The insights to enable the next energy secretary succeed are laid in black and white.
The Next Energy Secretary
By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity
First posted in the GMH Blog, on October 3rd, 2008.
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.
We should thank Harry Collins, Steve Koonin, Jack Casazza, the late Fred C. Schweppe, and many other experts that have tried to help us with their insights. We should also thank systemic thinker Donella Meadows, a co-author of the international bestseller The Limits to Growth. I have a copy of the 1992 update edition, entitled “Beyond the Limits, confronting global collapse, envisioning a sustainable future,” that I believe is the true reality check, and not something to laugh at.
Maybe it is too late to do anything and our global society is bound by a too little understanding, as explained by another expert that should be thanked, Jared Diamond for his book “Collapse: How Societies Choose to Fail or Succeed.” What Koonin explains is also that we are choosing to fail unless we change the system. EWPC is intended to allow system leverage on a global scale at the World Trade Organization. As part of the single undertaking, the Doha Round should be reopened to implement the conclusions of the Copenhagen’s 2009 decisions to replace the Kyoto Protocol.
Under the Energy Pulse article Another Inconvenient Truth: The Need for Coal, by Mark Gabriel, Jude Clemente says that “It many ways, it remains irrelevant what we do because the world is turning to coal, mainly India and China - as Biden talked about last night.” I disagree; that is about business as usual, instead of changing the system. So, it is not irrelevant what the U.S. does, as can be seen in the Kyoto agreement (the U.S. boycott it), and also in The BIG California LIE (please read it) that has sequester the power global industry under obsolete price controls.
Jack Casazza repeatedly explained how politicians, lawyers and economists have taken over the power industry doing a lot of harm. Today I made a comment to highlight another Casazza type example on the post A BRIDGE TO SOMEWHERE - The Next Energy Secty Will Be... by EnergyBiz Editor in-Chief Martin Rosenberg, who start said post with “Well, if you are asking who it SHOULD BE, cast our vote for John Rowe.”
By reading "Our Take" and "View from the Bridge," it is wise to "agree that we have lost our way," to allow the new "course that deals with climate and energy supply" and demand "issues in a decisive way" to emerge. This begs the question of leadership.
As the case of the mainframe versus PCs of the computer industry can attest, John Rowe misunderstanding of the non-trivial aspects of the power industry is based on his flawed statement that confuses the properties of the system (affordable high reliability electricity) from the properties of one of the (unreliable) parts, when he said "Are we going to be in an era when politics written with a Capital 'P' continues to make it so difficult to accomplish those large projects that we become dependent on smaller technologies, even though the smaller ones are more expensive?
The proper mix of large and smaller technologies should not be the result of Capital 'P' regulation biased to large projects. We need to let the market decide, and that can be enabled with a decisive action that allows the new course to emerge.
The action should be based on a neutral environment as explained in the EWPC article Leadership Answers What to do First, whose summary states: "The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today's legislative and regulatory uncertainty."
Hence EWPC is what the next energy secretary needs. Please take also a look at the article EWPC Blog's First Year Anniversary: Electricity for the Digital Era.
The "chasm between hype and reality", you say Jude. Yes, that's good, but the problem is that it's too good. It doesn't really say anything. The "wind corridor" that Pickens has in mind is mostly fantasy, and for the record, the energy plan being offered by GOOGLE is just plain nutty.
Once again, all together and at the top of your voices: the important thing isn't to come up with new ideas - you can find plenty of these in every wine bar in the world - but to get rid of the bad ideas as quickly and expeditiously as possible.
With the intention to get raid of the bad (specially scientific or fundamental) ideas (not just any bar idea)...Harry Collins said "The attitude that anyone's opinion on any topic is equally valuable could spread, and there are some indications, such as widespread vaccine scares, that suggest it is happening. A world in which there is said to be no difference between those who know what they are talking about and those who don't is not one that anyone who thinks about it wants. Such a society would be like one's worst nightmare, exhibiting many of the characteristics of the most vile epochs of human history."
In the EWPC article The Next Energy Secretary [this one], I quote EnergyBiz Editor in-Chief Martin Rosenberg, who wrote "Well, if you are asking who it SHOULD BE, cast our vote for John Rowe." In the article I show that is a very bad idea, since as far as electric power fundamentals, Rowe doesn't know what he is talking about.
Fred,
"the important thing isn't to come up with new ideas - you can find plenty of these in every wine bar in the world - but to get rid of the bad ideas as quickly and expeditiously as possible"
It should be apparent that new ideas abound for our electricity industries, since the wine bars are doing a great business around the world with many of their patrons brain storming over their drink glasses. In some areas of the industry too, lots of investment is being poured into some of them. The bar patrons must all realize that something is terribly wrong and new ideas are desperately needed, don't you think so?
The problems besetting our electricity industries can all be traced back to its regulation and our government leaders. The industry moves at a snail's pace to adopt new ideas or technologies, or build new generators and infrastructure, all because regulation demands that our utility companies must apply for highly unpalatable rate increases across the board for all consumers to pay for them. A utility executive once told me a few years ago that they don't want pay one dollar more for a new metering technology than they really have to, nor do they want to charge one dollar more to their customers than they really have to.
Our electricity industries suffer from paralysis when faced with new additional problems like global climate change and growing consumption demand outstripping supply, and the escalating prices of fossil fuels. The efforts to address them and speed that new ideas are developed and adopted pale in comparison to other industries. In the electronics world that I live in, companies routinely survive on innovation and its relatively fast development and commercialization investment in the absence of stifling market regulations. Sure there are many bad ideas that fail, but without the new ideas to start with over the glasses of wine, there IS NO INNOVATION, PERIOD.
To get out of the big mess and the "paralysis when faced with new additional problems like global climate change and growing consumption demand outstripping supply, and the escalating prices of fossil fuels," not to mentioned the large value destruction all over the world of today's system that needs urgently to changed.
That change will be the result of systemic leverage as EWPC restructures the power industry into two separate and mutually reinforcing components one centered on the whole of electricity and the other on the whole of business. The electricity component is subject to regulation (the natural transportation T&D monopoly) which should evolve to the smart grid compact with responsibility to transport reliable electricity. This is the space for the EWPC article Engineers Needed for Lower Prices (please hit the link http://www.energyblogs.com/ewpc/index.cfm/2007/9/2... ), whose summary states "The paradigm shift from the vertically integrated utilities to the electricity without price control paradigm will lead to lower costs, lower profits and lower prices after a reasonable delay. To accomplish that engineers need to take the transpotation function that allow the market between supply and demand run efficiently."
The business component as a vibrant open market (supply and demand) on the wholesale and retail value chain of commercial transactions. That business open market enables all the potential of the "electronics world that" you "live in," where "companies routinely survive on innovation and its relatively fast development and commercialization investment in the absence of stifling market regulations."
With wholesale and retail commercial competition set up under an EWPC EPAct, competing generators and Second Generation Retailers (please hit the link http://grupomillenium.blogspot.com/2007/07/second-... ), could develop their practical ideas with the aim of survival. The market will weed out bad ideas, such as that of John Rowe that asks "Are we going to be in an era when politics written with a Capital 'P' continues to make it so difficult to accomplish those large projects that we become dependent on smaller technologies, even though the smaller ones are more expensive? One bad idea like that, which at some point was held by Fred and many other people writing in this media as a fact, had IBM lose their power on mainframes to Microsoft PCs.
The " irrelevant" what I am talking about is the idea that "environmentalists" can think they are "saving the planet" when they use a certain kind of lightbulb or they can cheer when they shut down coal power plant projects (Kansas Governor Sebelius) but what they are doing is much more insidious. Carbon emissions are going to increase world wide, regardless of what we do - that is the point I was making.
It is like in a dirty house we clean our kitchen (our nation) but the rest of the house (the world) is dirty. Because we live in the kitchen we think the rest of the house is clean. (Kinda of a stupid analogy put I think it captures what I am trying to say) We may feel good, but in reality, we are "shooting ourselves in the foot" - as many coal companies put it. They are right. These companies are now building ports to ship our coal - this is a serious problem, because everytime a coal project gets shut down, it offers an other nation to buy our most abundant energy source.
By not using coal, we are opening up our major companies (Peabody, etc) to sell it to those countries that will use it. Other countries will be using our most important domestic source of energy, we won't be using it!!! The environmental relentless push is doing this. They are against everything!!! Read the blogs on line - solutions are never offered. Wind and solar simply cannot contribute what we need - they never tell you that part. Even NASA, a major renewable advocate, realizes the limitations these "greens" never acknowledge.
The coal industry is not real concerned about this tug of war in the energy fight. They know that America has to turn to coal, they know that there is no chance renewable energy can win. Regardless of the false claims Greenpeace and Sierra Club, etc, puts out there - we have to use coal (and we will).
Again, we should be looking at all possible options - that is "all the above" concept. But the priority concept has to be installed.
I disagree. The next energy secretary does not have an easy job, simply by following a "black and white" plan. Tough decisions must be made. It starts with more funding for carbon capture research.
Nobdy wants business as usual. But the bottom line is our discussions must be realistic. Clean coal is hardly business as usual - the technology is in its infancy and many experts claim it could come online by 2020. US DOE officials 2015 is realistic. This is way way sooner than any contribution wind and solar could make - especially because the progress has not been there for 35 years. Yet they claim, the renewable sector is "booming" on "a commercial reality" "beyond Kitty Hawk and into the jet age" . It is simply not true. There is so much more to this story, I am working on an article detailing all this bs the wind and solar sector has been spewing for 35 years, but we need to realize stopping coal plan projects is, in the end, an opportunity lost. And more reliance on a limited contributor - wind and solar (both of whom I support) We need to open the doors of reality - that is what I am trying to say.
Fossil fuels have given us the world we know. They are the reason I can fly to Rome tonight, Mexico City tommorrow, and Hong Kong the next day. Fossil fuels are the reason we have electricity - developing nations must be given the opportunity to find cheap abundant electricity. The socioeconomic benefits of increased electricity are unreal. More people can read, less infants die, better water supply, etc.
Just remember one thing: India has some 800 million people without a refrigerator. Imagine when they get one. Imagine when the average person in China or India can drive. These levels are increasing everyday. Car companies are today builting smaller and cheaper cars for them. These developments are on such a large scale, the average American cannot imagine it. The type of power they will need is simply without precedent.
"Changing the system" Jose is quite difficult and will open doors for these countries to buy our coal because they need all of it. Climate change is a debatable subject - thousands upon thousands of published scientists do not subscribe. It is a theory - trying to change our system to "save the earth" is downright silly to me. Peak oil is the only catalyst that should make us change direction. Despite better technology, production remains flat. That is our main problem when it comes to energy. CTL offers a pretty good solution.
NO BOB; I DON*T THINK SO! You mentioned regulation, well the 'deregulation' of the electric (power) industry is probably the dumbest thing that I can think of right now, although I wouldn't expect to hear that in a wine bar. The interesting thing here - which very few people admit - is that when the wine bar patrons started talking about the wonders of electric deregulation, the engineers/managers thought that they were crazy. As I am almost sure that I have already mentioned a couple of thousand times, when I gave a talk on this subject at the Hong Kong Institution of Engineers, I had no problem with the engineers. It was the half-educated wine-bar clientiele who thought that they could put me in my place, but I wasn't having any that evening.
Eventually of course, when their net worth began increasing, the engineers/managers changed their tune, but that doesn't bother me. Wouldn't you have done the same thing if you were in their place?
(1) Regulation: close the electricity side of the power industry, by building a strong smart T&D grid at least cost for the whole electricity sector (including all customers costs) to enable maximum social welfare under tolls (transportation) price controls and
(2) Markets: open the business side of the power industry to innovation, by letting the market decide on generation, retail and end-use, to implement said maximum social welfare, under an environment similar to the electronics industry, and under prudential regulations instead of price controls.
Clean coal, "clean gas," and nuclear bets should compete with the resources of the demand side (not then just renewable). The recipe is to change the global system with the above recipe and the place to do it is the Doha Round that should implement global prudential regulations and a global carbon tax system as part of a single undertaking. I am sure that past GHG "exports" should be an integral part of the agreement to get the buy in of developing countries.
Fred, I'm not advocating what you and most others consider as "deregulation" of electricity prices. The problem with regulation as it stands now is that ALL consumers must pay for any new investment in the system with rate increases across the board, whether consumers want the investment or not. In particular it massively discourages utility companies from becoming involved in any new technology beyond their billing meters in consumers' homes, since regulators do not generally permit utility companies to commercialize in-home technologies to only those consumers that want to buy them.
I cannot see what would be so wrong with regulators continuing to regualte energy prices for all consumers but free up the utility industry for targetted billing to any consumer who is willing to pay extra for more than just their electricity supply.
Fred, when the electricity system in the US starts feeling the pain in the coming years from the growing demand - supply disconnect, tell the regulators to have a glass of wine or two for me. Maybe it will loosen them up a bit to do something instead the pervasive paralysis and snail's pace of technological advancement we see in the system in most places today.
Please explain to readers how competition is involved in the statement "In particular it massively discourages utility companies from becoming involved in any new technology beyond their billing meters in consumers' homes, since regulators do not generally permit utility companies to commercialize in-home technologies to only those consumers that want to buy them."
Do regulators need to make a bet on the in-home technology?
Do regulators keep their price control power for that subset of customers that "choose" in home technology?
Why not follow the electronics industry model of letting customers choose instead of a regulator what the in-home technology they prefer?
Jude: "Climate change is a debatable subject - thousands upon thousands of published scientists do not subscribe." -- evidence? a few hundred deniers on a "physics" forum website do not constitute "thousands upon thousands of published scientists". Or are you referring to that hilarious list posted by that group in Oregon, where "Published Scientist" was defined to include preachers who published sermons, and Doctors of Veterinary Medicine who apparently had published price lists or something?
Jose Antonio,
I agree regulators should not be making these bets, but unfortunately that is what many of them are preferring to do.
Take for instance the communicating thermostat systems for demand response. In Ontario for example they are offered free of charge to any consumer that wants one. The cost of setting up their systems at the utility offices, and the cost of each thermostat including installation is several hundred dollars per house, all paid for by either direct government funds given to the utilities or with general rate increases. The vast majority of the public however don't want one because they are viewed as an invasion of privacy given the utility company pays for and controls them.
There would probably be far more consumers interested in using them if they were individually paid for and controlled by interested consumers at their own discretion. They would also then realize that they would not be unfairly forced to share their total cost if not interested in having one.
Do regulators keep their price control power for that subset of customers that "choose" in home technology?
Why not follow the electronics industry model of letting customers choose instead of a regulator what the in-home technology they prefer?
Fred,
Here's another wild idea for you to chew on.
The article here clearly defends the use of coal for electricity generation for many years to come, and are still being vigorously built in places like China. There are many competing views and politics about coal, here in Ontario our provincial government is actively phasing them out by planning to shutter them all within several years from now. They are instead big on building new and refurbishing our old nuclear plants, which I'm sure you will agree with, and so would I to some degree realizing their potential economy over decades of service.
If it were technologically possible to give all residential consumers complete choice of their generator source, I wonder which (type of) generators would be snapped up to their full capacity first. I'll bet all the renewables would get used up first followed by nuclear, natural gas, and then coal probably last, mainly because the environment is very big and growing on the public's radar screen these days. And for any consumer that invests in and owns their own micro-generator, said generator would be at the top of their own list.
Coal may have stark realities that will give it years of lifetime to come yet, but to the uneducated public voter they are an increasing evil, witness all the blocked coal plants in the US recently.
BTW Len Gould's IMEUC market reform proposals combined with real-time technology in the hands of consumers would theoretically enable the choice scenario above for consumers. It's another one of the good "ideas" (in my view) that a few glasses of good wine have helped to create on this website.
Did you see in one post above "A world in which there is said to be no difference between those who know what they are talking about and those who don't is not one that anyone who thinks about it wants. Such a society would be like one's worst nightmare, exhibiting many of the characteristics of the most vile epochs of human history." I think you missed it from the earlier post.
It might be worth considering which category, "... those who know what they are talking about and those who don't...", one fits into himself before he arrogantly classifies others as belonging in one set or the other. This seems particularly important for folks who demonstrate that they are quantitatively and factually challenged.
Jose Antonio,
Yes, the Ontario regulators maintain price controls for electricity even for those consumers that "choose" in-home technologies.
Currently the only in-home technology widely available in Ontario that operates by communicating with the local utility company is the communicating thermostats. Other stand-alone products have been available for some time that consumers are free to purchase elsewhere, such as an independent energy display that connects to your service panel or attaches to the outside of a service meter for sensing energy consumption, but lacking communications with the local utility company makes them almost useless for future demand responses or real-time pricing.
I suspect the electronics industry commercial model is not permitted within our utility industry because it would require a complete change in regulations for them. Currently all consumers here are billed uniformly with common energy rates plus additional utility operating charges forming their total bill. Indeed it would seem utilities here are pressured to make their added operating charges as low as possible, since some utility companies will often boast how efficient they are over others.
Ironically however utilities here are free to consider new investment in their operations or in any additional consumer commercial interaction, but they must by law recover all additional costs they incur by applying for and adding approved charges across the board to ALL their customers. To adopt the electronics industry model of charging individual customers for selling them additional products or services is effectively disallowed, and I suspect the same is true in much of the US.
Since Koonin, an expert that knows what he is talking about, suggest that we need to change the unsustainable system, to prevent the concentration of GHG from rising in the first place, and that is a global issue that should be handled (for example) at the World Trade Organization, today's practices will be really unimportant in the near future. That's what the Secretary of Energy of the USA needs to know. Once the USA takes the lead, Canada and all the other countries will follow.
Vertically-integrated electric systems – not the unreliable generators – do have economies of scale of reliable service.
Responding specifically to Don Giegler on his misunderstanding of economies of scale, about a year ago In the "EWPC article Extra, Extra... Goliath is Defeated Once Again! (please hit the link http://grupomillenium.blogspot.com/2007/09/extra-e... )" I wrote the following:
In the posted link "Lowest Cost Electricity Generation is Just Intuitive (please hit the link http://grupomillenium.blogspot.com/2007/09/lowest-... )," the message is that generation economies of scale were not the key to reliable electricity service. I believe that the economy of scale of interconnected power systems development, discovered in 1921, not by insull, but by what's today PJM, is the essential requirement that I call ultraquality transportation.
Lowest cost electricity generation does not make any sense to a system engineer, nor to the end customers that pay for it. As an old system planner, I will tell facts and the origin of the idea.
Under vertical integration, systems engineers made long run least cost expansion plans and as a result came up with a generation mix adapted to the forecasted long term demand. Such optimization was to minimize the costs of investments, operation, maintenance and [customer] outages to produce reliable electricity.
An excerpt of the posted link on "lowest cost generation is just intuitive," about expert knowledge which Don Giegler arrogantly said that it "Seems like a pretty close-minded lecture, Jose.... " follows:
To produce reliable electricity is a property of the whole system not of the parts. To have 24 hours of loss of load probability [in 10 years] - as many systems were designed - generation reserves of 20 or 25 percent resulted for many systems.
I read that PJM had recently more than 30 percent reserves. That is one of the main reasons that demand response is not attractive, because it makes obsolete a lot of generating units.
That is also why retail customers get rates which are way above the cost of base load generation. They have a lot of coal units, but ask what is the retail rate residential customers are paying for.
Hydro and nuclear seems a good mix. However, with a very uncertain future demand and with a lot of climate changes working out, I would not bet on it and have some gas installed. Or better yet, I would develop the resources of the demand side to integrate it as active demand, or said in other words develop an effective rationing system or still in another way change demand from inelastic to elastic.
Sorry for the class. But I fell it was needed for some of the people posting their ideas without sufficient understanding of electric power system planning.
Going against the flow, VIUs are in the process of extending the useful life of the price control business model under the watch of regulators making "big bets with questionable data," as can be seen in the video "WSJ: How Growth Succeed (Please hit the link http://grupomillenium.blogspot.com/2008/08/wsj-how... ) "by JEANNE M. LIEDTKA, that explain that they "will end up with expensive fiascos," that will be added to the rate base.
Being "obsess with bigger is better" and needing to "cite evidence" by getting involved in analysis, regulators are pushing what Leidtka calls the Greek Tragedy. This has been dealt in another light in the EWPC article "Utilities and Regulators' Value Destruction (Please hit the link http://www.energyblogs.com/ewpc/index.cfm/2008/4/9... )," whose summary says: "Excessive marketing costs are identified by Marty Agius, under today's regulations, which make utilities and regulators unable to add customer value as will be done under EWPC. Added to his arguments is the large value creation waiting to happen with the emergence of business model innovations, to be develop by retail marketers (2GRs) to integrate demand to power system planning, operation and control, since market research doesn't work yet."
EWPC restructuring enables competition among Second Generation Retailers to find better value for customers in the market where as Leidtka explains "all the real learning happens" with "customer feedback" while avoiding the Greek Tragedy.
Carol Hymowitz: Does the emphasis that companies put on data also hurt?
Jean Leidtka: Absolutely! We see something in organizations that we called growth gridlock and a growth gridlock happen because organizations want analysis done to prove that an idea it's a good one before they're willing to invest in resources. Well the problem is that the only data you got with to predict the future is data from the past and that growth opportunities are all about making sure that the future diverges from the past. So when we extrapolate past data to try and justify growth projections it just doesn't work very well. So growth leaders spend all of their time it just doing power point presentations in conference rooms trying to convince the doubters that they should let them move forward and in that process nobody learns anything, because all of the real learning happens when you get to the marketplace.
N.E.L.A. Proceedings, 1897, pp. 159ff.; A.E.I.C. Minutes, 1895, pp. 92-95; Minutes, Chicago Edison executive committee meetings, Feb. 1, April 19, 1898; Insull, Central Station Electric Service, p.41 (address of June 7, 1898). They might help your understanding of utility electric service system economies of scale. I say might, because the willingness to remedy ignorance may be suppressed by an acute case of arrogance.
Bob
I am too busy praising nuclear and cursing electric deregulation to know as much as I should about coal, even though I once wrote a book on coal. (Actually I wrote two, but forgot to publish the other).
Anyway, the situation here is abolutely and totally clear cut: AS MUCH RENEWABLES AS POSSIBLE, BUT NO MORE. You see, what Ms Palin called Joe Six Pack and his Significant Other think that they have a choice, when in reality - according to mainstream economics - they don't. Given their resources (i.e. incomes) they cant turn their back on the energy in coal, regardless of whether they would like to or not. .
A large number of German war prisoners were taken to the US during the war, where they spent their time arguing about what had taken place in Germany, and what should have taken place, and this and that and all the rest. It was explained to them by their hosts in the US that that country had been just about ruined by the allied air force and the Russian army, but they were too busy theorising and philosophising to pay attention to that kind of 'rumour'. What they saw in the German cities when they got back though clarified and focused.
The same thing is true here. No matter what Joe and frau think about energy, the bottom line is that high quality energy (of the kind they dream about) is scarce. The present finance crisis is educating many of our colleagues about the logic of the marketplace, but that is nothing compared to what could happen when the present crisis disappears and energy prices begin to escalate again.
Interconnected power systems are a different animal, which allows electric service to be designed for example for of an expected loss of load of accumulated 24 hours in 10 years. That is not a property of central stations. I am sorry that is probably non-trivial concept for most people.
This is what you need to respond to Fred.
Vertical integration under price controls is just plainly inefficient. However, deregulation is just unstable. The power industry needs to go to efficient pricing, which technology now enables by a large reduction in transaction costs.
EWPC emerged with transportation (T&D) regulation to make the whole power system stable and to enable maximum social welfare also for the whole in the open market. The open market develops the resources of the demand side (the supply side is very developed already) to introduce a lot of elasticity (to respond in case of price escalation) and thus increase the efficiency of the whole power system by emulating the electronics industry.
Jose Antonio finally hits on the main issue which most others above are missing, which is "Zero Transaction Costs". When the implications of that are factored into the equations, a lot of what was thought to be known becomes no longer valid.
Fred and Jose Antonio,
Deregulation has been demonstrated in past to be very unstable partly because consumers don't have the technology or knowledge to handle real-time prices. However there are those in the utility industry that continue studies of real-time prices with consumers using emerging advanced metering technology, and they are learning that it does foster less energy consumption. And if anything like Len Gould's IMEUC proposal gets implemented where consumers can choose their generator source, we may see deregulation attempted some day again. I am not brave enough however to predict how stable or efficiently it would work. Todd McKissick and Len have a better understanding of this subject than I do.
Vertical integration of the electricity system may very well be inefficient compared with other possible system designs Jose, but vertical integration is what has evolved over decades, and we are likely stuck with it for a long time to come yet. Changing it to some other system design in the name of better efficiency would be non-trivial to say the least, and would probably be riddled with vested interests trying to keep it as it is now.
One thing is clear me. Fred is agonizingly correct again; once the current economic crisis passes in the money markets, energy prices will resume their escalation and the electricity demand supply disconnect will continue to grow from years of new generation not getting built. Their combination will create tremendous pain in some places where there could be rolling blackouts with increasingly expensive electricity rates, making many voters think we are sliding into a third world society. Keeping coal generators running in many places will be demanded for a long time yet as a result.
I view this as an opportunity for the electronics industry. The consumer will need every tool and incentive they can get to stave off demand growth with conservation measures and greater efficiencies in energy use. Investment in much more localized micro-generation also has huge potential. If I'm correct, just watch the demand for these things skyrocket when the public is informed the pain must last for many years to come before massive new generation can be brought on line to moderate prices and restore reliability.
An additional tool for consumers to mitigate their pain would be an ability to "shop" for the best electricity price at any time they choose with the help of technology in their homes. Choosing the generator source of their choice is an one obvious way to achieve this, and many voters will increasingly want this ability if local micro-generation becomes widely commercialized. The future promises to be very interesting.
If it appears my last comment sounds like I am describing Len's IMEUC proposals, well in fact it is.
BP's chief scientist, Steven Koonin, said "We really need major changes in the ways we produce and use energy if we're going to prevent concentrations from rising. I don't think people understand that." I think that what we need is that at least world leaders understand it to initiate the major changes needed. This is the key issue for humanity is that our GLOBAL society should choose to succeed by initiating those changes as Jared Diamond suggest. EWPC is set to support such change to enable maximum social welfare.
Maximum social welfare requires considering all costs, as well as the resulting value that electricity provides. Among the very large costs are the long term investment costs of all customers. Short term shopping with very low transaction costs by themselves doesn't result in maximum social welfare. Deregulation is unstable because it lacks the maximum welfare aim. EWPC is stable, by mixing regulation and market.
By the way, John Rowe and Don Giglier are very important and intelligent persons. As far as I know John is also very powerful. I should say now that what I wrote above should be restricted to the issue of whether they were experts or not on electric power systems economies of scale. That has nothing to do with them as human beings. Expert advice is not to confuse the interconnected power system economies of scale with that of central station economy of scale. If I had hurt any feelings, please consider this apology.
Best regards for all of you.
Does this mean you've read the references? Seems doubtful. Too bad. Had you read them, you might have had a chance to understand John Rowe. Tell us, Jose. Just how does one design electric service for "...an expected loss of load of accumulated 24 hours in 10 years."? Don't forget "...just a part on a power system...". Or perhaps, as you say, that's non-trivial. As far as I am concerned, you'll never have to apologize for being non-trivial.
I don't need to read such an old reference. Time have changed for good. Unlike the good old days, when loads were lights and motors, and 99.9 % reliability was excessive. Today, reliable service for the digital economy requires 99.9999 to 99.999999 % reliability, can only be provided by having extra generation/storage very close to the load to bridge the deficit of central stations. Similar to mainframe computers, central stations are in the process of losing their magic. Sorry again!
The Electric Power System Is Unreliable (Galvin Electricity Initiative)
The U.S. electric power system is designed and operated to meet a "3 nines" reliability standard. This means that electric grid power is 99.97 percent reliable. While this sounds good in theory, in practice it translates to interruptions in the electricity supply that cost American consumers an estimated $150 billion a year.
In other words, for every dollar spent on electricity, consumers are spending at least 50 cents on other goods and services to cover the costs of power failures.
EXELON CEO OUTLINES TOP FIVE ENERGY POLICY IMPERATIVES FOR THE NEXT PRESIDENT
In a major energy policy address delivered at Harvard University's Center for the Environment last night, Exelon Chairman and CEO John Rowe outlined the five elements he believes are imperative to the next U.S. president's energy policy. - (COMTEX) --> http://www.energycentral.com/global/news_text.cfm?...
I have come late to this discussion, but this I believe:: There are no combinations of solutions given or proposed, recognizeing the present and growing world world population that can cope with the energy dilemana.
I tend to believe what Don Hirschberg is saying.
The need for increased reliability Jose is describing is not an issue with the public. The difference between 99.97% and 99.999% reliability is meaningless because the public has always expected and lived with localized service interruptions, e.g. from storms, grid maintenance, etc.. Achieving 99.999% is and will continue to be unrealistic in practice.
The far BIGGER issues coming will be escalating energy prices combined with greater incidence of rotating blackouts and brownouts from the growing demand supply disconnect in some places. These will foster much more consumer interest in investing in their own micro-generators, and adopting more conservation and efficiency measures, especially when the public is told there will be no quick fixes. This will also lead to growing public pressures on politicians to keep existing coal plants running and build many more large central generators.
Don Giegler: I think perhaps Jose is simply experiencing a difficulty with translation. I believe what he may,/b> mean to say is "Today, reliable service for the digital economy requires 99.9999 to 99.999999 % reliability, can only be provided by having extra generation/storage very close to the load to bridge the deficit of central stations COMBINED WITH grid intelligence which allows, by various means, fast emergence load shedding at every customer site to enable the grid to survive emergency situations which would normally cause regional blackouts."
The point is, it should be rational to approach a much higher lavel of reliability than present with much lower investment, for a significant proportion of every customer's loads by providing to rapidly shed the remaining loads in event of a grid emergency.
Len's bold comments above describe precisely what is possible with more technology in the hands of consumers to handle more automated demand response, smart grids and more localized micro-generation and storage, and market reforms that allow consumers to buy power from the generator of their choice at any time they choose.
Lo and behold don't we have his IMEUC proposal.
While my last comment says that reliability is not normally an issue with consumers, IT WILL BECOME A BIG ISSUE if reliability starts dipping below the 99.97% levels we have come to live with and expect. The growing supply disconnect threatens to do exactly this. So over time you can add simply MAINTAINING reliability to what we enjoy now will be a motivation for consumers to look for alternative solutions on their own, like maybe IMEUC.
Warren Causey and Ken Silverstein have posted a blog on the EnergyBlogs page of this website titled "Expect the Utility Industry to Hunker Down, Everyone Else Had Better Too", describing the situation for utilities in light of the current financial and credit crisis. While I don't normally agree with Warren on many of his articles, he nails it correctly on this one. In relation to this article on coal, no one should think coal plants will disappear for a long time yet. This is my comment posted to it....
"This blog will be hard to swallow for many but when push comes to shove, it describes sobering reality. In fact, I would go further to say that during the good times most utility companies cannot afford the massive infrastructure changes they have been under pressure to consider without massive rate increases for all customers. And historically regulators won't allow massive rate increases over short time frames, so if anyone thinks the utility industry will plunge ahead in a timely manner during bad OR good times, they are in for massively frustrated expectations. The country's only option will be for "everyone else to hunker down", meaning much more adoption of conservation and efficiency measures, and maybe even investment in local micro-generators to mitigate the looming crisis."
What follows is about an expert who can "walk the talk" of reliability. It is not a personal matter.
I n fact, from my exposure on EnergyPulse, I think that you are a very intelligent and important person that can "talk the talk" of reliability. But, Do you feel that you can also "walk the talk"?
Jose Antonio,
It depends on what exactly you mean by "walk the talk".
Over the past few years I was personally involved in developing real-time in-home energy display technology that communicated with one the state-of-the-art smart meters being commercialized in North America. For reasons of confidentiality I cannot describe much more about it but I can tell you I invested much of my own time and even a substantial amount of my own personal funds to create working prototypes of it. I along with the people that helped me were told it was the first ever in-home energy display to communicate with a smart meter. Since then of course other products have emerged, since I am not the only camp to recognize the need for them.
Clearly therefore I have had a personal and vested interest in promoting the commercialization of advanced metering for in-home technologies and all the consumer benefits it can realize. I quickly learned however of the many barriers that exist in our utility industry to commercialize things like this. Participation in discussions on EnergyCentral here (where I have talked the talk) have taught me very much also about our energy industries and its economics, having come from the electronics industry.
As an average residential consumer of electricity, I also believe I have a pretty good understanding of many issues talked about here on EnergyCentral, and have developed the courage to comment on many other topics besides just advanced metering related topics.
So I consider myself to have walked the walk already unless you mean something else. As a design engineer in the electronics industry, I do not readily see how else I can walk the walk, so please feel free to explain otherwise.