martes, abril 07, 2009

Forget Demand Side management (DSM); Think Demand Side Innovation (DSI)

To make the emergent power industry smarter, there is a need to restructure the power industry to enable Second Generation Retailers integrate the require demand side innovations to power system planning, operation and control.

Forget Demand Side management (DSM); Think Demand Side Innovation (DSI)

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

EWPC Systems’ ArchitectFirst posted in the GMH Blog, on April 7th, 2009.

Copyright © 2009 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 to contact the author for any kind of engagement.

In the EnergyPulse article Does Smart Grid Make Utilities Smarter?, by Hahn Tram, VP Enterprise Solutions, Quanta Technology, the case for reform of the power industry is set, as Mr. Tram writes that:

…to support utility customers in applying the advanced energy demand management capabilities and in navigating through the number of options available to them, the utility's Customer Service Representatives (CSR) will need to have the same, if not greater, capabilities at their disposal … As well, because the typical CSR and consumer may not be so tech savvy, the energy portal must be "user affectionate." Smart Grid needs an AOL, Google, or Yahoo!”

The readers should have no doubt that Mr. Tram is actually calling for market innovations to make the power industry smarter on the demand side. The way to do it is to restructure the power industry away from the investor owned utilities (IOUs) paradigm and into the technology neutral electricity without price control (EWPC) paradigm.

Under EWPC, competitive Second Generation Retailers - 2GRs aim to develop such “user affectionate” business model innovations in a market environment similar to that of the computer and information technologies industry. That is the way to make the power industry smarter. Business model innovations and the necessary market environment are described in the EWPC article The Sixth Disruptive Technology. 2GRs will enable demand integration to power system planning, operation and control.

Customer service representatives belong to competitive 2GRs that aim to develop business model innovations. That way humans could "operate at the same decision frequency as we did 10,000 years ago," as Daniel claims.

I propose that that EWPC paradigm shift involves also a shift from demand side management (DSM) to demand side innovation (DSI). Today I came up with the idea of DSI as a replacement of DSM, while twittering during the PowerUp Canada. This was the tweet “gmh_upsa: Thanks @NaomiDevine DSM is utility oriented. Please ask McArthur about the new customer oriented term "Demand Side Innovation" #powerup.”

Then I looked to see if there was a formal definition of DSI and I could not find one. Wikipedia does not has even an accepted one for DSM. A good definition of DSM is given by the Energy Information Administration in the EIA Energy Glossary:

The planning, implementation, and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. It refers to only energy and load-shape modifying activities that are undertaken in response to utility-administered programs. It does not refer to energy and load-shaped changes arising from the normal operation of the marketplace or from government-mandated energy-efficiency standards. Demand-Side Management covers the complete range of load-shape objectives, including strategic conservation and load management, as well as strategic load growth.

There is no doubt that it is utility or supply oriented definition. What is needed then is to reform the power industry to enable DSI to be able to develop needed business model innovations.

Finally, there is one of many examples of the informal use of DSI that I found in the filing “In Re: Rule Development proceedings re Proposed Renewable Portfolio Standard Rules 25-17.400; 17-410 and, 17-420 F.A.C, Docket No. 080503-EI Dated: September 3, 2008.” The introduction of FIPUG COMMENTS WITH RESPECT TO PROPOSED RPS RULES says:

The Florida Industrial Power Users Group through its undersigned attorney has attended and participated in the concurrent workshops on Energy Efficiency and Renewable Energy that the Commission has conducted over the past twenty months. The FIPUG representative makes the following general comments with respect to the proposed rules. The rules are well thought out and well drafted, but they preserve an existing utility supply model that discourages demand side innovation.

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