We Need 2GRs as the Forecast is Always Wrong

I am glad that Len is agreeing to the learning involved in a generative dialogue, based on the principle that “I am not my opinion.” Great!

The posthumous dedication to Fred C. Schweppe in the book “Spot Pricing of Electricity,” says: “Fred created spot pricing and proved, again, that ‘The forecast is always wrong!’” It is the response to wrong long run forecasts that leads to “power plant build up” and “involves often costly systemic delays.” It is too late when discovered. The action suggested is to develop the resources of the demand side with 2GRs starting from the long run.

In accordance with the post Synthesis Proposal Agreement of EWPC, the essential generic market model paradigm, Schweppe’s work is extended. The synthesis is open to enhancements in learning from the emergent future.

Technologies enthusiast, visionaries, and pragmatics readers are advised to decide for themselves on the need for 2GRs. In that sense, in addition to what is said in the post in which Todd Defends Len Once Again, please consider at least:

From the post EWPC a Customer Orientation:

Integrating energy efficiency, demand response and other services with advanced metering to the homes makes a strong business case for 2GRs as the developer of integrated resources of the demand side. This is a change from a supply orientation with flip the switch service (exogenous demand) to a customer orientation.Demand can thus become endogenous in power system planning, operation and control, completing a (demand vs. supply) fully functional market, with both wholesale and retail competition performed with 2GRs in the value chain from generation to customers. That is another angle of what I been calling EWPC.

And from the post The Purpose Retailers Serve Customers:

Retail-marketers then take control of the strategic Enterprise Solutions [customer facing systems], developing innovative business models [investments by customers and/or retailers in AMI, DR, distributed generation, distributed storage, EE, etc. are not independent decisions in the long run]. As each customer selects what he perceives is the maximum value addition, the economy as a whole maximizes welfare.The last phrase states another purpose of retailers and is the essence of the long run contractual relationship of a customer and what is now known as 2GRs. For more details on my response to Len the reader is advised to go over near 19 energypulse articles in which I patiently responded that his short run electricity market model does not work, as electricity markets are unique.

To integrate demand into power system planning, operation and control, retail customers that invest to respond to real time prices need to advance their plans, to a 2GR when in the future the system is about to operate close to capacity. After investments are done system adequacy studies require what customer capacity is in place to perform when required under a contractual relationship with the 2GR. That information and more is required in advance to plan system expansion and operation. Many retail customers will not find it attractive all the red tape and cost that goes along to become themselves 2GRs, as it is just totally inefficient and ineffective. That is another purpose of retailers.

© 2007. All rights reserved by José Antonio Vanderhorst-Silverio, PhD.