Source: https://en.wikipedia.org
The UK was the first country to implement TPA as part of its broader electricity market liberalisation and privatisation reforms. This process began in the late 80s and early 90s. In 1990, the UK’s electricity industry was privatised, and the Electricity Act of 1989 laid the foundation for market liberalisation. This included the unbundling of electricity generation, transmission, and distribution, allowing independent power producers and other entities to access the transmission and distribution networks. The reforms made the UK a pioneer in TPA, setting a precedent for other countries to follow in their electricity sector reforms.
Electricity generators or suppliers in the UK pay fees, known as wheeling charges, to use the transmission and distribution networks to transport electricity from the point of generation to consumers. The charges are a significant component of the overall cost of electricity and are crucial for maintaining and operating the power grid infrastructure. They incentivise the efficient use of the grid and encourage generation and consumption in locations that reduce overall system costs.
The UK’s wheeling charges, which include Transmission Network Use of System (TNUoS) charges and Distribution Use of System (DUoS) charges, vary significantly based on factors such as location, time of use, and the specific electricity network company involved. For example, TNUoS charges for generators typically range from around £2 to £25 per kilowatt (kW) per year, depending on the generator’s location.
Charges are higher in the north of the UK and lower in the south, reflecting the cost of transporting electricity over long distances. For suppliers, TNUoS charges, often passed on to consumers, can range from about £20 to £40 per megawatt-hour (MWh), with variations across different regions.
In Australia, the National Electricity Market operates across several states and territories, with deregulation beginning in the 90s. The market is designed to facilitate competition in generation and retail while maintaining a regulated transmission and distribution network. Australia’s deregulated market has fostered competition and investment in new generation capacity, particularly in renewables. However, it has also faced issues such as price volatility and concerns about supply reliability during extreme weather events. India has implemented TPA to some extent, particularly for large consumers and independent power producers, as part of its electricity market reforms.
Singapore is a prominent South-East Asian country that has successfully deregulated its electricity market. The city-state began deregulating its electricity market in the 1990s, with the process fully implemented by the mid-2000s. The market is managed by the Energy Market Authority, which oversees the competitive wholesale market and retail competition.
Singapore’s deregulation has led to a highly competitive market, with numerous retailers offering various pricing plans, including fixed rates, discounts off the regulated tariff, and wholesale pricing. Consumers will have more options and greater control over their electricity costs, with retailers introducing innovative products and services such as green energy plans and bundled deals.
The actual rates for transmission use of system (TUoS), DUoS and market support services (MSS) charges are regulated by the EMA and are subject to periodic reviews. These charges typically range from 1.5 Singapore cents to 2.5 Singapore cents per kilowatt-hour (kWh) for TUoS, about three to four Singapore cents per kWh for DUoS, and around 1.5 to two Singapore cents per kWh for MSS. The charges are usually bundled into the final electricity tariff that consumers pay, which also includes the cost of energy generation, market administration fees, and the carbon tax.
Despite deregulation, Singapore has maintained a stable and reliable electricity supply, supported by a well-developed regulatory framework and infrastructure. Singapore’s success with electricity market deregulation has made it a model for other countries in the region considering similar reforms.
The Philippines introduced retail competition and open access in 2001, allowing qualified retailers to supply electricity from the wholesale market or generators using distribution utility wires.
In Vietnam, a direct power purchase agreement (DPPA) scheme was approved in July 2024, allowing major consumers to procure renewable energy directly from producers via a private transmission line or through the national grid, a concept commonly referred to as “power wheeling.”
This scheme includes two mechanisms: the physical DPPA, which allows renewable energy generation companies to sell their output directly to consumers with over 200,000 kilowatt-hours of monthly consumption and a 22-kilovolt or higher voltage connection through private transmission lines, and the virtual DPPA, which uses a forward contract to allow renewable energy procurement via the national grid.
However, other South-East Asian countries have been more cautious, with many still maintaining vertically integrated, state-owned electricity monopolies or partially deregulated markets, just like Malaysia. We were among the first to have IPPs. Now it is just Edra, TNB and Malakoff. From a TNB perspective, monopoly is good. But not from the consumer’s point of view.
References:
Taking a leaf of electricity reforms from other countries, Doreenn Leong, The Star, 31 August 2024
Opening the national electricity grid, Risen Jayaseelan, The Star, 31 August 2024
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