Playing With Fire and Collapse Part 7

Reference: Playing With Fire and Collapse Part 6

Len and Paul: the supply oriented, vertical integration, central station, mechanistic thinking, continuity paradigm is just one scenario. The 28 billion euros "is far from being sufficient." The surcharge depends on what it costs consumers the electricity, no just what the electricity bill amounts to. The difference is customer's outage costs, which rise as end use devices become sophisticated.

Under mechanistic thinking Andy’s article infers the need of forecasting. Under systemic thinking Forrester’s explains why forecasting is a losing game. Instead of forecasting, the use of scenarios comes to the fore, together with what I suggest to call Energy Dynamics. Forrester wrote about Industrial Dynamics, and John D. Sterman wrote Business Dynamics.

Decision making under scenarios is centered on intelligent conversations and finding flaws on mental models to find decisions which are robust under every scenario. Those are the predetermined elements.

I strongly believe, Energy Efficiency (EE) and Demand Response (DR) are predetermined elements which give EWPC an edge. To develop the resources on the demand side in EWPC, the old mental model of cherry picking, as Andy suggests in “Improved energy efficiency, particularly in the commercial sector, is the quickest and most cost effective way to begin closing the energy supply gap in a meaningful way in a short period of time” should change. As I posted on April 12, 2006, under the article What a surprise: Prices move both ways this is what Electric Power Research Institute (EPRI) had said then:

--- Energy efficiency (EE) and demand response (DR) can be cost-effective alternatives to adding new capacity
--- Programmatic approaches to EE and DR have been successful, but have only “scratched-the-surface” of what’s possible
--- Huge opportunity to utilize technology, innovation, and markets to drive EE, DR, and overall electricity utilization

Such an approach, based on simulations with Energy Dynamics and scenario building, will allow the development of a trusted market design and architecture where long run and short run risk management is under control. EWPC is one healthy candidate for the approach.

In “Poised for change: hopeful signs for the power industry (see Time to Innovate…),” Charles W. Gellings, vice president of innovation at the EPRI, adds that:

Assumption: The end-use efficiency of energy utilization has stagnated.

Fact: The U.S. is improving its end-use energy efficiency at a rate of about 1 percent per year. However, there is a potential for reducing the consumption of electricity by between 24 and 44 percent — if all existing technologies and those under development were deployed.

Going for a nuclear silver bullet strategy, without considering the emerging market reform paradigm, is playing with fire.