P.C. Mayer r Energy Economics 22 2000 319]330 320
sample contains 37 systems owned by 22 distinct utilities. Table 1 lists information about the systems in order of system peak load. Annual peak load for these systems
varies from 0.14 to 2929 MW. Peak load refers to highest use of generating capacity. The preponderance of smaller systems apparent from the first column of
Table 1 is confirmed by mean size being 156 MW with median being 12.2 MW. ŽThe meaning and significance of the other columns of Table 1 will be discussed
. throughout the paper.
For comparison, the 1996 annual peak load for California was 48 480 MW Ž
. California Energy Commission, 1997 and California is but a part of the Western
North American grid. The operational significance of the small scale is illustrated by the following
from the letter accompanying the survey questionnaire.
‘Although this study is an outgrowth of Guam’s utility planning, other island utilities may use the results for benchmarking and other evaluation. Guam Power Authority’s regulator criticized the
w Authority for planning a much greater installed reserve margin a measure of redundancy which
x provides reliability than is customary among utilities connected to a continental grid. Mean-
while, the public justly criticizes the Authority for providing unreliable power.’
Qualitatively, the impacts are the same for temperate and tropical islands but differences in seasonality of demand may result in different quantitative impacts.
Temperate seasons allow greater reliability from given capacity relative to annual peak load through scheduling maintenance during the low demand season.
This paper analyses a survey of Caribbean and Pacific tropical island electric utilities. The analysis shows how island power system size influences a reliability
criterion chosen by management and influences an operating criterion.
2. Theory
Economies of scale may appear as costs of providing given reliability; the cost of redundancy required for given reliability may decrease with scale. For a stand-alone
electric utility, with scale, the redundancy in generation for given reliability can be provided with larger, more efficient, units or with smaller units and a lower
percentage excess capacity.
The costs of providing the redundancy may be reflected in smaller power systems having weaker reliability criteria. The reliability criterion evaluated usually means
that intended or planned system capacity minus the two largest generators is Ž
. greater than peak load. This is often called the N-2 criterion. System capacity
minus two largest generators greater than peak load allows for full service with the largest or second largest generator inoperable for planned maintenance and the
other under forced outage. Forced outage means unintentionally inoperable.
The actual reliability criterion allows for simultaneous planned maintenance of another generator along with the largest. The criterion is planned operating
P.C. Mayer r Energy Economics 22 2000 319]330 321
Table 1 Data about the systems in order of system peak load
System Satisfying
Installed Largest
Generatorr Has
Uses peak
reliability reserve
generator peak
hydro computer
Ž .
load criterion
margin MW
ratio power
simulations Ž
. Ž
. MW
0.14 No
257.00 0.25
1.79 No
0.26 No
100.00 0.25
0.96 No
0.35 No
105.00 0.36
1.03 ?
0.45 No
80.00 0.31
0.69 No
1.21 No
38.80 0.50
0.41 Yes
? 1.61
No 24.00
0.30 0.19
No ?
2.00 No
112.50 1.65
0.83 No
No 2.20
No 75.50
1.75 0.80
No No
2.40 Yes
50.00 2.10
0.88 No
No 2.50
No 130.00
2.50 1.00
No No
2.70 No
83.00 2.00
0.74 No
No 3.20
No 130.00
2.50 0.78
No No
4.20 Yes
50.00 2.80
0.67 No
No 5.72
No 30.58
2.40 0.42
No ?
6.40 No
90.00 2.20
0.34 No
No 7.20
No 44.00
2.10 0.29
No No
7.45 No
90.00 2.22
0.30 No
No 10.80
Yes 43.00
2.84 0.26
Yes No
12.20 No
36.00 3.78
0.31 Yes
No 14.50
No 60.00
4.70 0.32
No Yes
16.00 No
25.00 5.00
0.31 No
Yes 21.00
Yes 45.00
4.75 0.23
No No
37.20 Yes
49.00 9.20
0.25 No
No 44.00
Yes 100.00
24.00 0.55
No No
53.00 Yes
56.00 10.30
0.19 No
Yes 55.40
Yes 96.75
40.00 0.72
No No
62.00 No
130.00 12.80
0.21 No
No 67.00
Yes 50.00
13.70 0.20
No No
74.00 Yes
100.00 35.00
0.47 No
No 79.50
Yes 39.80
20.00 0.25
Yes ?
90.00 Yes
38.00 13.00
0.14 No
No 112.30
Yes 51.00
20.00 0.18
No Yes
166.00 Yes
40.00 30.00
0.18 Yes
No 183.00
Yes 31.50
20.00 0.11
No No
435.00 Yes
43.00 72.00
0.17 No
Yes 1253.00
Yes 25.00
180.00 0.14
No Yes
2929.00 Yes
64.00 450.00
0.15 No
Yes
P.C. Mayer r Energy Economics 22 2000 319]330 322
generator capacity minus the capacity of the largest generator under planned operation always greater than peak load. Generators under planned operation
refer to those not under planned maintenance. Another reflection of economies of scale is the installed reserve margin required
for given reliability. Installed reserve margin is the difference between system capacity and annual peak load, here measured as percent of annual peak load.
Larger scale allows a lower percent margin } thus, lower unit cost } for given reliability but the relationship is also influenced by the size of existing generators.
The larger the largest generator } or perhaps the largest two, three, four or... generators } the greater the reserve margin required for given reliability.
1
As can be seen from comparing the first and fourth columns of Table 1, capacity of the largest generator and system peak load are highly correlated. Such correla-
tion is expected since a power system is expected to take greater advantage of the economies of scale of individual generators with greater system load.
This correlation limits the statistical estimation from a cross-section of power systems to combining impact of generator size and peak demand. The estimation is
through regressing the percent intended reserve margin as a function of a ratio between the capacity of the largest generator and peak demand. Other variables,
Ž . besides the ratio between capacity of largest generator s and peak, might affect
intended reserve margin. The system size, measured by peak load, might matter. To operate a smaller system a lower intended reserve margin might be chosen because
a smaller system may require more expensive generator capacity to provide redundancy.
Also tested were regressions including having hydropower and using computer simulation programs to estimate system reliability; these variables may influence
intended reserve margin. Nature and technology provide different operational uncertainties for hydro generation than for fossil-fuel generation. Furthermore,
seasonal variation in hydro capacity is likely since tropical islands often have wet]dry seasonality. Use of computer programs to estimate reliability may reflect
an attitude toward reliability or directly influence the choice of intended reserve margin. No hypotheses are made for the direction of the impact of these two
variables.
3. Survey procedure
