1.2.1 Brief History of the Transmission System Before Liberalization
After the introduction of electricity, the power industry has been in continuous evolution throughout the twentieth century. The earliest systems consisted of a single generator connected to one or more nearby loads. A generator company owned the generation unit and the grid connecting the loads. This generator company sold electricity directly to its customers. In order to increase reliability, facilitate a growing demand, and provide a sufficiently flexible grid operation with a minimum of assets, these local grids were connected to form interconnected grids. The outage of a single generator no longer led to supply interruption. As loads increased, more systems were interconnected, the total generated power grew and higher voltage levels had to be used. Longer distances were covered. Step by step, entire countries were electrified and smaller independently operated power systems were connected.
In continental Europe, the establishment of international interconnections really started after World War II. This led in 1951 to the establishment of the “Union for the Co-ordination of Production and Transmission of Electricity” (UCPTE) [1]. Since then, an international transmission system was developed with strong interconnections at the 380-kV level. UCPTE originally oversaw the development of economic activity through the improved exploitation of primary energy resources associated with the interconnection of electricity systems. Gradually, UCPTE also organized the international cooperation between the electricity system operators and set common operational rules, amongst which is a strict frequency control. NERC1 fulfilled a somehow similar role in the United States, where different synchronous zones cooperated from the early 1960s.
On a local level, a consolidation of power companies led to the situation in the 1990s in which each country in Europe had one or more vertically integrated companies, each dealing with their own zone. They were responsible for generation and transmission of electricity, and in some countries also for distribution. This included the planning, operation, maintenance, and exploitation of the transmission system as well as the power plants. Often these companies were state-owned or state-controlled. The power system is still operated as such in a significant part of the world.
In the vertically integrated system, operation is done from a best engineering practice point of view. To ensure a high reliability, investments are done in a coordinated manner: Generation and grid development are planned by the same group of engineers or at least within one firm. The focus is to provide an adequate energy supply with a grid which is sufficiently secure. Also, the management of the entire power system is within a single entity. As the entire supply chain is within a single company, there is a tendency to favor generators which are “grid friendly.” This generally means large, controllable generators with a high availability and predictable energy supply. In such a utility, “economies of scale” resulted in large centrally planned power plants, mostly using fossil fuels or nuclear energy, or hydro power where available.
As stated before, connections between zones also existed in the vertically integrated system. On the one hand, they allowed for support during events that threatened the secure operation of the power system, enabling each zone to operate more economically, with fewer reserves needed. On the other hand, long-term contracts between countries existed, allowing international trade. This made the cheap hydro power from the Alps and the cheap and abundant nuclear power from France available to other European countries. Mainly AC links were used, connecting the different zones into synchronous zones, but also asynchronous links existed in the form of HVDC connections between different synchronous zones.
As a whole, the vertically integrated power sector in industrialized countries was a slowly changing and well-established business, with limited, well-defined problems. This was especially so after the economic development in the industrial world became mature and the increase in energy consumption dropped to a few percent per year. However, as there was no competition, the power system was not necessarily operated at the highest techno-economic optimum.
