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Procurement Management in the Electricity Industry

   

Added on  2019-10-30

24 Pages6204 Words80 Views
Running head: PROCUREMENT MANAGEMENT Procurement ManagementName of the StudentName of the UniversityAuthor Note

1PROCUREMENT MANAGEMENTTable of ContentsDetailed current and past power generation....................................................................................2Procurement practice of Different organizations in the electricity Industry...................................6Description of the Electricity market in Australia and its Future changes......................................9Impact of technology on the procurement market of electricity....................................................14Procurement Strategy for suppliers to make them use of technology...........................................17References......................................................................................................................................20

2PROCUREMENT MANAGEMENTDetailed current and past power generation The electricity industry is one of the most important industries of Australia. Since theentire power supply of Australia is dependent on this industry, hence the sector has a key role inthe Australian economy. The sectors of the electricity are involved in the generation ofelectricity, along with its transmission and distribution("ABC - Australian BroadcastingCorporation", 2017). The retail sales of the electricity are also involved as a part of the activity ofthe electricity supply industry. The social, industrial as well as commercial success of Australiais dependent on the reliability of the electricity supply. In this way, the economy of Australia issignificantly dependent on the electricity industry. The production of electricity has changed significantly over the years. Electricity couldbe produced, either by chemical means or by mechanical actions ("ABC - AustralianBroadcasting Corporation", 2017). The electricity production by the chemical means relies onthe flow of the charged particles from the cells in a battery. This type of production of theelectricity is expensive in the modern day ("Australian Energy Regulator |", 2017). This isbecause; the rise in the demand of the electricity has forced the electricity industry to look foralternative sources of energy production. With this process of electricity production, only alimited amount of electricity could be successfully produced("ABC - Australian BroadcastingCorporation", 2017). In order to meet the increased demand of the production of electricity,mechanical actions are used widely. Powerful magnets spin very fast inside the coils ofconducting wires. Gas, water turbines or steam usually drives these, thus assisting in electricityproduction. In the present day situation, more than 90% of the electricity produced in Australia is

3PROCUREMENT MANAGEMENTobtained by burning of fossil fuels, such as gas, oil and coals. The chemical energy that is storedin the fossil fuel that is used to heat water as well as produce steam ("ABC - AustralianBroadcasting Corporation", 2017). This steam is then forced under high pressure through aturbine that drives the generator, to produce enough electricity for supply all over Australia. Thiscomplete process helps in conversion of the chemical energy into kinetic energy and theneventually to electrical energy. The kinetic energy of water, falling from a great height, drivesthe blades of the turbine that produce electricity ("ABC - Australian Broadcasting Corporation",2017). The use of wind energy is also seen in the production of modern day electricity. Thekinetic energy of the wind force drives the blades of the wind power turbine, to produceelectrical energy. Before the period of the 1800s, the production of electricity was majorlydepended on wood, water, sun and wind as their energy sources. However, in the 19th century,the introduction of coal-fired power was first introduced. In the 20th and the 21st century, the useof burning of fossil fuels for the production of electricity was mainly used ("Australian EnergyRegulator |", 2017). However, with the increase in the need for the production of electricity, thesolar and tidal energy was also being used.

4PROCUREMENT MANAGEMENTFigure 1: Electricity distribution in Australia(Source: "Australian Energy Regulator |", 2017)The distribution of electricity is also important, as the effective transportation isimportant for the successful utilization of electricity. The speed of electricity is similar to that ofthe speed of light ("ABC - Australian Broadcasting Corporation", 2017). Though as users, peoplesee that the electricity supply comes to the electrical appliances instantaneously as soon as theapplication is switched on, yet a number of stages are followed ("ABC - Australian BroadcastingCorporation", 2017). A transformer coverts the electricity, that is produced in a generation plant.The electricity then arrives to a location, where a substation transformer changes the high voltageto a lower voltage, for distribution. The distribution channels then carry the low voltage

5PROCUREMENT MANAGEMENTelectricity to the consumers. The consumers then use it, according to their needs. The distributionof the electricity has changed over the years ("ABC - Australian Broadcasting Corporation",2017). With the rise in the use of the various electrical gadgets such as air-conditions, thedemand in various states of Australia has risen. The increase in the number of households alsoresulted in the changes in the distribution of electricity all over Australia. Statistics show thatwith the increase in the demand in the household, the deficit in the supply to the industries iswitnessed. The increase in the use of air-condition have increased the demand in the householdfor the supply of electricity increased("ABC - Australian Broadcasting Corporation", 2017).However, with the increase in the use of solar energy and other cost effective forms of energy,the demand in the electricity is seen to be lowered. The modern electricity distribution networks are expensive as well as geographicallyspecific. This means that the distribution of the electricity is confined to geographical limits, andhence natural monopoly is established ("ABC - Australian Broadcasting Corporation", 2017).Moreover, the electricity industry is highly regulated as the access to reliable supply ofelectricity is considered important by the government. The Australian Energy MarketCommission (AEMC) regulates the distribution of electricity all over Australia. However, in thepast, the National Electricity Market regulated the industry ("ABC - Australian BroadcastingCorporation", 2017). Thus, significant changes in the past and the present power generation in Australia havebeen witnessed. The changes are appropriate in order to ensure that demand of the electricityamong the people of Australia is met. Moreover, the electricity distribution industry is dominatedby the state-owned enterprises, such that stability could be maintained over time ("ABC -

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