Smart Grid or Strong Grid? Comment on Ken Maize is a timely post by by Robert Michaels, on July 8, 2009, in MasterResource: A free-market energy blog. This is a comment I submitted under that article, which at this moment is awaiting moderation:
I love the concept of the Strong Grid, as it fits nicely with the Electricity Without Price Controls (EWPC) Architecture Framework (EWPC-AF) that has emerged to replace the Investor Owned Utilities (IOUs) Architecture Framework (IOUs-AF).
This is how it fits. The Smart Grid is based on the policy: economy first, system performance second. The strong Grid is based on system performance first, economy second.
A Strong Grid will result in a simple, not simplistic, power industry, which can be divided into two highly cohesive systems that are lightly coupled and that mutually reinforce each other. The systems are a primary regulated power service transportation system and a secondary open market commercialization business system. That is my key discovery.
Please go to the EWPC Blog (my website) to learn about the Greek Tragedy that will cost the American ratepayers and/or taxpayers billions of dollars.
The smarter grid that is being developed is not a strong cost effective grid. As Jim Collins and Jerry Porras' lesson given in their book "Built to Last," a key idea is the Genious of AND, Instead of choosing between a Smart Grid or a Strong Grid, the EWPC-AF embraces both as a Strong & Smart Grid,
A good example of the comparison of the characteristics of the IOUs-AF and the EWPC-AF can be found in the last sets of comments between James Carson and myself under the must read article How Secretary Chu can Deliver a Win-Win, Big Deal Outcome at the Global Sustainability Game:
Posted by James Carson | 7/17/09 12:24 PM
1> As I have pointed out many times, your view of the traditional IOUs is a decade out of date.
2> "Does DOE and the States have mutually reinforcing ways to influence each other?" Of course not. What makes you think that the states pay much attention to the DOE? The DOE has little power over them.
3> If your point is that the markets would work better with lower prices and volatility if there were some demand side activity, then you are correct. However, your point as stated is silly. The current arrangement does provide the lowest overall cost given current behavior. What's more, the current arrangements are more than sufficient to induce demand side behavior given enough time. We are already seeing a lot of that.
4> Your point about incremental extension is ridiculous, as I have pointed out before. Nobody in their right mind would implement substantial change any other way but incrementally. The consequences of a misstep are too great.
5> The power system in much of the US has already been separated "into a regulated power transportation system and an open market business system". Haven't you been paying attention?
6> I think it is about time that after two years and a half he should change his opinion, instead of just repeating "Perhaps I should just ignore your posts...." Why should I change my opinion when I am right???
1. I am not writing about traditional IOUs, but the Architecture Framework with a series of incremental extensions that have made a huge costly legacy under an architecture flaw that separated transmission and distribution, while forgotten the requirement of active demand.
2. The mutually reinforcing effort will be for example the result of States following DOE money and also of global sustainability effort in which States will ask DOE for help on GHG emissions.
3. No! The point is that with the policy systems reliability first, economic second, transmission and distribution can be develop at least costs expansion of integrated T&D from the beginning. That is why states that without organized wholesale markets are better off as they will avoid a lot unnecessarlly complex baggage.
4. Agree that the consequences of a misstep are too great when the vision is mistaken as it happen with the IOUs-AF. The ultraquality imperative enables a simple vision of two highly COHESIVE systems that mutually reinforce each other through lightly COUPLED interfaces.
5. While demand is integrated to power system planning, operation and control from the beginning, under the IOUs'AF demand integration is just an afterthought that is still an externality. Neither transmission, nor distributions, should be made independent activities, which have created the huge and costly legacy. See also 1,3 and 4.
6. Your opinion is wrong as is explained in 1 thru 5.
I use the word "transportation" not to refer just to "transmission," but as the physical integrated transmission and distribution, which are composed of wires, transformers, etc. The architecture flaw in the Energy Policy Act of 1992 was to consider that physical distribution was inactive, because demand was considered inactive, to introduce Open Transmission Access, while letting State regulate distribution and retail as independent activities from transmission. That was thought to be an apparently minor perturbation, but it is in fact the source of a huge mistake.
That flaw enabled an incredible and very costly legacy under the banner of organized wholesale markets, which have led to an inferior solution path configuration and under the "minor" perturbations "phase locked" with mutually reinforcing elements. The legacy "phase locked" is the result of trading arrangements, contracting arrangements, regulatory requirements, and ownership arrangements, for the companies operating in the sector that generate vested interests that need to be changed.
The huge legacy is the result of the new configuration that requires transmission and distribution be kept integrated and separate from the open market activities in every area. The impact of the change affects many other activities, like your own services, and most of the suppliers of products and services in the investment, operation and maintenance supply chain. Jack Casazza has given the analogy of a "scrambled egg," to explain the immense level of difficulty to execute change towards a superior solution path configuration. That is why those States that have not separated transmission and distribution have a simpler way to develop a strong service that enables smart business.
Reference: slide 11 of my presentation at Carnegie Mellon University, March 2007, available at the GMH Blog.