Missing from the GridWise approach is the need to restructure as soon as possible the power industry to eliminate the barriers imposed by "the lumbering old style utilities companies" and to manage the physical systemic risks of power system failure. The EWPC market architecture and design should be the End-State of the power industry for quite some time to enable the mentioned approach.
Missing From Gridwise
By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity
First posted in the GMH Blog, on March 21st, 2008.
Copyright © 2008 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 email@example.com to contact the author for any kind of engagement.
The NewDaedalus article “Do you choose Incrementalism or Markets?” starts with “The Grid doesn’t get better because we keep on relying on central planning to make it better. Any efforts developed exclusively by the current stakeholders and run through the utilities commissions will predictable and incrementalist. There is one (at least) that is not. The GridWise Architectural Council is trying to create open interoperable protocols to enable vibrant markets to develop, ones that are not driven by or yoked to the lumbering old style utilities companies.”
The creation of open interoperable protocols is great progress to the future of the power industry. However, the first sentence of the above paragraph jumps into an unnecessary conclusion, because the power industry Grid need to be better understood. Once understood, the elements to replace as soon as possible the old style utilities companies will be enabled to eliminate most barriers to progress that will enable breakthroughs instead of incrementalism.
As explained in the EWPC article Free Market and Central Planning, Under R1E2, the utility Grid needs to be separated into the utility Grid and the utility Enterprise. The utility Grid should keep relying on central planning to make it better as depicted in the EWPC article The Smart Grid Transportation Utility.
At the same time, the utility Enterprise needs to be replaced by an open market technology neutral Second Generation Retailers - 2GRs under the breakthrough EWPC market architecture and design. The new EWPC stakeholders will enable innovations as suggested in the EWPC article Shrinking the Regulator’s Jobs, whose summary says:
“There is a need for a shared vision to restructure the power industry, shrinking regulators jobs to price controls of the remaining transportation electric utilities and letting end-customers make their own investments and purchasing decisions of electricity. The shared vision needs to go to the public opinion so that high level political decisions are enabled to restructure the electricity industry and shrinking regulators jobs.”
From the perspective of power system planning, operation and control it is going to a long transition to arrive to a truly competitive and commercial service that the NewDaedalus article states: “Live power pricing will drive storage development better than any number of central government programs; better storage will make responsiveness to price signals easier. From there, every means of alternate energy, no matter how unreliable, become another way to charge the storage. Sites will have multiple generation strategies depending upon their location, winds, sun coverage, thermal posture…”.
To bridge the long transition, that will shift the direction of power on the transportation system, what needs to be added to the GridWise approach is found in the EWPC article Customer Reliability and System Reliability. Similar to bank runs that fuel systemic risks, live power pricing will lead, when less expected, to power system systemic risks in the long run (system adequacy) and the short run (system security). The economics of electricity service will still depend on central station generation for a long while. That is why I claim that EWPC is the market architecture and design is the End-State of the power industry for quite some time.
Reference and context: A Power Grid Smartens Up, by Peter Fairley, MIT Technology Review.