electricity supply, there is separate procurement Strategies for encouraging Electricity Distribution companies. The Australian Electricity Board has encouraged all the distribution companies to procure their source of renewable electricity generation. The implementation of solar energy distribution program in Australia, it has encouraged all the major Electricity Distribution companies to implement new contract with suppliers, in order to get regular supply from the Electricity Distribution boards.  All the major companies in the domain of electricity supply chain in Australia have on new contract with the solar power distribution supply chain, which is believed to be one of the measures of procuring the  generation of electricity and meet up with the growing demand of the younger generation (Grob & Benn, 2014). It is also relevant to mention in this context that the economic progress of industry and all other manufacturing sectors are entirely dependent upon the procurement strategies that are implemented by the Australian electricity suppliers.

There are few issues that the distribution companies have to face due to the fact that there will be a rise of cost, while they are procuring their distribution from renewable supply chain. For example, there will be a rise of cost of maintenance that is required for the supply chain of electricity from solar sources. Hence, it is evident that the overall capital that is required in operational management activities of electricity supply will rise to some extent. However, it is believed that considering the project activities, which is implemented initially there is huge cost in the overall infrastructure. However, with the improvement of solar technology and other renewable form of Electricity Distribution Technology, it is possible to reduce the operational cost and thereby making it possible to procure the power supply for the future at lower capital expenditures (Lember, et al., 2014).

Procurement management practices and their importance

The electricity industry of Australia is one of the largest manufacturing sectors of the nation, which is responsible for meeting up all types of power demand for both household and commercial purposes. The power throughout the nation is distributed with the guidelines of The National Electricity Board (NEM), which is the wholesale market for the electricity generation. The national electricity market is responsible for supplying 80% of the total electric power generation in Australia (Elliston et al., 2013). The electricity market began its operation in the year 1998 and is currently one of the leading power distribution organisations not only in Australia but in all over the globe.  The electricity is distributed by facilitating electricity with the help of power generator and retailers.  These retailers directly sell the power supply to business and houses.  High Voltage suppliers and transmission line are used in order to generate electricity and distribute them to various commercial and domestic houses.

The National Electricity Market of Australia has the operating range of 5000km that is from the Port Douglas in the state of Queensland to the Lincoln Port in the Southern parts of Australia. This is the world’s longest power operating system in the world (McConnell et al., 2013). The Australian Energy Market Operator (AEMO) is in charge of all forms of activities that are conducted by the NEM. The economic regulation of the electricity market in Australia is generated by the AEMO, which helps to generate the policies related to the monopoly of power distribution. The NEM currently supplies around 200 terawatt of electricity to all commercial and business distribution per year. The total number of customers is of 9 million, who are dependent on the power distribution of NEM (Bae et al., 2014).

With the advancement of the technology, it is possible for the NEM to use the sophisticated forms of electricity distribution. With the help of this form of technique, it is possible to deal with the challenges of power wastage that is caused due to the transmission of the electricity. The infrastructure of NEM is contributed by the capital of both state and private forms of assets.

Figure 2: Process of Electricity generation in Australia

Source: (Anuta et al., 2014)

The pricing of the electricity system is determined with the help of the 5-6 minutes of parameters, which helps in the matter of determining the spot price. This is one of the most important matters that can help on to deal with the financial transactions of the electricity generation systems. The rule of the pricing is set with the minimum value of $1000 per megawatt hour. The term spot price is used to ensure that the pricing level of the electricity generation is not over hiked. In the year 2015, the pricing of the electric generation is set with the help of the cap technique, which is set at the inflation price of $13,800 per megawatt hour (Apergis & Lau, 2015). Most of the customers do not pay directly to the NEM due to the fact that they purchase the required power from the local retailers. The price that is set by the NEM is based on the offers of the generators and also upon the market volume of electricity. The demand of the power generation at any particular time is also one of the major determining factors.

Electricity supply chain in Australia

It is important to understand the overall system of electricity distribution in order to understand the current system. The very first electricity is produced with the help of generators. In a subsequent step the generator, convert low voltage of electricity into high voltage, which is needed for transport of the electricity through the lines of transmission. The transmission lines are responsible for carrying the electricity through long distance which is then distributed to transformers. The transformers are responsible for converting the high voltage too low voltage power which is 10 distributed to the consumer. This conversation is done depending upon the source of purchase of electricity. For example, the power generations of domestic houses are generally lower than that of commercial industries, where heavy gadgets are required for manufacturing process.

Nearly 77% of the total electricity generation is from thermal sources that accounts for 152,463 GWh. 9% of the generation is from gas, 7% is from hydro power projects and 5% from the wind power. The rest 1% is dependent upon other forms of electricity generation which includes solar panels installed at roof tops (Elliston et al., 2013).

It is evident from the given data that currently the Australian power industry is mostly dependent upon Thermal Power sources. Less than 15% of the total electricity generation in the current market is dependent upon Renewable Sources. It is crucial to change this scenario at a very rapid rate within the near future, which will help to procure the resources for the industry and thereby able to secure the future (Elliston et al., 2014). The scientists and government authorities of Australia are highly concerned about the factors related to climate change and sustainable development that needs to be implemented with the help of alternative forms of Electricity Distribution techniques. As the electricity supply is reaching at the juncture due to over exploitation of the natural resources, it is essential to improve upon the alternative sources which are renewable and can help to deal with the issues related to energy crisis.

Government in Australia has made strict commitment towards reducing the total amount of greenhouse gases that are emitted in the atmosphere, which is mainly produced from the thermal power projects. It is important to implement the transition plan in order to change the overall system of Electricity Distribution in domestic and commercial places of Australia. In the recent upcoming years, the Government of Australia will change the energy policy which will aim to put forward National transition plan. It is important for the electricity board and the NEM to exploit the new form of technology that will improve over the cost effectiveness of electricity generation. The feature of procurement management of the Australian electricity industry is dependent upon the policies that are being implemented at present.

New procurement strategies in the Australian electricity market

Nuclear energy is believed to be one of the effective sources of electricity generation, which has the potential to change the demand rate of electricity market in Australia in recent coming future. Additionally, due to its long term efficiency and ability to provide power, it is believed that the nuclear energy could bring about revolution in the electricity market. The modern forms of nuclear reactors are reported to emit minimum amount of greenhouse gases that can harm the environment. By the yard 2030, it is estimated that nearly 15% of the total power generation in all over Australia will be done with the help of nuclear energy, which is currently just below the rate of 5% (Anuta et al., 2014). Nevertheless, it is also essential to ensure the nuclear waste obtained from the power plant is treated properly, which will minimize the risk of spreading nuclear contamination.

 

Figure: Source of electricity generations in different states of Australia

Source (Anuta et al., 2014)     

It is evident that the modern technology will play a significant part in the procurement strategy management of demand for the electricity supply chain in the Australian market. With the Rise of the demand of power generation, it is essential for the electricity industry of Australia to implement alternative techniques in order to meet up with the excessive demand. Hale et al.,  (2016), have mentioned about the importance of technology that can be implemented in order to deal with the challenges of dealing with the shortage of resources. Predictive analysis one of the important benefits that are gained with the implication of technology in the cases related to procurement management. Predictive can help in the cases related to securing the future and also dealing with the risk of resource shortages. It is also possible to make effective decisions depending upon the investment that is made for the future. In case of the electricity market of Australia, it is possible to improve upon the supply transmission process with the implementation of Technology.

In the current time, it has been seen that due today long distance process of supplying electricity, there is huge amount of wastage of power. With the implementation of new process of power transmission, it is possible to reduce the wastages that can improve upon the cost benefit ratio.

The technology can also help to improve upon the process of implementation of renewable sources of energy. The usage of ultra supercritical Coal fired Technology and carbon capture storage is believed to play a major role in the future of electricity industry of Australia. Ultra supercritical coal Technology can help to improve upon the efficiency of thermal power plants and thereby help to produce more electricity. The increase of efficiency is generally measured in units produced per hour. Higher level of efficiency with the help of steam temperature and pressure is the basis of this type of Technology. The emission of greenhouse gas is significantly reduced with the help of this technology. As the wastage of electricity can be prevented, it is possible to procure the resources which can help to generate more electricity. It is predicted that with the help of ultra superficial coal technology, it is possible to generate 16% of the total electricity demand for all over of Australia (Ortega-Vazquez et al., 2013).

Role of State Procurement Board

The use of the renewable form of technology is used in the purpose of dealing with most of the procuring form of electricity generation.  There is also a significant rise in the popularity of renewable electricity generation storage Technology, which can help to reduce the cost of electricity supply chain. Moreover, there is also the technology of low carbon emission technique, which can help in the matter of Sustainable development and preventing environmental degradation. The renewable forms of electricity generation technology is mainly dependent upon solar energy, which is needed the case of implementing procurement technology.  There has been nearly 1.5 million distributed PV solar system technology installed in various parts of the nation, which has the potential to provide nearly 30 to 50% of the total electricity generation of Australia by the year 2050. Hence, securing the source of solar energy generation is one of the significant steps of implementing procurement management practice for the future of electricity industry. In spite of the fact that large scale solar PV generation project are still at its initial phase, it is believed that with new forms of investment by the year 2020, it is possible to generate 482 megawatt of electricity (Morales et al., 2013).

The generation of wind power energy is believed to be the lowest cost as there is no expenditure involved in the process of maintenance of the wind generated turbine. In the year 2015, 76 wind farms have been able to generate 4187 Megawatt of electricity. As taller Towers are being installed, it will be possible to get access to greater wind speed. This will thereby help to improve upon the rate of efficiency of power generation. By the year 2030, with further improvement of the wind energy, it is possible to generate nearly 25% of the total electricity consumption of Australian population (Kim & Kim, 2015).   

Hence, it can be said that with the implementation of wind solar and other form of renewable technology of energy, it is possible to improve upon the efficiency of power generation. With the current state of progress, it is expected that the renewable source of electricity Technology will bring about Revolution within the next few decades the Australian power generation market.

On the other hand there are few challenges due to the process of implementation of the Renewable electricity generation in the form of solar and wind power. This is mainly because most of the technology that is entirely dependent upon the natural forces and thereby the natural calamities in the forms of disasters can compromise upon the total amount of electricity that are being generated from these renewable sources. The NEM plays a major part in the process of electricity generation process, which is needed in the process of dealing with the challenges related to the procurement of electricity supply for the future (Borenstein, & Bushnell, 2015). Hence, it is essential to implement proper intervention techniques, in order to deal with the challenges of the power generation. It is also important to implement the power security techniques that will help in the process of making up with back up processes to deal with the challenges of procurement management. Proper storage technology will be used both at the domestic and commercial levels, which will help to deal with the techniques related to storage of energy.

Alternative sources of electricity

In order to ensure the procurement strategy it is important to understand the overall demand and necessity of electricity market of Australia. The overall objectives of the industry and resource that are available also need to be properly assessed. The suppliers of the electricity industry need to implement the implication of new technology in order to procure the resources. The suppliers thereby need to shift from the traditional theories to that of the new strategies, which is necessary in the process of implementing the procurement strategies ().  

The NEM and OEM Will play a significant role in   ensuring about the fact that all the electricity suppliers of Australian power industry are able to transfer to new technological methods. The management of the electricity industry in Australia need to close the monitor the Dynamics and changes within the Industry that are happening due to implementation of renewable Technology (Mahmoudi et al., 2014). The suppliers have to get used to the process of energy Optimization techniques, which is the basis of implementing procurement within the electricity industry.

The energy procurement Outsourcing market in the Australian electricity industry is highly mature and deregulated due to the changes in the economic market. In order to ensure better process of implementing the technology, it is important for the suppliers to deal with the process of outsourcing. One of the major challenges that exist in the electricity industry of Australia is due to the fact that in house energy procurement process is highly volatile.  

One of the important steps for the suppliers in procuring the energy supply can be achieved by helping the customers strengthening their purchase unit (Peterseim et al., 2014). Unrivalled knowledge and technological capabilities are also required in the process of executing procurement strategies.

The process of energy supply procurement capability in the Australian electricity market includes opportunity identification and market entry Strategies for renewable Technology. It is essential for the officials of Electricity Distribution industry to form contracts with new group of suppliers, who will be able to provide electricity from renewable sources. It is also important to provide proper training to the suppliers along with awareness program, which is needed to enhance the skill with the use of new technology in the procurement market of electricity (Riesz et al., 2015).

With the help of Transition process from traditional approaches to the application of new technology, it is possible for the Australian electricity industry to have a secured future with the implementation of procurement management practice that is necessary to deal with the increase demand of electricity

Dominant role of fossil fuels in electricity production

References

ABC - Australian Broadcasting Corporation. (2017). Abc.net.au. Australian Energy Regulator |. (2017). Aer.gov.au

Anuta, O. H., Taylor, P., Jones, D., McEntee, T., & Wade, N. (2014). An international review of the implications of regulatory and electricity marketing structures on the emergence of grid scale electricity storage. Renewable and sustainable energy reviews, 38, 489-508.

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Apergis, N., & Lau, M. C. K. (2015). Structural breaks and electricity prices: Further evidence on the role of climate policy uncertainties in the Australian electricity market. Energy Economics, 52, 176-182.

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Dowling, R., & Kent, J. (2015). Practice and public–private partnerships in sustainable transport governance: The case of car sharing in Sydney, Australia. Transport Policy, 40, 58-64.

Edquist, C., Vonortas, N. S., Zabala-Iturriagagoitia, J. M., & Edler, J. (Eds.). (2015). Public procurement for innovation. Edward Elgar Publishing.

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McConnell, D., Hearps, P., Eales, D., Sandiford, M., Dunn, R., Wright, M., & Bateman, L. (2013). Retrospective modeling of the merit-order effect on wholesale electricity prices from distributed photovoltaic generation in the Australian National Electricity Market. Energy Policy, 58, 17-27.

McMurray, A. J., Islam, M. M., Siwar, C., & Fien, J. (2014). Sustainable procurement in Malaysian organizations: Practices, barriers and opportunities. Journal of Purchasing and Supply Management, 20(3), 195-207.

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Sanchez, A. X., Lehtiranta, L., Hampson, K. D., & Kenley, R. (2013, May). Sustainable infrastructure procurement in Australia: standard vs. project practices. In Proceedings of the 19th International CIB World Building Congress, Brisbane 2013: Construction and Society (pp. 1-12). Queensland University of Technology

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