miércoles, noviembre 14, 2007

Storage is Ready to Cross the Chasm

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 Chasm is because of the “native load” barrier that unnecessarily extends the life of the obsolete vertically integrated utilities paradigm.

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.