jueves, abril 30, 2009

Why President Obama Needs to Keep Working on Energy

'Pleased, but not satisfied' Energy crops up at Obama’s 100-day press conference is the commentary posted on 29 Apr 2009 by Kate Sheppard in the GRIST website. This is my comment:

Besides the high level of complexity of the power industry, it is important to understand the root cause of why President Barak Obama mentions “energy among the issues they need to keep working on.” The root cause is a flaw at outset of power restructuring. The flaw was not to accept that the Investor Owned Utilities (IOUs) Framework was not longer useful, because its monopolistic business model of IOUs winning rate cases to state regulators was plain obsolete. There has been a need since EPAct 92 for business model innovations in the open market.

Power industry restructuring was set for wholesale competition, which resulted in congestion and price spikes, as the rule economy first (E1), power system performance second (P2), was applied. Soon enough a fix was found with the introduction of capacity markets, which essentially meant a counter reform towards the IOUs Framework.

Organized wholesale markets have been operating in several jurisdictions of North America with the E1P2 rule. Even less of those jurisdictions are actually implementing retail markets. The COMPETE Coalition seems to be happy that those retail market should depend on the corresponding wholesale markets.

The majority of states of the union have kept the IOUs Framework without such organized wholesale markets. That signals a failure of the reforms which are now more than a decade old.

Smart Grid designs based on the E1P2 rule suggest that every customer should have a smart meter in order to participate in the real-time market. Such a rule may induce an excessive investment which may be subject to early obsolescence, especially if the smart meters are the result of huge bets by state regulators.

The IOUs Framework incremental extensions based on the E1P2 rule is also the basis for IOUs and state officials for finding that DOE ceiling for grant funds are insufficient.

The Electricity Without Price Controls (EWPC) Framework is based on the reversed P1E2 rule. The performance first has its origin in the ultraquality imperative of system architecture of space flight vehicles, nuclear power stations, and complex industrial installations.

P1 is what allows the emerging whole power industry to be separated into a regulated high performing power system (with neither congestion nor price spikes) and an open market on the value chain, generation, retail, prosumer.

After operations planning, demand and supply commitments and security constraint spot pricing, in time and space, are set. Deviations at the real-time operations balancing market result in economic transactions that are the responsibility of the supply and demand wholesale market agents.

Under EWPC wholesale and retail markets mutually reinforce each other, without the need for capacity markets. Second generation retail markets concentrate on the development of the resources of the demand side to enable such reinforcement. Below, please find the 10 most recent EWPC Framework articles which try to answer many key issues going forward:

The Truly Smart Grid

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