Do you have 15 minutes to spare? Embark on a journey into the world of electricity and recharge your knowledge batteries.
Knowledge that is not shared is eventually lost. Believing this to be the case, EDP has created Portugal's first corporate university. The company's employees are both students and teachers, so as to make sure that all the knowledge they have - passed down over the years from team to team, from individual to individual - does not vanish with the passing of time and generational change.
Some of the men and women teaching at this university have answered frequently asked questions about energy and how it reaches our homes.
Give us 15 minutes and we promise you knowledge that can be shared yet again.
The emergence of electricity
As in most developed countries, electricity is available in all Portuguese homes and industries. It was one of the most important revolutions of the twentieth century, and it contributed to the enormous development of modern societies.
But energy goes through a long process before reaching the end consumer in the form of electricity.
A continuous current
Electricity is a very peculiar product: it must be produced exactly at the same time as it is consumed. It flows in a continuous, uninterrupted way, just like a river - it must always flow, although we can turn our home appliances 'on and off'.
In fact, as soon as you turn on a lamp, you open a 'flow' for that particular lamp. And the amount of KW/h (kilowatts per hour) you are consuming has to be produced somewhere, at that very moment, to make sure no one runs out of energy.
How is electricity produced?
Electricity is produced in large Power Plants, or through distributed generation resources (such as photovoltaic solar panels), which vary depending on the power source they use. For instance...
EDP now has 27GW of installed capacity worldwide, mostly using renewable energy sources: wind power and hydro power account for about 75% of the company's overall production.
Do you know the differential cost between producing electricity from a renewable source (such as wind) and non-renewable sources? There is a cost associated with coal and gas as raw materials, whereas renewable sources are free, of course. However, the latter entail an initial investment in technology and production infrastructure.
Average variable cost - production cost
Average levelized cost - includes technology investment costs (LCOE)
Over the last decade, the average levelized cost of onshore wind generation has dropped by 50%. As for solar production, the decline was even more pronounced, with a drop of 80 to 90%! Do you want to know why?
How do you decide which Production Centers produce energy at each particular moment?
To answer this question, we must understand how the energy market works. The various Production Centers, such as thermoelectric plants and wind farms, produce energy according to market demand - in practical terms, according to the needs of the population.
Efficient electricity management means ensuring that it is produced in sufficient quantity to meet the needs of the population - but not too much, so as to avoid waste.
Until 2007, REN was in charge of electricity management in Portugal. This organization decided which Production Centers were active at each particular moment. These Production Centers used to sell the electricity they produced to the countries their energy could reach. In other words, electricity trading was limited to neighboring countries; in Portugal's case, exchanges were made with Spain or - exceptionally, and by paying a 'toll' to Spain - with France.
But in 2007, with the creation of the Iberian Electricity Market, a free electricity market was born, not only in the Iberian Peninsula but also on a European scale.
Nowadays, just as on a stock exchange, electricity is put up for sale on a digital platform where the various producers - from several countries - can place their buy and sell orders.
"At the Dispatch Center of UNGE (portuguese capitals for Management Energy Business Unit) there are people working 24/7 who are like stock traders. They use a platform where the offers for selling and buying energy are made, on the various available markets. There's a daily market session, like an auction, in which producers offer certain amounts of energy at a certain price, and buyers make purchase offers, and then, intra daily market sessions to adjust the previous sold programs."
Berto Martins - Energy Management Business Unit, EDP
Through trading activities in this market, and the intersection of the supply and demand curves for each hour of negotiating, the price of electricity for each hour of the next day is set.
If producers put up for sale a given amount of electricity at a lower price than what has been determined, they will have to sell it and deliver it to the buyer (and ultimately to the end consumer).
It is due to this delivery commitment that it is necessary to make sure, in real time, that certain Production Centers are really producing energy. Because a company will be economically penalized if it sells electricity it cannot deliver.
It is thus the Dispatch Center of UNGE that, depending on the results of the electricity market, gives orders to the various Production Centers to 'manufacture electricity' in order to make sure the quantities that have been previously sold are delivered.
The Douro example
Douro area Production Centers
1. UNGE determines the price at which electricity will be sold, based on all factors influencing production costs.
2. The Dispatch Center in charge of the Balance Area puts up electricity for sale at the determined price.
3. By selling a certain amount of electricity, the Douro Balance Area commits to producing it.
4. The Dispatch Center then organizes the production process in this Balance Area, deciding which production groups will step in to deliver on the above production commitment.
5. Electricity is produced and can be consumed in another location or even in another country.
Does this mean I can consume electricity produced in other countries?
In practical terms, as the electricity market operates on a European scale, it is possible that Portuguese consumers use energy sold in Finland, but only if we look at the matter from a purely financial point of view, as Berto Martins explains.
As soon as it is produced, electricity begins to 'run'...
It is not by chance that we often talk of electricity as 'current' or 'electric current'. Electricity as such is not a static thing waiting around to be used. There are batteries that can store a given amount of (chemical) energy, which is then turned into electric current. But electricity as such starts 'running' as soon as it is produced, through high-, medium- and low-voltage cables, until it is used.
Thus, when a wind turbine (for instance) generates electric energy, the latter is immediately injected into an electricity grid, which has been designed to optimize constant transmission and minimize losses.
Until it reaches our homes.
Portugal's constantly updated distribution grid is managed by EDP Distribuição. The grid consists of high-, medium- and low- voltage overhead and underground lines and cables; it is low-voltage that brings electricity to our homes - a voltage suitable for powering our home appliances.
Other fundamental network structures include substations, sectioning and transformation stations, and public lighting equipment. This network ensures that electricity 'runs', or that it is divided into different 'flows', according to the place and purpose for which it is meant.
The global electrical system is highly sophisticated and solves one of the problems posed by electricity, which makes it different from other products: what we consume must be produced at the same time - precisely at the same time. Every time we turn on a light in our homes, this requires the production of an equivalent amount of electricity somewhere. And the electricity network as it exists today operates in an active way, in real time, to ensure all this.
José Ferreira Pinto - Dispatch and Conduction Manager, EDP Distribuição
This ability of the distribution network to meet consumption needs in real time requires highly sophisticated technological systems. But is this what they call the 'smart grid'? Not exactly.
What are smart grids?
Smart grids are an evolution of the existing electric distribution systems, which, as we have seen, are already highly sophisticated. The difference is that smart grids make it possible to operate various types of electricity production and consumption in a harmonious manner, as José Ferreira Pinto explains.
The smart grid is a key piece that ensures that the entire puzzle of producers and consumers works, and that we can have multiple players and devices operating harmoniously.
For customers, the main advantage of smart grids is that it provides access to a number of new possibilities, such as electric vehicles and home power generation systems (through solar panels), allowing them to become decision centers.
With the emergence of smart grids, customers will have the chance to play a key role in the electrical system itself: they will not only be consumers but also producers ('prosumers'), thus making a fundamental contribution to the operation of the grid and to the optimization of the energy we will be using in the future.
The increase in energy production from renewable sources poses an additional challenge: if these sources do not produce energy at the same time as people use it (for instance, there may be a lot of wind at night, when people are asleep), how can we make sure that we do not waste these non-polluting energy sources?
The ideal solution would be to have some way to store solar or wind energy - or at least to be able to use it when such energy is plentiful but people are not using it. Wouldn't it?
Is it not possible to store energy for later use yet?
It is already possible to store energy for later use, which is tremendously important given the unpredictability of renewable energy sources and their growing use.
Basically, the idea would be to take a given 'electric flow' and store it for later release instead of letting it 'run'. This is not possible with electricity, as we have seen, but it is possible with the energy sources that produce it! Dams and pumping systems are the main energy storage instruments in Portugal.
When a reservoir stores water, it is actually storing energy that we can use sometime later. And the capacity to store energy in the form of water is even greater if the so-called pumping systems are in place.
Pumping is the process by which water that has already passed through the dam is pumped back into the reservoir and stored there until it is discharged again, thereby producing more electricity.
In addition to making it possible to reuse water and produce more electricity, pumping also boosts the use of clean energy, particularly wind energy, thereby minimizing waste. That is, when wind levels are high and turbines produce more energy than required by current consumption needs, such energy can be channeled to the dam pumps that pump water back into the reservoir - instead of simply being wasted. This provides a double energy return.
Batteries can also be used for storing energy, of course. With current technology, however, it is not yet possible to store large amounts of energy - nor for a long time. Batteries therefore have a more occasional role, in the countries where they already operate: rather than providing great amounts of energy for everyday use, they are available to help the system in case of failure or to transfer the energy of the hours of less demand to the hours of more demand.
"Many technologies allow the storage of electricity for later use. But clearly the most relevant solution right now is hydraulic storage, reinforced by pumping systems in the dams where this possibility exists. EDP has invested in pumping units in some of its hydro plants, and they are already operating normally. As for battery storage, EDP is following several research projects but does not use this tool on a regular basis yet."
Carlos Mata - Energy Management Business Unit, EDP
It is interesting to note that the electricity that powers our homes is a mix of several energy sources - whether renewable or not. When we turn on our TV we are opening a flow of electricity that has been produced in several production centers - the ones in which it is more profitable and sustainable at a particular time, whether they are wind farms, solar plants, thermoelectric units, etc.
As we have seen, the weight of renewable energies in EDP's assets, and electric systems in general, pool has been increasing. This will contribute, first and foremost, to the protection of the environment, but also to the possibility that one day, electricity can be produced at a variable cost of zero.
This can create very interesting scenarios for all of us. Such as the possibility that instead of paying for electricity at KW/h, consumers will buy a 'power package' (as with mobile phone tariffs) and use it according to their needs.
The future will tell us how things will evolve, but the renewable energy path is already being explored by several electricity producers around the world, including EDP. For our sake and that of the planet.