Electricity

The supply of electricity begins with generation in power stations. Electricity generators are usually located near fuel sources, such as coalmines, natural gas pipelines and hydro-electric water reservoirs.

Most electricity customers, however, are located a long distance from these generators in cities, towns and regional communities. The supply chain therefore requires networks to transport power from generators to customers. There are two types of network:

• high-voltage transmission lines transport electricity from generators to distribution networks in metropolitan and regional areas
• low-voltage distribution networks transport electricity from points along the transmission lines to customers in cities, towns and regional communities.

The supply chain is completed by retailers that buy wholesale electricity and package it with transmission and distribution services for sale to residential, commercial and industrial customers.

Natural gas

The supply chain for natural gas begins with exploration and development activity, which often involves geological surveying and the drilling of wells to find and verify the recoverable resource. At the commercialisation phase the extracted gas often requires processing to separate the methane from liquids and gases that may be present, and to remove any impurities, such as water and hydrogen sulphide. The gas extracted from a well can be used on site as a fuel for electricity generation or other purposes.

More commonly, however, gas fields and processing facilities are located some distance from the cities, towns and regional centres where the gas is consumed. High pressure transmission pipelines are used to transport natural gas from the source over long distances.

A network of distribution pipelines is then used to deliver gas from points along the transmission pipelines to industrial customers and from gate stations (or city gates) for the reticulation of gas in cities, towns and regional communities. The gate stations measure the natural gas leaving a transmission system for billing and gas balancing purposes and are used to reduce the pressure of the gas before it enters the distribution network.

Often retailers act as intermediaries in the supply chain. They enter into contracts for wholesale gas, transmission and distribution services and package the services together for on-sale to industrial, commercial and residential consumers.

Unlike electricity, natural gas can be stored, usually in depleted gas reservoirs, or it can be converted to a liquefied form for storage in purpose-built facilities. Liquefied natural gas (LNG) is transported by ship to export markets. It is also possible to transport LNG by road or pipeline.