martes, julio 17, 2007

Second Generation Retailer - 2GR

Reference: The Next Innovation in Energy Efficiency - Extending Advanced Metering into the Home, by Jeff Lund, Vice President, Business Development, Echelon Corporation

I find Mr. Lund contribution a welcome one.

By merging what the author wrote I can come up with the following statement:

Advanced metering systems that enable new and variable prices issued by competitive retailers, which can be downloaded into meters over the network, create opportunities for regulators to enforce energy policy, retailers to differentiate their service, and for consumers to choose from an array of offerings to find one that best matches their needs and lifestyle.

Based on the statement, I see emerging Second Generation Retailers (2GR) under Electricity Without Price Controls (EWPC). This idea, which I suggest for the first time, is to stress the paradigm shift from the traditional retailer or First Generation Retailers (1GR), in this sense and the sense of the next paragraph: while demand response is a short run activity, energy efficiency is a long run one. Investments by retailers and customers on energy services, such as demand response, energy efficiency, and other service innovations, will restructure and integrate demand into system operation.

The process of integration and restructuring of demand is what I call the development of the resources of the demand side, which should involve 2GR on: 1 - long term planning, 3-5 years; 2 - resource adequacy, 3-6 months; 3 - operations planning, 1-2 weeks; 4 - day ahead scheduling, 12-24 hours; and 5 - real time security, 5-180 minutes. The last activity is under control of the system operator.

To allow 2GRs to differentiate their services, regulators should shift from price control energy policy to prudential regulation energy policy, so efficient variable price offering plans are selected by customers (not just consumers anymore) to choose the plan that best matches their needs and lifestyle. This means that 2GRs will develop business model innovations to compete in the retail and wholesale markets.

Recalling the post Synthesis Proposal Agreement of EWPC, the essential generic market model paradigm is: retail competition with active demand and ultraquality transportation. So there is a need for ultraquality transportation, which requires integrated transportation (transmission and distribution) operated on the Normal State (probabilistic concept) on every utility because demand is active and endogenous. For the same reason, no entity related to the retailer should operate transportation at all. That is a requirement for incumbents in the EU to handle, even for UK operators.

In short, as part of the ongoing generative dialogue, I see EWPC a lot closer.