jueves, agosto 30, 2007

Final: IMEUC not a Market Architecture and Design

Reference and context: under the energypulse.net article Finding Opportunity in the Global Warming Challenge, by Jay Stein, Executive Vice President, Research, E Source. with 72 comments as of 8.31.07.

By now, readers have the answer to Todd's statement on the second day of comments under this article: "Jose Antonio, I'm curious of your hangup with Len."

Reality: everyone should be curious of Len's hangup with EWPC.

I am really asking for help. Is Len and/or Fred, working for some vested interest or are they just simple skeptics or just good guys trying to find the truth? Does anyone have info to that respect? I could supply a post about Fred being a skeptic, that somehow he run away from two times earlier.

EWPC market architecture and design is better than vertical integration (Model 1) which has outlived its useful life. EWPC is better than incomplete and/or no-functional markets, based on transmission open access (Model 2) and its extension which costs more than Model 1 when for example capacity markets are added.

For the benefit of Fred, I will recall a post under Playing with Fire (see A Generative Dialogue Without Illusions Part 12 and its context):

Thanks Fred for your timely response. I guess you are right that "no tinkering with the demand side can compensate for gaming and lack of investment on the supply side" is highly likely under Model 2 and its piecemeal extensions.

To face gaming and lack of investment under EWPC there is an ultraquality requirement to be performed by a system engineering institution. The commercial activities of generation, and wholesale and retail of electricity to end-customers need to operate under a no-nonsense prudential regulation.

If the expert to the authorities in China is pushing Model 2 and its extensions, I also agree that your "anti-electric deregulation performance" statement is very likely to occur. If vertical integration – Model 1 – becomes the default solution, the little guy is bound to pay more for the investments than he should. The development of the resources of the demand side equity criterion - Market 3 - should lead to the effective development of the Chinese market at the bottom of the pyramid, which is the largest in the world.

Unless Northamerican, Chinesse and European leaders listen very closely to the first and second part of these comments, discussions, debates, and dialogues, they will certainly be playing with fire. My humble recommendation is that they retain a system architect expert on EWPC to help them coordinate a generative dialogue to come up with a new vision and develop a transition to EWPC. An expert on gas without price controls (GWPC) should no be difficult to develop in a parallel generative dialogue.

As the readers can attests, I gave the benefit of the doubt to IMEUC as a market design and architecture, but as his author was unable to produce a synthesis, nor resolve its internal contradicitions, it is now very clear that it is not such thing. In electric power systems, optimization is done for the whole, no by optimizing the parts as IMEUC does. If anyone needs the post on wholes and parts, I will be happy to post it.

Fred, as Len does not have one, what's your market design and architecture?

If anyone has a real market architecture and design, please by all means, proceed to make a synthesis like the one I have done in Solving the Tough Electric Power Market Problem for everyone to see. Meanwhile, EWPC is the winning market design and architecture.

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