Managing the Green Transition: The Role of Public Utilities

Public Utilities

Something that connects people together, provided by the public sector. May be services provided directly by the central government (railway & postal service), or services provided by private actors (energy)
Company providing essential services such as water and electricity to consumers, usually subject to some government regulations

Public Administration

Central government or municipality which controls guidelines and provides regulations in how the public utility goes around

Green Economy Transition

The main goal is to foster changes from the current economic development paradigm to an economy that generates profits while ensuring environmental sustainability and social inclusion

Energy Transition

Long-term structural change in the power industry motivated mainly by environmental concerns, but also by new technologies, change in demand, new business models, national & international strategies, etc.

Circular Economy

Gradually decoupling economic activity from the consumption of finite resources, & designing waste out of the system. Based on 3 principles (see MacArthur Foundation):
(1) Design out waste & pollution;
(2) Keep products & materials in use;
(3) Regenerate natural systems

Mtoe

The unit quantifies the amount of energy released when burning one mega tonne of crude oil

Fit for 55 Package

A package of proposals to make the EU's climate, energy, land use, transport & taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels

REPowerEU

A 2020 plan for saving energy, producing clean energy, & diversifying energy supplies with short-term objectives

Power Sector Value Chain

Generation --\> Transmission --\> Distribution --\> Sales

Natural Gas Value Chain

Research & Production --\> Transportation & Storage --\> Distribution --\> Sales

Water Value Chain

Withdrawal Transportation & Potablization --\> Distribution & Sale --\> Sewage & Sludge Collection --\> Despuration & Disposal

Waste Value Chain

Production & Consumption --\> Separate or Ordinary Collection --\> Transportation --\> Selection, Treatment, & Disposal --\> Composting, Recycling, Waste to Energy, Landfill --\> Production & Consumption

Regulation

Set of rules imposed by the Public Authorities aimed at directing the industry operators' behavior - with regards to investments, prices, services' quality levels, etc. - in the interest of the economic & social needs/country development

Tariff Regulations

Regulated segments; natural monopoly; bargaining and agreements between players are not allowed

Non-Tariff Regulations

Market segments; free marketing; multiple aspects (environment, health, safety, quality)

kwh

The kilowatt-hour is a unit of energy equal to one kilowatt of power sustained for one hour or 3600 kilojoules (3.6 megajoules)

TWh

10^9 kWh (1 household electricity consumption per year: 3-4 MWh)

Base-load

Minimum amount of power that a Utility or TSO-DSO must make available to customers, based on reasonable demand expectations

Peak-load Plant

Run to face high electricity demand (peak demand)

Mid-merit Plant

Adjusted output as demand fluctuates throughout the day. These plants must be flexible, able to fast modify the output level at low costs

Demand Response

Change in power consumption of customers to better match demand & supply. Shifting (or lowering) consumption can be a source of income (or power price discount) for consumers

Ancillary Services

Specialty services/functions provided to/by the TSO or DSO to guarantee the continuous flow of electricity (avoid black-outs). Regard scheduling/dispatching, reactive power/voltage control, frequency control & operating reserves

TSO (Transmission System Operators)

Responsible for the bulk transmission of electric power on the main high voltage electric grids

Unconventional Gas

Aggregates very different geological objects that have in common to hold a little gas, not very mobile & not as easy to produce as conventional gas

Shale Gas

Gas formed in low permeability shale rock & trapped in clay particles or in small pores & micro-fractures in the rock. Energy sources developed in recent years thanks to technological improvement & financial support. Extraction through horizontal perforation & hydraulic fracturing or fracking. This practice has originated a debate over the quantities of water needed for drilling & the use of chemical agents introduced into the subsoil

Coalbed (or Coal Steam) Methane

Methane absorbed by the solid coal particles in coal & extracted from coal mines usually by removing water from the reservoir

Tight Sands Gas

Gas trapped in sandstone & carbonate, which has very low permeability, thus restricting its ability to flow to the surface

Methane Hydrates

A form of porous ice that traps methane molecules, the chief constituent of natural gas. Hydrate deposits generally occur deep under Arctic permafrost, & beneath the ocean floor. 1 m3 of gas hydrate releases 164 m3 of natural gas when extracted

Reserves

Proven to exist & to be economically & technically exploitable; Energy consumption

Resources

Known to exist; however they are not exploitable; Production

Hydrogen

The lightest, most abundant & one of the oldest chemical elements in the universe; To be used in its purest form, it must be extracted

Brown Hydrogen

A type of hydrogen if its production results in emission of CO2 into the air. Almost all the hydrogen produced in the world today involves the steam reforming of fossil fuels (methane) using a nickel catalyst. At present, this is a proven, commercial technology & is the cheapest way of making hydrogen on a large scale

Green Hydrogen

Hydrogen can also be produced from biomass, such as crop residues, wood & dung, using pyrolysis & gasification (thermochemical) techniques. Water electrolysis is used commercially today in a few regions with low cost hydro-electricity. However, a broader role for electrolytic conversion is envisioned in a future hydrogen economy which utilizes vast renewable wind & solar resources. Development of lower cost, more efficient electrolyzers for use with variable renewable electricity is an active area of research

Blue Hydrogen

This type of hydrogen is produced from carbon-containing sources using the exact same steps as for the brown type, but the CO2 from the reactions is captured & stored using CCS technology

Power-to-Gas (Hydrogen)

Renewable electricity surpluses are used to produce hydrogen which can then be directly injected into the gas network

Hydrogen-to-Power

In this case, the hydrogen procured is re-converted again in electricity via a fuel cell

Renewable Energy Sources (RES)

Produced with natural resources that are constantly replaced & never run out. Include: Solar, wind, biomass, wave & ocean currents, geothermal & hydroelectric

Sustainable Development Goal 7

Calls for "affordable, reliable, sustainable & modern energy for all" (Affordable & Clean Energy)

Capacity

The amount of electricity a generator can produce when it's running at full blast

Energy

The amount of electricity that is produced & consumed over time

Storage Hydropower

Dams and artificial basins. Water that goes down through pipes or turbines & produces electricity

Run-of-River Hydropower

Any of several methods used to generate hydroelectric power without greatly disrupting the flow of river water. Run-of-river approaches eliminate much of the environmental impact of large dams

Pumped-Storage Hydropower

Using power when electricity costs more, & using pumped water when electricity costs less

Vertical Axis Turbine

Turbine with blades perpendicular to wind direction

Horizontal Axis Turbine

Turbine with blades parallel to wind direction

Photovoltaic (PV) Effect

The creation of voltage - or a corresponding electric current - in a material upon exposure to solar light. This is due to the physical properties of certain semiconductors. Silicon is the most used semiconductor in PV panels although thin-film panels with other materials are becoming more competitive

Biomass

A biological material from living, or recently dead organisms, such as wood, agricultural, industrial, & urban waste; Can be grown only to generate electricity, or produce heat

Biogas

Primarily composed of methane (50%) & carbon dioxide; Originates from the bacterial fermentation of organic matter

Prosumer

An actor that consumes & produces (sometimes at the same time)

Demand Side Management

Includes ALL activities that have the purpose of changing the typical electricity consumption curve. The most frequently seen business model involves an Aggregator (company who aggregates distributed generation/batteries & legal acts as its representative), who has been later acquired by utility

Ancillary Services (AS)

According to ENTSO-E, represents a range of functions which TSOs contract to guarantee system security. These include: Frequency responses; fast reserve; black start capability; Reactive power

Local Grids

Embraces a wide number of models composed by the following subsystems: Software/managing system; Generation plants (RES, non-RES, mixed); Transmission (off-grid, tied to the main grid); Storage systems

Anchor-Based Approach

Synergistic diversification, tapping in by exploiting an existing generation plant, telecom tower or commercial presence (an entry strategy for local girds)

Ultra Mobile Broadband (UMB)

Refers to a fourth-generation mobile communications technology. Current infrastructure is outdated to support high-speed data rates & the coming 5G technologies. Broadband infrastructure deployment is a cost & resource-intensive option. This can be facilitated by accessing alternative infrastructures & utility networks (e.g. Fiber optic cables through transmission & distribution networks)

Trojan Horse Strategy

The new entrant starts selling a specific product/service (e.g. EV charge) to gain a market space, & then extends the offer to other energy products

Energy Efficiency

Supplying the same good/service using a lower quantity of energy (e.g. Led/ fluorescent light bulb instead of an incandescent one to produce the same amount of light); must not be confused with energy conservation/saving, i.e. to use less energy

Primary Energy Consumption

The entire consumption of a country including the consumption of the entire energy sector including emissions

Energy Performance Contract (EPC)

An approach to finance energy consumption reduction. By partnering with an ESCo a facility owner can use an EPC to pay for today's facility upgrades with tomorrow's energy savings — without tapping into capital budgets

Private Goods

Rivalrous & Excludable Goods. If I consume this good, you cannot consume it. I can exclude people in general from enjoying that good (e.g. Bottled water)

Common Goods

Rivalrous & Non-excludable. Non-excludable because all of us can take part in fishing, & rivalrous because if everyone goes fishing, there won't be any fish left. Everyone can use water, but it can run out (e.g. Water in aquifer)

Club Goods

Non-rivalrous & Ecludable. Non-rivalrous because anyone can enjoy a movie, however, it's excludable because, in a cinema, there are limited seats in a theater (e.g. Shared irrigation)

Public Goods

Non-rivalrous & Non-excludable. Provided to everyone; nobody can exclude you from breathing air, & non-rivalrous because if I breathe air, I do not steal (e.g. Water sanitation)

Sustainable Development Goal 6

Clean Water & Sanitation. Most important SDG regarding water

Integrated Water Resources

Multiple actors consuming water, multiple sources, managing them all together

Drinking Water Directive

Concerns the quality of water intended for human consumption. Objective is to protect human health from the adverse effects of any contamination of water intended for human consumption by ensuring that it is wholesome & clean

Water Framework Directive

The European Union established a framework for water protection & management. Member States must identify & analyze European waters, on the basis of individual river basins & districts. They adopt management plans & measures for each body of water. Ultimate objective. To achieve "good ecological & chemical status" for all Community waters by 2015 (not completely achieved)

Urban Waste Water Treatment Directive

Objectives: To protect the environment from the adverse effects of urban wastewater discharges & discharges from certain industrial sectors & concerns the collection, treatment & discharge of: domestic wastewater, mixture of wastewater, & wastewater from certain industrial sectors. Four main principles are laid down in the Directive: Planning, Regulation, Monitoring, Information & reporting

Water Resources

Water, since they are necessary (or potentially necessary) for human life, they are always (& must be always) public (from a legal point of view)

Water Public Service

Water management is a major economic (industrial) activity which requires the use of capital, labor, knowledge, & the natural resource of water itself, water services & sewage could be both public or private

Sludge

Something that can be used for compost, for buying energy, something in which you can extract materials

Externalities

Not accounted for (ex: emissions & material use)

Ladder Principle

Management priorities: reduce, reuse, recycle, recover; landfill only for "ultimate waste" (waste not recoverable in any other way)

Proximity Principle

To avoid "waste tourism"

Self-Sufficiency

Each community should be able to handle its own waste

Polluter Pays Principle

Costs of waste management should be paid by the polluter

Extended Producer Responsibility

Cost of waste disposal should be incorporated in the price of economic goods

Internet of Things (IoT)

Describes an innovative technology paradigm by which every object of our daily life gains of identity in the digital world, thanks to a network constituted by sensors

Smart City

Capable of adapting itself to the needs of users; uses ICT tools in delivering public services; uses real-time sensor data to monitor the city & improve public services
Uses information and communication technologies (ICT) to enhance quality, performance and interactivity of urban services

Smart Grid (US)

Utilizes modern communications & electronics technologies to improve the reliability & efficiency of electricity distribution. A smart grid improves utility-consumer communication, providing both with more awareness & control & of energy use (EPRI/DoE)

Smart Grid (Europe)

An electricity network that uses digital & other advanced technologies to monitor & manage the transport of electricity from all generation sources to meet the varying electricity demands of end-users. Smart grids co-ordinate the needs & capabilities of all generators, grid operators, end-users & electricity market stakeholders to operate all parts of the system as efficiently as possible, minimizing costs & environmental impacts while maximizing system reliability, resilience & stability (IEA)

Smart Grid (Europe)

An electricity network that can intelligently integrate the actions of all users connected to it - generators, consumers & those that do both - in order to efficiently deliver sustainable, economic & secure electricity supplies (ETP SG)

Multiutility

Company with public or private capital able to offer multiple services of public utility, with a strong presence in the final stages of distribution & sale. Can be: municipal or private companies; companies born from the unification of former municipal companies or listed companies; or local companies with mixed public & private capital

Unique Selling Proposition (USP)

A strategy of differentiating a product by communicating its unique attributes; often becomes the common theme or slogan in the entire advertising campaign

Corporate Governance

The process of supervision & control intended to ensure that the company's management acts in accordance with the interests of shareholders
The system by which companies are directed & controlled
Governing bodies, rules, & mechanisms by which management steers the organization in order to meet relevant interests

Traditional Corporate Governance Model

Looks at the relationship between shareholders & managers. The most important interest to be satisfied is the shareholder's interest

New Corporate Governance Model

Look at the relationship between the stakeholders & managers. The most important are stakeholders

Public Sector

Politicians influencing the management
Need for higher levels of managerial autonomy
Needs of higher levels of political & managerial responsibility
Increase the power in the independence of managers

Private Sector

Shareholders-Management separation
Risk of opportunistic behaviors by the management (most important risk)
Needs of effective control on managerial activities

Board Size

Mixed results on the correlation between number of directors & board's decision making power: reduction of board effectiveness vs. variety of competences & decision making styles

Board Leadership

Concentrated leadership (duality of the board structure) if the CEO is also the firm Chairperson vs diffused leadership (no duality of the Board) when the firm is characterized by two spokespersons. Chairman may also be the CEO; usually, these roles are separated. Concentrated leadership or dual leadership

Board Diversity

Focus on the personal characteristics of the board members as age, gender, tenure, gender, culture, & professional background. Distinction between independent/dependent board members & executive/non-executive board members. What are the characteristics of the members of the board?

Autonomization

The degree to which the organization has discretionary powers to make independent decisions with respect to political stakeholders on various matters, including the use of its financial resources, its organizational structure, & project-related plans

Crafting a Strategy

To design the relationship between a company & its environment

Strategy

Interaction model between the organization & its environment

"Outside-in" Approach (Strategy)

Some changes in the environment & the way you react to them by adapting your goals, objectives, & behaviors

"Inside-out" Approach (Strategy)

Start from resources, capacity, & meet the changes in the environment in a more active way

Strategizing

Taking a systematic approach to decision-making, directed at particular positioning of the organization in its environment. Different than designing a strategy

Strategy (Design School)

Strategy formulation as a rational process. Set of guidelines meant to assure consistency in decision making, so as to move an organization from where ti is today to a desired future state

Strategy (Learning School)

Strategy formulation as a social process. Pattern emerging in a stream of decisions concerning the positioning of the organization within its environment

Vision

A mental image of what the organization will be or is striving to be; it is the platform on which one builds the organization & links its present to the future