The sentence above gives new meaning to the expression "the real cost of energy". Isn't it amazing what the government "magic wand" and enough "pixie dust" can accomplish. A little amendment here; a little amendment there; pretty soon the laws of physics and economics are just the way we want them. No problemo!

Why, with a wave of that "magic wand" and a sprinkling of that "pixie dust", the Tesla sports car might be as affordable as the old VW "Bug". Yippee!

No. I am live against calling a thorn a rose.

Ed

"It is becoming clear that the future of our electric power will come less from large coal, gas and nuclear power plants, but more from millions of building-integrated micro generators and urban wind-turbunes, photoelectric solar panels mounted on the roof-tops of the city with wind farms in the countryside.

Existing national power grids won't disappear. They will operate like the Internet, as part of a complex web through which people will supply electricity, by uploading, as well as downloading it."

We call this process distributed generation and it is being introduced all over the world.

As we open the retail market to innovations, the "Rising Expectations" scenario will likely happen after a time delay, when business model innovations developed. Regulators need to shift as soon as possible to EWPC under prudential regulations from today’s regulations on price controls.

Government incentives always have a dramatic impact on markets, for as long as they remain in place. Ultimately, however, either the "real cost of energy" from the incentivized technology must drop below the cost of alternative energy sources or the incentives must become perpetual.

The "consumer-priced" EVs are still where they have been for decades - waiting on the drawing boards for competent, consumer-priced batteries.

The "externality of global warming" is a global externality driven by global emissions, including those from the "developing nations" of China (#1) and India, among others. If this externality is a real concern, we had better hope that consumers in China and India are as enthralled with distributed renewable technologies as you suggest consumers are here; and, that their governments provide the levels of incentives required to achieve broad adoption of the technologies.

As was clearly demonstrated with solar thermal collectors 30 years ago, the technology has got to be "ready for prime time" before government starts throwing market development money at it, or the money just disappears down a "rat hole".

The battery example is also a good one. The government started throwing market development money at electric vehicles about 15 years ago, but the battery technology was "not ready for prime time" and it "bombed" in the market.

The key question must always be: "Is the technology we have available capable of achieving market competitiveness at reasonable production volume within an acceptable period of time?" The question must never be: "Shall we throw money at this technology until the technology we really want/need becomes available?"

"Perpetual" incentives are unsustainable and ridiculous. Nobody has that kind of patience; and, nobody should.

It is of course the absence of any low cost means of storing electricity of the scale necessary that is missing from the scenario. What is the good of a wind generator - however quiet, vibration free or aesthetically pleasing when there is no wind to turn it.

If storage capacity is not available users will still rely on the continued availability of the grid to serve the needs of the user when the users own distributed generator is not operating. You could install a back up generator but now you have additional costs of installing operating and maintaining it. Not cheap.

As far as I am aware photovoltaic cells do not generate electricity at night. But a distributed generator consumer will still want the lights to be on , the computer to operate and the fridge to refrigerate and will therefore need to store the excess energy produced during the day or rely on the grid at night.

Of course this is a double edged sword. If the purpose of distributed energy production is to get rid of the grid then over time the grid connections will simply vanish as customer after customer starts to produce their own power. Utility incomes will drop and the capability to invest in the power infrastructure will disappear. Eventually - as some would like to see - there will be no grid.

Now I see a small problem there. if distributed power generators do not have the ability to store energy and there is no longer a ready supply of electrons flowing from the grid wires to make up the shortfall then our intrepid solar or wind powered household will find that life will be a bit less comfortable than it is now.

Their lights will indeed not be operating at night (may be I am naive - but I think nightime is when lights are needed most) if they have solar only.

Of course the other interesting observation that must be made is this. If the necessary storage capacity DOES become cheap and available the first people to use it will be grid operators to flatten out demand fluctuations so that they can use base load plants more efficiently. In fact in the limit there will ONLY be base load plants as the demand will be flattened out by storage much like a car battery operates in your vehicle.

As I see it monies "invested" by Governments on distributed electrical generation schemes of all stripes will serve only to decrease the revenue of the grid operators. This in turn will reduce the already low investment in the grid and over time the grid and the plants that provide it with electrons will not be there.

A counterproductive investment I think.

The author indicates problems with city power supplies and deployment of distributed power supplies in built up areas. Fortunately technology is hard at workl solving the problem of city power congestion and the routing of high voltage lines. American Superconductor is making this problem a thing of the past with power lines of much lower voltage than present able to carry vastly greater current than present power cables. Long Island Power Authority is currently installing and testing these cables. What this means is that in the near future existing rights of way in cities will be able to carry over 100 times more current than present and most of the high voltage overground lines will be put underground releasing very expensive city property for other uses.The congestion problem is about to go away.

So technology doesn't only advance in the distributed energy field. Grid designers and developers are not exactly asleep at the switch either.

The key development for both central electricity production and distributed energy production is storage.of electrical energy on a large scale. It is essential for distributed producers - not essential for grid producers. It is the absence of any satisfactory technology that fact really puts the Khaibosh on any meaningful contributuion from the distributed energy sector.

Malcolm

The BOTH/AND Assumption of EWPC

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 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. Please write to javs@ieee.org to contact the author for any kind of engagement.

Thank you very much Mr. Rawlingson for your intervention.

The first statement of your comment "Distributed means of energy production are OK but they must be accompanied by a distributed means of energy storage. If not users will still be dependent upon the grid to supply their needs at times when they cannot - or their lights will go out." is an EITHER/OR assumption, making the rest of the post unnecessary on the BOTH/AND assumption of EWPC.

The BOTH/AND assumption is based on the quote which I posted above as The "Continuity" Scenario is Gone (hit link please if not under the EnergyPulse article) about “The future of electric power,” that in particular says: “Existing national power grids won't disappear. They will operate like the Internet, as part of a complex web through which people will supply electricity, by uploading, as well as downloading it."

As the smart grid is one of the disruptive technologies (please see The Sixth Disruptive Technology), it gives also a good opportunity to explain better EWPC As The New Internet (hit link please), where I said that “… I understand that DER [distributed energy resources] is just one of the six disruptive technologies already identified … under electricity without price controls (EWPC) for the transformation of the electric industry. EWPC is the winning market architecture and design breakthrough paradigm shift that satisfies "... these changes and require new ways of thinking and operating..." that the author [Mr. Tornal] calls for.

I hope the above clarifications may help you and other readers to Let EWPC Come to Fruition (hit link also for details), “…As ‘the heat of combat is over, and a decision’ about EWPC can now be reached, ‘all the bitterness disappears, and people work hard to bring’ EWPC ‘to fruition in the best possible way’…”

Best regards,

José Antonio

Reference and context: Distributed Architectural Renewable Energy Generation, by Brian Braginton-Smith, Executive Director, Sustainable Resources Group.

"It has so far not been possible to agree on the basis: control cost vs. damage cost."

The primary advantage of a policy where external costs are applied (through taxes) is that one DOESNT have to determine the costs of control or mitigation. It's actually irrelevent.

An externality tax policy simply ensures that the true (i.e., correct) cost is paid for energy that is produced a given way. If a cost-effective means of reducing the external costs is available (resulting in a lower true, total cost), it will be employed, given that there (finally) is a financial incentive to do so. If an alternative source is available that has a lower true, total cost, it will be substituted, despite it's somewhat higher direct (non-external) cost. Finally, if no cost effective (i.e., lower total cost) alternatives or mitigation technologies are available, one simply continues to produce electricity the old way, and the additional cost (of the tax) is passed on to the consumer. Then, the consumer is at least paying the real cost, and has the associated incentive to conserve.

The beauty of it is that none of these questions (about what technologies are available or what will happen in response) need to be considered when setting the policy. All the policy is doing is determining the external costs and adding them, so that the true, correct, total cost is paid, by the consumer, for any given energy/technology option. It is strictly a scientific exercise, determining the health, environmental and geopolitical impacts of various energy options. Once the real costs are being paid, for various energy sources, it is left to the market to decide how to respond.

Failure to account for fossil fuels' massive external costs is primary market failure that exists today, and it is the single most important issue that needs to be addressed through energy policy.

"An externality tax policy simply ensures that the true (i.e., correct) cost is paid for energy that is produced a given way."

That is true if and only if the tax applied is the correct tax. The question then becomes: "How do we determine what the correct tax is?"

The two methods which have been pursued by multiple jurisdictions to determine the correct tax are: the control cost method; and, the damage cost method.

The control cost method sets the tax at the cost of controlling the emission to the level required. Thus, control cost-based externality taxes vary depending on the level of emission reduction required, since the first ton of reductions is typically far less costly to achieve than the last ton of reductions, particularly if the last ton of reductions must result in a zero emissions level.

The damage cost method sets the tax at the cost of the damage caused by the emissions. Thus, damage cost-based externality taxes vary depending on the current condition of the affected area and the impact of the emissions on those conditions as well as the sensitivity of the affected area to the emissions. California, for example, proposed three levels of externalities damage costs for SOX and NOX at one time: one for emissions in the LA Basin, which was heavily polluted; one for the balance of the state of California; and, a third for emissions in other states resulting from the production of energy for use in California, about which California cared a great deal less.

Of course government, in its infinite wisdom, could merely pick a tax rate from the etherium and apply it to the emissions of interest. However, it might be very difficult to defend the cost of energy including that tax as the "true (i.e., correct) cost for energy that is produced a given way."

There should be some reasonable, defensible method for determining the correct tax. I certainly don't have the answer, nor am I aware that anyone else does. Perhaps you do, in which case I encourage you to share it.

Ed

"It is strictly a scientific exercise, determining the health, environmental and geopolitical impacts of various energy options."

That is a mouthfull!

Is it fair to presume, for example, that the geopolitical impact of the first ton of annual CO2 emissions reductions in China and the US have the same geopolitical impact. (NOTE: Each country emits approximately the same number of tons of anthropogenic carbon each year.) If so, is it also fair to apply the same tax to each ton of emissions reductions?

Is it fair to presume that the environmental and health effects of a ton of SOX or NOX in either country is also the same, since the air quality in much of China is far worse than in the US?

Enquiring minds want to know?

Ed

My idea of applying external costs (through taxes, etc..) would correspond to what you call the damage control method. What you call the control cost method does not make much sense to me, for many reasons. My primary point was that with the "damage control method", control costs are irrelevant and need not be estimated or discussed. This is a major advantage.

As for the difficulty in the scientific exercise of determining the damages/costs, I didn't say that it would be easy. My point is that this is what needs to be done, if one wants to have any intelligent set of environmental policies and/or regulations. Regardless of the approach used (taxes, cap-and-trade, or simple regulation, etc..), how can one intelligently set policies if one can't quantify the damage from the pollution? Given that one must arrive at an estimate of the damage anyway, the most elegant policy (once that information is known) is to simply account for the damage through the application of a pollution tax. This lets the market (industry) decide how to respond.

You are probably right that the amount of damage from any given pollutant is not simply proportional to the amount released, regardless of location, etc.. A conservative approach would be to assume a linear relationship between exposure a health effects, with the coefficient based on high exposure data (this being what the nuclear industry has been required base its analyses on, regardless of the lack of evidence of any health effect for low doses).

Despite the uncertainties, I would say that picking a simple, per-ton damage value, based on the available data (studies to date) would be closer to the mark than not applying any cost at all. Why does a tax (external cost) of zero have to be the answer to any uncertainty? And, BTW, despite the difficulties, there have been many scientific studies which do indeed estimate the external costs of various energy sources, using detailed scientific analyses. Most of these studies conclude that the external costs of coal are very high, enough to roughly double its cost (i.e., ~4-8 cents/kW-hr). This roughly matches EPA's estimate of ~$100 billion in annual damages from coal, which, when divided by US coal's ~2 trillion kW-hrs per year, corresponds to ~5 cents/kW-hr.

So, why shouldn't simple, per-ton pollution taxes be set so that the US coal industry pays out a total of ~$100 billion per year, i.e., an average of 5 cents/kW-hr. This would be far better (and closer to the mark) than applying a tax of zero. Of course, the taxes would not fall evenly on all coal plants. Most of the damage is coming from the small fraction of old "grandfathered" coal plants. These plants would have double digit cent-per-kW-hr taxes, and would close promptly (something that is decades overdue). The more modern plant would likely have external costs of only a cent or so, and would likely remain open (perhaps with some further pollution controls, i.e., BACT).

Finally, I was referring to oil and gas when I spoke of a geopolitical external cost. Coal's external costs are environmental. Yes, I know that we can't tax China's pollution, even though it affects us (as well as their own population). Once again, however, this does not mean that doing nothing all is better than making domestic plants account for their external costs.

The last resort is scare the heck out of them, I guess. Here in Onatrio at least, and I think in many other "de-regulated" areas, the full cost of the distribution grid is included in a flat-rate charge on our bills, clearly indicated separately, set by the regulater board (at least that's what we're told, e.g. "doing it this way eliminates the possibility of the generation charges cross-subsidizing the distribution companies").

SO, Malcolm, as long as every customer who wants a connection (likely all of them, as you imply), and every customer pays the flat-rate distribution charges anyway, and presumeably transmission is a logical responsibility of generation, what's the big fear factor implied above all about?

I had some first hand experience with the cost of storage during a recent trip to Africa. We stayed in a reasonably posh "chalet" with electric lights and outlets for our small appliances. This "resort" which is actually a game ranch with two bungalows, a common area for eating, and quarters for the owners, relies on about 600 watts of solar panels and 47 kWh of lead-acid batteries for storage. The owner tries to limit his storage discharges to no more than 10% of his storage capacity because deeper discharges shorten the life of the batteries in almost a linear fashion. His batteries last 10 years if he limits daily discharge to 10% of capacity. They last half as long if he doubles the discharge. Of course, that's on top of the cost of the panels at $US6-8 per watt.

Both positions are wrong.

"It is strictly a scientific exercise, determining the health, environmental and geopolitical impacts of various energy options."

James identifies 3 disciplines of concern. Select 10 experts in each discipline and ask each to quantify the environmental externalities cost of coal combustion is his or her discipline. I'll bet big money you get at least 30 different answers. I'll grant that if you put the 10 experts from each discipline together in a room, you might achieve a "consensus" for each of the disciplines.

I choose to ignore your AGW hyperbole at this time. Point me to the unique, definitive answers to the questions below. Then, let's talk about AGW.

? What is the ideal global average temperature? ? What is the ideal atmospheric carbon dioxide concentration? ? By what percentage must global AGW emissions be reduced to achieve the ideal? ? Over what time period must that reduction occur? ? Who will convince all global emitters to do what must be done?

Global issue, global resolution; or, no resolution is possible.

Similarly, for smaller businesses geothermal HVAC has perhaps the fastest payoff of any renewable energy source - often within 5 years. Such systems however should be integrated during the building phase to maximize affordability.

Unfortunately, these other technologies I mentioned are almost entirely overlooked - and especially by the government. They have little to no tax breaks associated with them. I'm not sure why this is, but it almost seems criminal to me that the least efficient energy sources have the greatest tax incentives and subsidies associated with them. Still, they do however have a much faster payback than say, PV solar has even with government subsidies an tax credits.

I thinks it's also worth mentioning that most Distributed Energy solutions are at best only a bandaid for larger companies who have the money to afford them. Far too often are they touted as an actual alternative to coal for the everyday energy user. There are renewable energy sources that can solve the energy crisis as cheap as $0.08 per kWh but they are too large to do on a distributed basis (see here for more info: http://www.cnn.com/2007/WORLD/asiapcf/11/12/eco.about.csp/index.html?section=cnn_latest ).

Storage is Ready to Cross the Chasm

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 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.

A very important invention is announced in the article New Energy Storage Options Needed! The invention, however, is not required to recognize distributed storage as an innovation that is ready to cross the Chasm of Geoffrey Moore. Al that is needed is to break the "native load" barrier by making a paradigm shift from the vertically integrated utilities to the EWPC. Once the shift is done, that invention will increase its odds substantially, as they will no longer be "overlooked - and especially by the government," as David Austin suggests with his supply side mindset. We will now see that distributed storage has been ready for quite some time.

Jack Ellis has tried to provide one example against the feasibility of distributed storage (another case of distributed resources) using an EITHER/OR argument. My response to Malcolm Rawlingson applies also in this case as will see below. The response was The BOTH/AND Assumption of EWPC (hit link please if not under the EnergyPulse here and below for more details), which in brief says: “By using both the smart grid and distributed resources, EWPC will produce reliable electricity at affordable costs, just like Toyota does with cars.”

In that same response, I also mentioned that “The BOTH/AND assumption is based on the quote which I posted above as The "Continuity" Scenario is Gone … about “The future of electric power,” that in particular says: “Existing national power grids won't disappear. They will operate like the Internet [please read EWPC As The New Internet], as part of a complex web through which people will supply electricity, by uploading, as well as downloading it."

In the [seminal] EWPC article An Alternative Business Case for Demand Response, I wrote:

The business case of Demand Response (DR) [a key disruptive technology] is enhanced under free markets, innovation, and probabilistic (risk) mindsets. DR is poised to be the demand side risk management tool to complement the traditional "LOLP" supply side risk management tool. There are two sides on the DR coin. On one side, system crashes are mitigated by a least cost mix of supply and demand risk management tools that may be applied in time and space. On the other, DR is the key to the segmentation of customers supply security (a kind of insurance). Because of its fine grain nature, DR can help mitigate delays (intended or not) of lumpy investments in generation, transmission, and distribution.

At this point, I want to highlight “probabilistic (risk) mindsets,” to explain the importance of distributed storage investment by customers that can be exploited as demand side risk management tools, in time and space.

This is part of what Mr. Ellis wrote: “Storage is an issue with distributed generation, but so is cost, and no reasonable level of incentives can erase the gap between 8 cent grid power and 25 cent distributed power.”

Mr. Ellis’ opinion seems to be correct with a long run analysis of EITHER/OR isolated service and a under deterministic supply side mindset. Under probabilistic customer oriented perspective and demand integration it is wrong as follows:

This is what we have experienced in the Dominican Republic with an unreliable utility electric service. Customers invest in accordance with their perceptions in battery inverters. The proof is in the pudding, as one company has sold so many of these inverters, that it designed a model specifically for the country. Those customers use the grid when it is available and use the inverters, which connect automatically, when the grid isn’t available. For every customer there is a perceived optimal combination (a sign of differentiation) of grid vs. storage investment that results in expected minimum costs. This was one of my intuitive insights in 1996 for what is now EWPC, which intelligent and important people in first world countries couldn’t probably imagine (until now).

Using Jack Ellis’ numbers, if the probability of service of the utility in a neighborhood is 90% (it varies widely from circuit to circuit in my country), and the unreliable service is priced at 8 cents (it is much higher in small countries) and 25 distributed, then the (expected) cost to the customer in the long run is equal to:

8 x 0.9 + 25 x 0.1 = 9.7 cents.

The gap is reduced from 17 to 1.7 cents. That is how the gap is almost erased (no need to be erased, as it only depends on customers perception of value), being one of the insights that underlies a Dominican strategy, which was published in the May-June 2006 issue of the IEEE Power&Energy Magazine.

In my [seminal] article mentioned above I wrote: “Professor Schweppe "envisioned a world of customer-based electrical generation and storage," which has been happening in the Dominican Republic, for quite some time, missing only the Demand Response System and a truly competitive retail deregulation to fulfilled the dream of a country without blackouts.”

There are then strong reasons for Disintegrating the Grid and Retail Worlds to break the “native load” barrier that keeps the obsolete vertically integrated utilities paradigm in place. Those same reasons suggest to “Let the Market Decide” in Ohio in order to Let EWPC Come to Fruition.

In sum, as experienced in the Dominican Republic, the disruptive technology of distributed storage has been ready for prime time for quite some time, lacking a shift to the EWPC paradigm. The reason it has not crossed the Geoffrey Moore’s Chasm is because of the “native load” barrier that unnecessarily extends the obsolete vertically integrated utilities paradigm.

Reference and context: Distributed Architectural Renewable Energy Generation, by Brian Braginton-Smith, Executive Director, Sustainable Resources Group.

A serious win-win scenario. Still, I think for it to really work there should be incentives commensurate with the savings that should be expected (not to mention the carbon reduction).

Read about it here: http://spacing.ca/wire/?p=2477

As can be seen from the comments under EWPC As The New Internet, distributed providers should be just as interested as the customer to be tied to the grid. In particular, see my response to Malcolm that reads:

Dear Malcolm,

You are absolutely right! Distributed energy needs the grid. What we don't need anymore is the obsolete vertically integrated utility paradigm. Please read the details in the article Storage is Ready to Cross the Chasm.

A better win/win scenario to invite distributed energy is to have a customer orientation. With six disruptive technologies identified, and only one institution with which to interface, a perceived optimal long run decision can be made by a customer under EWPC, for a solution mix of distributed resources, read energy efficiency, demand response, distributed energy/storage, etc. for long run investments. This is the integrated approach.

The whole point is that a peacemeal approach to distributed resources development makes a more difficult business case, especially if the retail barriers to competition are kept in place.

Best regards,

José Antonio

One can argue about how and why grids developed (I fall firmly into the camp that argues grids beget large power plant rather than the other way around), but in nearly country in the world we have ended up with grids designed to feed power from a small number of actively managed large generation units at the "centre " to a large number of passively managed small consumers at the "periphery". This is because it is the most cost effective way of supplying power to the bulk of the population. Our existing grids may not carry the label "Smart", but operating them within very tight voltage and frequency bands and keeping them in instantaneous equilibrium is one of the smartest things I have ever witnessed.

For distributed generation to become a reality at the scale you envisage, either each distributed generator will have to operate in island mode (for that to happen in the USA a minimum of 4 million tonnes of lead would be required for the batteries plus the infrastructure to recycle it ever three years – most people do not have the discipline to keep power drawdown to less than 10% of the maximum charge) or we will have to completely re-engineer the grid. If it is the latter, every single neighborhood, district, and transmission grid supply point step-down transformer will have to be changed to an automatic tap-changing transformer (ATCT): the grid operator will not be able to control (dispatch) the millions of micro-generators, therefore when generation within a neighborhood grid exceeds demand, it will result in a counter-flow of current through the neighbourhood transformer. Without ATCTs, this will likely result in an over-voltage trip in the higher voltage circuit knocking out the whole district, and possibly the whole city.

Assuming ATCTs have been deployed throughout the grid, the issue of power quality will have to be addressed. Microgenerators (including the Swift turbine) almost entirely generate in DC and use a solid state inverter to produce AC to feed into the grid. Unless the technology has moved on since the last time I bought one, these produce less than perfect sine waves. My understanding is that where micro-generation exceeds more than 2% of the average power flow on a grid, there is a noticeable deterioration in power quality.

Once power quality has been solved, the issue of variable generation has to be addressed. As has been discussed in EnergyPulse many times, wind and PV are variable generation. There have been a number of studies carried out around the world that suggest that until variable generation reaches 20% of peak demand, the grid will be able to cope without significant changes. Leaving aside the fact that the 20% figure is not yet proven, above this figure the management of the grid becomes much more complex and the grid operator will be required to make many more grid stability calls on (giga-watt size) quick response players.

Solving these issues will the cost tens of billions of dollars. Who will pay for this? Will it be spread across all grid users or will just the distributed generators pay? If it is all grid users, will the distributed generators still be asking for further subsidies to make their equipment "cost-effective"?

At the end of the day, we need to ask what are the true objectives of the proponents of micro-generation/distributed generation. If what they want is to increase the percentage of electricity generated from renewable sources and CHP, then based on everything I have learnt in the power industry to date they should be arguing for as large a grid as possible so that as much large-scale renewables/CHP as possible can be connected to the grid. If their objective is to be self-sufficient in power, then like me they should be honest enough to admit that this is a lifestyle choice and they should not expect the rest of the country to pay for it.

If we presume that your analysis of the existence of this problem is accurate, why the heck would you solve a problem of over-voltage from inverter DG by replacing local transformers with tap-changing units? Why not simply signal all the inverters to reduce their generated voltage? That capability is obviously already built in.

In general, the whole bit is symptomatic of the old "centralist" concept of how to solve problems. Spend tons of money at the centre to solve problems which rationally should be solves locally. If you had a system with the communications capability of IMEUC installed, all these "issues" should just go away, perhaps with a minor bit of tweaking of substation relay setpoints or adding some intelligence to them. See atricles / blog this site.

"Solving these issues will the cost tens of billions of dollars" "what are the true objectives of the proponents of micro-generation/distributed generation" ? Perhaps it's time to put some more creative engineers in charge. Of course, "creative engineer" is a contradiction in terms isn't it?

You are quite right. If every distributed generator has a smart meter and an appropriate inverter, it may be possible to get round the over-voltage problem. The problem is their cost and getting the distributed generators to install them.

Some years ago I was involved in a (European government sponsored) group whose terms of reference were to look at what was required to make distributed generation possible and what it would cost. To this day I am not sure why I was asked, although the chairwoman told me it was because I was independent of any utility and she thought I understood enough about both finance and electricity to be able to make a contribution. As business was in the doldrums following the Enron meltdown, I decided not to disabuse her of her naivety - it was better than being idle, and I got to meet with some very interesting (and creative) engineers.

It quickly became apparent that - the DG proponents on the group had looked no further than their own pockets (being grid connected meant that they did not need to buy batteries and they got substantial payments for the "green" electricity they exported)

- the government in question was looking for a fix to meet an electoral pledge that had been made without any consideration of the consequences.

- being unconstructive was not a politically acceptable option for the system operators

- the system operators had very valid and demonstrable concerns over grid stability, power quality, increasing levels of harmonic resonance within the neighborhood grids and the health and safety of power line workers.

Of these the greatest immediate concern was DGs would continue to put power on the wires during a grid outage. This wasn't just hype, as there had already been incidents of voltage on lines disconnected for maintenance that had been traced to self-styled "guerrilla" DG operators who had connected up without permission to get their meters to run backwards. The main long term concern was grid stability

The outcome of all the deliberations was that - the system operators agreed to a code for combined metering and inverting units for DGs that automatically disconnect when the voltage on the grid went above or below a pre-set level.

- units that could respond to signals from the system operator (to reduce voltage or to disconnect for reasons of power quality/safety) were rejected as being too expensive (by both the DG representatives and the system operators)

- units had to be registered with the system operator and shown to meet the code before they could be connected

- systems operators could refuse to connect new DG units to any circuit if the total DG on the circuit exceeded x% of the lowest demand

- connecting an inverter that did not meet the code or which had not been registered became a criminal offence

- the government in question would look again when the level of connection refusals reached "politically unacceptable" levels.

Despite going for the cheapest acceptable option, the cost of buying and connecting a compliant combined metering/inverting unit turned out to be about $1000. It is therefore no surprise that the uptake of grid connected DG in that country remains well below the x% level.

If it is deemed desirable to have widespread grid connected DG, then grid stability, power quality, variable generation and safety will all have to be taken into account in the re-engineering of the grid. But based on what I learned on that group, I can tell you that what ever the outcome, it will be expensive – the reason I mentioned ATCTs in my last post was I concluded from what I heard that they would ultimately be less expensive than putting in millions of smart units and then asking the SO to actively manage them, which is what IMEUC-GD would entail.

If you or any one else who is more technically competent than me can tell me that this is spooking at shadows, I am more than happy to listen. But please at the same time consider all of the costs and compare them to the costs of the alternatives. When I do this, I keep on conluding that the old centralist approach is still the most cost-effective means of supplying power to large urban populations

BTW, enjoyed your posts on the AGW thread - very informative.

After reading the article by Sandy Smith, Communications Coordinator, Utility Wind Integration Group, some of its references, the articles by Roger Arnold, and all of the really valuable comments on all 4 articles, I like to select what J. Charles Smith wrote in the article Winds of Change as a summary message: “For many of us, this has created the necessity of a fundamental realignment in our thinking. We must understand all the implications of this and go about the business of helping to create the future.”

The following are my generative dialogue suggestions (I am not my opinion) for a fundamental realignment in our thinking:

1) A carbon tax should be negotiated on a global setting, i.e. the World Trade Organization. Each country that does not apply the negotiated tax, will then free ride the global system.

2) Most of the discussions are indirectly supporting generation as a monopoly. Generation competition is not only possible, but absolutely necessary to go forward.

3) UG variability is an important consideration, but its uncertainty is even more important. Power system systemic risk management of system failure (system security) responds to uncertainty. Supply side management of systemic risk of system failure should be complemented by demand side management of systemic risk of system failure. See An Alternative Business Case for Demand Response and a Dominican strategy.

4) UG best performance will come from balancing areas, in which generators are widely dispersed and mostly located in the distribution system. Open transmission access is insufficient to integrate UG generation in the state of the art.

5) There is thus a need for full transportation access. Transmission and distribution reintegration requires dismantling native loads, which changes the concept of a utility to wires only utility. See NERC Compliance and Power Sector Structure.

6) Fully functional and competitive wholesale and retail markets can then allow the development of the resources of the demand side. See We Need 2GRs as the Forecast is Always Wrong.

All of the above implies an emerging EWPC is Pragmatics' Winning Market Architecture and Design. [Since that time EWPC emerged as the winning market in the first phase of competition.]

To go forward to EWPC as the End-State of the electricity industry for quite some time, I made a presentation at Carnegie Mellon University that can be found on the Grupo Millennium Hispaniola Blog, as A Generative Dialogue to Reach the End-State of the Power Industry.

The cost issue is a non-issue. The customers will get their payback from investing in the infrastructure immediately by a) purchasing their electricity requirements directly from the wholesale market at generation prices. Distribution becomes a flat-rate regulated monthly charge per service point, just as now in Ontario's de-regulated market. b) DG, renewables etc. will be valued and paid at their actual value to the market, not some arbitrarily estimated regulator number. c) no more geruilla DG connections, the system's auditors would detect it immediately and there'd be no incentive. c) as customers increasing modify and control their appliances etc. to take advantage of off-peak rates, the real prices and values of baseload and peaking would be discovered accurately and continually adjusted. d) a higher percentage of total kwh consumption would come from high-efficiency baseload units which can sell for lower prices.

I don't see the problem. I assumed some amount will be required for adjustment of relay setpoints and perhaps some additional automation at substations, but that shouldn't even come to a measurable percentage of the total system install costs.

And I still believe that engineers are not creative. They have that beaten out of them at their universities, intentionally, because they must do thing "by the book" else bridges will start falling down etc.

Financing and Developing Uncertain Generation

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 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. Please write to javs@ieee.org to contact the author for any kind of engagement.

In the article Optimize Transmission Assets for New Wind Farms but Who Pays?, Mr. HIMADRI BANERJI brings a difficult question on how to finance and develop wind [changed to Uncertain Generation without any loss of generality] projects. The problem, however, comes from the lesson that Dee Hock, CEO Emeritus VISA International, gave us: “Simple, clear purpose and principles give rise to complex and intelligent behavior. Complex rules and regulations give rise to simple and stupid behavior.”

The problem Mr. Banerji is bringing has its origin in the vertically integrated utilities (VIUs) paradigm, whose incremental extensions give rise to very complex rules and regulations that result in simple and stupid behavior. It is well known that price controls are inefficient and lack transparency. Lack of transparency is one side of a coin, the other side being corruption. So the question “Who pays?” is always answered by those that control the political process, as debates get locked, and to get them unlocked the hierarchical force of the authorities is employed. Please read Slicing the Last of the Regulated Monopolies.

Electricity Without Price Controls is a market architecture and design paradigm shift away from the VIUs paradigm based on “simple, clear purpose and principles,” as can be seen in the article Synthesis Proposal Agreement of EWPC. Under EWPC, both questions – who should pay and how to develop an optimal transportation (T&D) grid, as many RR projects are to be connected to distribution lines, are answered without getting into debates.

Optimal transportation should be the result of expansion planning where all potential RR projects (see also Integrating Uncertain Generation to the Grid ) are taken into consideration at the same time for a give planning horizon. Such expansion planning is to be done in the environment suggested in the article Free Market and Central Planning, Under R1E2.

With a transportation utility that is financed by tolls the problem of “Who Pays?” is solved. A simple explanation of how to optimize the transportation system is given in the context of the article Demand Integration Under EWPC, as follows:

Generators and Second Generator Retailers interchange with the System Engineer their proposed investments and other key information to allow the System Engineer develop the transportation utility expansion plans for the long run, in order to optimize the future grid by minimizing total system costs (not just the transportation costs) in order for 2GRs to enable a potential maximum social welfare in the national economic context, and not just the financial viewpoint of the utility as the VIUs paradigm calls for.

For more details please read other articles in the Energy Central Network EWPC Blog.

This is how EWPC completes the answers Adrian Lloyd comments:

1) Be against isolated distributed generation. Mixed feelings!

For the 3rd time, “… Existing national power grids won't disappear.

”In addition, many customers can remain integrated to the grid without being interconnected. That is how most customers operate their distributed resources in the Dominican Republic, with which they will be able to provide Demand Response services to the grid.

Supply side only risk management needs generating reserves (sometimes in the order of 35% of capacity) with some of them to operate a few hours in the year to service customers reliably. One way traffic used to be the way with inactive demand as an externality. Active demand should be integrated to power system planning, operation and control to increase power industry efficiency.

Also read under the article EWPC As The New Internet my response to Malcolm "Problem is that millions of distributed generators will results in no income for the people that supply and operate the grid. No money no maintenance, no maintenance no grid and the scheme falls apart."

That is satisfied with the essential requirement of transportation ultraquality under EWPC. Read the article Synthesis Proposal Agreement of EWPC please.

Same response as in item 3.

Read the article Integrating Uncertain Generation to the Grid posted above please.

Leave that to the open market value chain and not to the Government or the utilities. I like to stress from the above article Financing and Developing Uncertain Generation, that the question “Who pays?” is always answered by those that control the political process, as debates get locked, and to get them unlocked the hierarchical force of the authorities is employed. Please read also Slicing the Last of the Regulated Monopolies to complete the response.

Believe me, a lot of engineers are creative - I have seen enough of them in my office over the years looking for money for perpetual motion machines and the like. Their teachers obviously did not beat them hard enough. But they are entertaining and it is worth listening to them for the occasional gem that turns up.

You are right, my only objection is cost. The government may be in denial about energy, but all the predictive models for future energy prices that I use are showing that unless the US goes into (deep) recession, energy prices are going to increase in real terms for the foreseeable future, with the curve getting steeper with time.

I actually think that smart meters are the way to go for all forms of consumption, as I reckon that that for most consumers it will save them a lot of money in the long run. It makes absolute sense for people to control demand and utilise off-peak electricity to minimise the cost. From the utilities' point of view as well I think that smart meters make sense. The infinitely better data flow the meters generate can't but help them manage the grid and target investment more precisely.

It's with regard to DG inverter/meter units that I have my doubts. There is a big difference between smart consumption meters and smart DG meters. Whilst the former are actively managed, they are primarily processing, sending and receiving data which does not have to be dealt with instantaneously. The latter require active management generating an instantaneous response from the connected equipment, which I understand requires a much greater level of processor control and 99.999% reliability and which substantially increases the cost. However, if you know otherwise I would be really interested to hear – I don't pretend to stay on top of developments in the field

There is also the issue of the cost of managing the grid. My understanding is that the cost of managing the grid is proportional to the number of interventions the system operator makes. If millions of actively managed DGs are connected to the grid, there are millions more interventions required. Obviously this can be rationalised by installing processor equipment at grid nodes, but the number of interventions is still huge. This is brought into perspective when it is realised than most sub-50MW generating plant that I have been involved with are not actively managed by the system operator – they have relatively simple SCADA systems that switch them off if they are out of sync, power factor or voltage goes out side limits etc. 50 MW is equivalent to 25,000 buildings with average size DG systems. If it works for small scale commercial generation embedded in distribution networks, it should also work for DG.

This does not address the issues of power quality caused by solid state inverters or large amounts of variable generation. I do not pretend to know what the answers are, or how much it will cost but I know that addressing it will be essential if large amounts of DG are to be possible.

Finally, regarding a flat charge for paying for the grid. I have seen this issue addressed in the past, and each time the politicians have shied away from mandating it; flat charging impinges disproportionately on the poor, whereas apportioning grid charges to each unit of power sold means that the rich subsidise the poor (because people like Mr Gore tend to consume more power). I offer no opion as to which is right, merely the observation that it will depend on where the politicians think the votes are.

A couple of comments on your posts.

The example you give of the Dominican Republic is interesting, as it shows how people respond to an unreliable supply rather than an unconstrained market. The corollary is vegetables. Most of us could grow vegetables in our back yards if we wanted to, but we chose to get them from a retailer – it is convenient, reliable and cheap. Those people who do grow their own choose to do so for a variety of reasons, which usually does not include a consideration of total cost (if they tell you they do it because it is cheap, they are generally placing a zero or low value on their own labor required to dig and tend the patch) . If however the supply becomes unreliable, then many more people start growing their own.

In the Dominican Republic, the unreliability of the electricity supply has not caused 100% of the population to install DG, because the majority of the population cannot afford to do so. If you were to give them a choice of choosing between an opaque, regulated public supplier that delivered reliable power or an unconstrained market where they were free to buy from whatever supply or install their own DG, but which was unreliable, my guess is that they would choose the former. But as it stands all that the Dominican Republic seems to prove is that when you can't buy it in the market, those who can make their own.

In my opinion the issue of price controls/mandated prices vs a fully competitive market is separate from the issue of grid ownership and grid charging. Grids are natural monopolies and therefore have to be regulated. If the regulatory structure is right, they deliver timely investment and reliable systems at something approaching least cost. If you do not believe me, take a look at the UK which now has one of the most reliable grid systems in the world. Investors are quite happy to invest in the grid operators, because although the returns are relatively low, they are pretty certain.

Against this, you have to look at the UK's supply market, which appears to be heading for a supply shortfall despite being fully competitive, with full demand side participation possible in the market and with less than 4% of the total supply subject to controls or subsidies.

In this case EWPC has failed to deliver adequate investment in new generation or demand side participation, despite the need for both being flagged for more years than I care to remember. In my opinion, this is primarily due to market design with a lesser effect from environmental legislation (creating disincentives to invest in new coal plant or keep existing ones running). If the market continues to fail as I think it is doing, demand will soon outstrip supply and will lead to much higher prices.

This should spur on smart metering (where a number of utilities have trialled it already with a view to curtailing domestic consumption at peak times) and DG, but not at a scale or speed of deployment that will solve their problems.

IMHO the problem with all EWPC theories including the UK is that they try to commoditize electricity so they can apply conventional economics to the industry whilst ignoring the value of capacity, the realities of huge lead times for new generation and the challenge of maintaining the grid in equilibrium. As I told Len Gould in my last post, I don't mind creative engineers. Its creative economists I fear.

Electricity is not a commodity. It is an essential requirement of modern life and security of supply should be placed ahead of consideration of cost. I realise I am probably the guiltiest when it comes to reducing debates to cost, but then I am a money man. What I should have talked about was value. This is why in places that have an unreliably supply, people install DG. The cost may be higher than the cost of grid connected electricity, but it is still lower than the value these people place upon it.

I would like to continue this debate another time, but right now I have to go – Mammon is a very demanding task master.

EWPC is NOT the UK Model By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 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. Please write to javs@ieee.org to contact the author for any kind of engagement.

Adrian: thanks for your comments. I hope you get to see this very brief response that goes right to the essence.

If you didn't have the time to read the "Synthesis Proposal Agreement of EWPC," you will see that EWPC it is NOT the UK model, but a new market architecture and design breakthrough paradigm that emerged in the last two years. This is the summary of my discovery as simple, but not simpler, as it can be said:

There are "8 possible End-State (UK was developed on 4), only one of which is the generic market model paradigm: retail competition with active demand (UK had no active demand) and ultraquality transportation (UK has separate transmission and distribution and no ultraquality identified). That is the essence."

Ultraquality transportation is the key requirement to develop A Futures Market under EWPC (hit link please), which the UK model lacks. That is why the UK model, as you say “has failed to deliver adequate investment in new generation…” It has also failed to deliver “demand side participation,” because it only considered the 4 possible End-States at the outset.

Please don’t confuse EWPC with the UK model. EWPC is an extension of Fred Schweppe et al Spot Pricing of Electricity. Under EWPC, system reliability is first and foremost. Instead of first generation (and incumbent) retailers, as the UK has, EWPC has Second Generation Retailer - 2GR (no incumbents) that participate in long run power system planning to integrate demand.

The important example of the Dominican Republic is not that of the vegetables, which we certainly have. I have tried hard, as Len can attest, to have Dominican like electric retailers. The example is that of customer differentiation, giving the opportunity to integrate demand and to practice true spot pricing of electricity. The opportunity is to integrate demand into power system planning, operation and control. It is about the opportunities available on demand side risk management.

In Free Market and Central Planning, Under R1E2, I wrote of the discovery that “To optimize the transportation system, it is required to consider total social (demand, transport, supply) welfare needs, and not just the optimization of transmission, distribution, or both, by themselves.” I used to say that electricity was not a commodity (I did in 1995 at an IEEE meeting). But once you have ultraquality transportation in the least cost controlled grid, electricity becomes the best commodity in an open market.

I've also been thinking about your other objection, that local voltage control will be difficult with a large proportion of grid power being supplied by eg. small residential DG units. That is a given, IF the installation of them is uneven, e.g. a high concentration of them in a given neighbourhood wanting to feed excess power out to other neighbourhoods. The problem is that, if say 27,600 volts on a substation bus is capable of supplying a 5 mile long 100 amp 3 phase feeder to a neighpourhood with e.g. 17,000 amps at 234 volts with a 2% voltage drop, then the neighbourhood's 34,000 amps peak of DG units get active and try to feed 17,000 amps excess power back into the substation, then they must raise the local voltage in the neighbourhood by at least 4% (in order to compensate for the 2% drop which customers were seeing on the power coming in + the 2% drop they encounter feeding back out). That 4% increase in voltage will be perceived locally as a voltage change from 234 volts to 243.4 volts which might become a difficulty. The 2.1% increase required to feed just a small excess back into the grid is likely very acceptable without any action and would cover almost all neighbourhoods.

I see sevaral mitigating factors. a) That voltage change is a worst-case extreme event, not likely to happen in many locales and in fact quite acceptable even if nothing is done about it. It could become significantly more problematic with a simgle large DG unit at the end of a long feeder but that's not really the condition we're discussing, and can be handled by requiring the large single unit to singal the substation for a tap-change every time he starts up. b) If a particular neighbourhood begins to approach these conditions then the distribution grid operator needs simply to install directional sensors on their substation transformers and adjust their tap-changing logic to handle the case. c) Worst case, a program can be set up to regularly take instantaneous sums of meter readings for all meters identified to be on particularly sensitive feeders in the central database once every 5 minutes. Substation actions (tap changes) can then be made based on sum of current flows with reasonable expectation of accuracy. d) It is also obvious to have the communicating meters record local voltage as well as wattage centrally, and have a program at the central database scan a small representative sample of neighbourhood voltages to determine if tap-changing actions are required at given substations.

The only significant change in control strategy required is that the voltage management mechanism needs to be designed to expect bi-directional power flows, whereas they presently likely only deal with single-direction flows. The tap-change required to fix an over-voltage condition for a customer is opposite if the customer's feeder is flowing power out than it would be if the feeder is flowing power in. It's just a minor upgrade in controls, however, and not likely required very often, especially for the first ten years or so.

The separation of distribution from generation, transmission and (retail if used) into a regulated monopoly on geographic boundaries should be considered an absolute requirement for competitive electrical systems. Otherwise the liklihood of the distribution owner making mischief for his competitor generators or retailers is just too much, and too difficult to monitor. I think your fears of problems are far over-emphasized. Here in Ontario we did it with no complaining at all anywhere (at least on that score) The province now has about 90 separate regulated distribution companies mostly private, some rural co-op. There is also now a fair bit of consolidation going on among them, which makes sense. Britain also. It works very well. The cross-subsidy thing is a red herring, I'd think.

Don't forget to hit the links while reading the article EWPC is NOT the Ontario Model Either.

Thanks,

José Antonio

1) How will your "Ultraquality grid operator" guarantee the quality of supply on the grid when projected demand exceeds available supply by a larger margin than the available demand control? At SOME point, new generation will be required, and that some point will likely hit very soon if electricity should become the mode to replace transportation fuels (PHEV's, H2, etc.). That means e.g. a new 1500 MW nuclear station when demand for it may be only at 100 MW. How will your grid operator "guarantee" it's existence in all combinations of circumstances?

2) You keep insisting that Ontario and Britain are not EWPC because of two minor differences, transmission company owns and operates distribution (Why?) and there is no price cap (sell THAT to the voters. I dare you.)

To get effective demand control implemented, we must eliminate the retailers and implement a genuine free market system. See IMEUC articles this site.

Q9. I have an interval electricity meter (or "Smart Meter"), can I still get a fixed rate?

A. Yes, if you are a residential electricity user or a small business using less than 150,000 kWh of electricity per year, you can sign up for a fixed rate right away. Your fixed price will be the same low price we charge cumulative meter customers, even if most of your consumption occurs during high-demand periods.

http://www.canadaenergy.ca/index.php?page=faqs#answer7

This retailer, CanadaEnergy, is offering to "protect" their customers "from" the nasty new TOU interval meters now being installed as rudimentary demand management systems in Ontario. I can see no reason why EWPC retailers wouldn't do the same thing, as that's where their advantage would lie.

Increased Sense of Urgency of EWPC

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 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.

Dear Mr. Gould,

Thank you very much for asking one right question, the one in the first crucial point that reinforces the increased sense of urgency about EWPC. The balance of your comments, however, has distortions and unnecessary repetitions.

In that “crucial point” you are describing the possibility of systemic risk – system adequacy problem - which is one of the main jobs of the system engineer (planner and operator) to be performed in coordination with generators, transporters and retailers. Today's regulation, deregulation, and re-regulation, based on inactive and inelastic demand (and an externality), and lacking customer oriented service, are not prepared to handle the managerial complexity involved.

To handle such complexity, we need to deploy 2GRs before "... electricity should become the mode to replace transportation fuels (PHEV's, H2, etc.)." Several market segments will develop, for example price takers, responsive demand (source of demand elasticity) and long term contracts. As 2GRs come up with the long term contractual commitments of ( i.e. industrial and commercial) customers that desire to buy the right of future electricity service at a fixed price, including those that have serve to finance base load power plants (i.e. via futures market), 2GRs will provide the system operator much more accurate demand forecasts. Such forecasts are better because demand in no longer an externality.

By updating power system planning procedures to EWPC with those quite accurate forecasts, the “projected demand” will NEVER “exceed available supply by a larger margin than the available demand control?” System reserves, in the proper mix of the “elastic” demand side and the supply side, should be adequate to run a stable system.

“How will your grid operator "guarantee" it's existence in all combinations of circumstances?” By proper long run power system planning system adequacy development. The statement “a new 1500 MW nuclear station when demand for it may be only at 100 MW,” is the result of a planning mistake or a misunderstanding of power system operation procedures.

That is why EWPC is the winner of the first phase of competition are precisely highly interrelated "absolute requirements" 1) integration of active demand and 2) that distribution and transmission are fully integrated geographically. Those requirements enable a superior solution path to the PROFIT ZONE through fully functional retail and wholesale competition. The obsolete regulation paradigm shifted the industry to the NO PROFIT ZONE and the deregulation experiments place it in an even more inferior path of development.

As for price caps, they are easily sold to voters. Under EWPC each customer has the right to choose its own price caps in the service plan of their 2GR as explained in No Need for Regulated Price Caps - I and No Need for Regulated Price Caps - II.

Distorting and naming the “absolute requirements” of EWPC as “two minor differences,” is no serious, just as it is also the “the added point” which are repeated again, and again, because Mr. G NEVER followed the links on EWPC is NOT the Ontario Model Either. Comparing the Ontario single generation retailer actions to those of the 2GRs adds insult to injury.

Finally, I repeat the summary of the article Take EWPC Lead & Reap Large Benefits: “The US Congress, the European Commission, the state of Ohio, and the Dominican Republic, are some the most likely candidates to start the paradigm shift to EWPC, ending demand forever as an externality. It has been shown that the days of the obsolete VIUs paradigm are counted. A paradigm shift to EWPC is the next source of business innovations, jobs with a lot of future and increasing exports. Those governments that take the lead, and avoid the risks of market implementation failure by retaining high caliber professional team advice, will reap most of the benefits.”

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D. Systemic Consultant: Electricity

“How will your grid operator "guarantee" it's existence in all combinations of circumstances?” By proper long run power system planning system adequacy development. The statement “a new 1500 MW nuclear station when demand for it may be only at 100 MW,” is the result of a planning mistake or a misunderstanding of power system operation procedures.[/snip]

??should be adequate??

Sounds like there must be some means for the "central planners" to mandate into existence the solutions they identify. What means will that be?

[snip] Comparing the Ontario single generation retailer actions to those of the 2GRs adds insult to injury. [/snip]

In what way exactly will EWPC mandate into existence some theoretically "new" retailer which does not follow market incentives?

Adequate is the key word on system adequacy. Nothing less, nothing more.

Adequate power system planning procedures for the long run are concerned with developing of a grid that takes the information deals of customers, retailers, and generators, already in progress in the commercial market and offers suggestions of new development to generators for future projects. The process is repeated, i.e. year after year.

No debates are necessary for the transportation utility, as its design and development is that of a machine that should operate at ultraquality.

The commecial market, however, has prudential regulations aimed to avoid market power issues and to protect conumers.

A no brainer on "adding insult to injury." Retailers get into the open market by themselves. Those that don't follow incentives go broke under competition with 2GRs that develop business model innovations. Those 2GRs increase their market share.

When 100 McMansion 200 Amp 240 Volt service entrances and 100 apartment service entrances on that 2000 Amp 208 Volt 3 phase line get rocking along near full capacity, what did you say those obvious communicating wattmeters would read?

Thank you Mr. Gould,

Now many of your questions are going beyond the first phase of competition.

Jose: It appears to me an exercise in sillyness to respond to a question from me (who you know advocates IMEUC as a competing market paradigm to VIU, EWPC and de-re-regulation) with a comparison only of EWPC to VIU's.

It is not silly to me. Please hit the link and read IMEUC: Unreliable Service and Price spikes very slowly.

Even though it is completely obsolete, you should care about VIU, because it is positioned in the minds of those that make decisions. By now it is very clear that EWPC is the winner of the first phase of competition. How it might work goes to the second phase of competition: company vs. company competition. I know there is a thin line between both phases. Please stay within the first phase. The second phase is reserved for professional services.

2GRs can get their power from long term and short term contracts with base load and/or distributed generators and from the spot market. The importance thing is that they satisfy the prudential regulations. I suggest that the prudential regulations evolve to be global regulations.

b) are generating entities also allowed to be retailers? If so, how does EWPC manage market power, especially during a transition from VIU to EWPC?

Since EWPC is developed for the global market, my strong recommendation is that generators should no be allowed to be retailers. I say the global market; because mergers and acquisitions will merge retailers with generators very fast, were it not for such a recommendation. I think the WTO is the proper venue for those global negotiations. In the mean time, federal regulations should be developed in the U.S. and EU level in Europe. During and after the transition market power will be under prudential regulations.

a) In order for an EWPC retailer to justify the relatively large investment in end-point demand management equipment we both agree is required, they will either need to sign up customers to VERY long-term unbreakable contracts (highly unlikely) or only install a very rudimentary control system which will too quickly wind up being obsolete.

b) EWPC retailers will spend a lot more money even than present VIU's "rolling trucks" to recover their equipment from sites and moving it to new sites as customers move about etc. A total waste of resources.

c) By what coersion means exactly is "Reliability First" enforced on the EWPC retailers?

d) e) etc) -- on and on. ridiculous claims of non-existent proofs of tests of IMEUC etc.

Jose: "Please stay within the first phase. The second phase is reserved for professional services. " -- How EWPC is supposed to work is a trade secret? Good luck selling comsulting time on that!

Once the infrastructure is in place, then what market system is used to exploit it is open to experiment. I happen to think that providing customers direct access to the competitive wholesale market is the fastest way to pay it off and keep customers happy, but there's no reason not to then assign a distribution area to test EWPC, however that works, and find out if it's better. At least then EWPC retailers could avoid the "rolling the trucks" problem.

A kilowatt here, a kilowatt there, your endorsement of Ed only seems fair!

While selecting the quote, you forgot to include the sentence “At the same time, there are other secondary economic requirements, the E2 part of R1E2 that should be mentioned,” which is very important for the meaning of the quote.

The same article also states:

Because of the lack of the R1E2 criterion, the thesis leads the untrained observer to the false general conclusion of “pernicious effect from… increase price volatility due to reductions in generation capacity reserve margins.” The R1E2 criterion prevent the possibility of price spikes occurring under EWPC, but which will occur under IMEUC, making it just another faulty deregulation experiment candidate.

Under EWPC, there is no Disco retailer, nor cherry picking, as 2GRs compete with each other. 2GRs have incentives to innovate – by developing business model innovations - to maximize value, minimize costs, or both, for individual customers, and, as a group, have the potential to maximize social welfare, something IMEUC cannot do. They optimize by obtaining as close as possible the required information of the (changing perceptions) preferences and conditions of all customers. While getting that information, they satisfy as close as possible the R1E2 criterion, something that is prohibitive and excessively complex to do by the system operator.

Specific responses:

a)… company vs company issue under competition. Maybe there is a trade secret.

b)… a repeated idea… standard meters don’t need to be moved in rolling trucks. Firmware downloading is what differentiates.

c)… the “essential role” … “to fulfill the R1E2 criterion,” is that of providing demand side risk management by participating in long run planning and short run operations planning to fulfill ultraquality operation with integration of the demand side.

d)… Exposing ALL customers to real time prices is the recipe for unreliable service and price spikes. (Copied from another post).

Before answering any more of your questions, I will pause to see if I get any answers to the article Does EWPC have a “Bystander Problem”? Please wait!

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D. Systemic Consultant

Poetry, even!

Ed