The economic theory of creative destruction is the key force to the destruction of the vertically integrated industry and the emergence of a new paradigm of global or universal electric service. Companies, states and countries need to develop shared vision initiatives of the new paradigm.
Creative Destruction of the Old Electric Paradigm
By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity
Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.
The new shared vision of the electricity industry is about universal or global electricity service as described in the EWPC article Global Electric Service Shared Vision. This is a follow up from the EWPC article Vertical Integration/Deregulation Debate vs. EWPC Generative Dialogue, which suggests once again ending the old debate to concentrate on a much needed generative dialogue as exemplified in the GMH article Solving the Tough Electric Power Market Problem to face the looming (systemic) crisis.
Such systemic crisis on electricity is the basis for the emergent markets, different from the vertical integration and total deregulation markets, as the system and information technology revolutions are making their inroads. In economics this is about creative destruction waiting to happen to the “Old Paradigm” of vertical integration.
For example, as Bob Amorosi explained in the reference, “there are many big players in the electronics industry that are developing or already have developed home automation technologies, smart appliances, real-time in-home energy monitors, and smart communicating thermostats, to name a few. They are viewed as consumer products that consumers will generally be willing to buy if it helps them to become more energy efficient and practice more energy conservation.” Those new technologies are now available to develop the resources of the demand side.
Those technologies are in effect waiting to destruct all vestiges of the vertical integrated utilities (the Old) paradigm by allowing integrating demand to power system planning, operation and control, thus changing the Old Paradigm centered only on the development of the resources of the supply side. Power system planners and operators will be able to plan and operate the power system by changing generation “stocks” and now also demand “stocks” after the processes of long term planning and of security constraint unit (supply and demand) commitment. For more details read the EWPC article Power System Operation Stocks and Flows.
As most readers learned from Professor Banks, that is not based on the first chapters of Econ 101, but taking into account inventories of generating capacity and inventories of customers demand response (from agreements made with 2GRs) available to plan (assuring long run system adequacy) and available to operate (assuring short run system security) the power system reliably.
Any company, state or country that wishes to develop a shared vision of the power industry is able to get a head start with rich information available in the GMH Blog, the EWPC Blog or the many comments under EnergyPulse articles.
Reference and context: Continental Grid Vision Needed, by Martin Rosenberg, Editor-in-Chief, EnergyBiz Magazine.
Let's thank Fred for his (useful but maybe negative) inputs,
Fred says that he doesn't have an agenda, but maybe his nuke centered agenda is hidden in his subconscious waiting to emerge. I am not glad that he doesn't accept that there is a looming (systemic) crisis on electricity...
The way to tackle the diverging (systemic) issues is through a generative dialogue to which Fred seem to be closed, preferring instead to keep entrenched in a debate that goes nowhere. However, his inputs to the dialogue have been great so far, as can be seen from his responses to Len (about Econ 101) and to Bob (most recent post to Fred).
The GMH article "Solving the Tough Electric Power Market Problem" http://grupomillenium.blogspot.com/2007/08/solving... is still very up to date as to a good place for readers to engage in a generative dialogue taking into account the IMEUC alternative. I am no longer suggesting doing such dialogue on any other market initiatives only on the Energy Central Network, but at any company, state or country that wishes to develop a shared vision of the power industry.
I am sorry to tell Fred that most innovations would be voted against by customers. For an example, readers should take a look at the EWPC article Market Research Doesn't Work Yet for Demand Integration. http://grupomillenium.blogspot.com/2007/12/market-...
Readers should expect very soon a complete response by Len Gould to all questions posed to him about IMEUC.
All I have in the vision I want to share is for those investing in Nukes to compete in the open market. Others are also trying to have the most efficient transmission - another part – of the system, which is also flawed. The efficiency I am after is that of the whole system.
That is why I am concerned is with the economies of the system to produce ultraquality service with a transportation (T&D) system developed at least costs, which will enable maximum welfare in the open market where nukes should compete and takes risks.
When I wrote in the EWPC article Global Electric Service Shared Vision http://www.energyblogs.com/ewpc/index.cfm/2008/1/9... , I changed my opinion about the need to do simulations at the first stage (market vs. market) of competition, in order to concentrate on shared vision. This is the paragraph that states the new opinion:
In the Fifth Discipline there is quote by Robert Fritz that says "In the presence of greatness, pettiness disappears." Peter Senge rephrases it as: "In the absence of a great dream, pettiness prevails." Senge adds: "Shared visions foster risk taking and experimentation. When people are immersed in a vision, they often don't know how to do it. They run experiments. They change direction and run another experiment. Everything is an experiment, but there is not ambiguity. It's perfectly clear why they are doing what they are doing. People aren't saying 'Give me a guarantee that it will work.' Everybody knows that there is no guarantee. But the people are committed nonetheless."
Those experiments are really needed for the second stage (company vs. company) of competition, to be done by companies, states, countries. So for the first phase of competition there is no need to do what Don has been asking at all.
I will keep waiting for Len Gould's complete responses of his vision at the fist phase of competition. In the mean time, I like to add that it seems that Len is proposing a closed market architecture with his IMEUC proposal. EWPC is an open market architecture to allow for the development of business model innovations, which will evolve as soon as the retail market start to respond. So Len, please also explain how IMEUC will evolve once the market start to respond.