domingo, mayo 23, 2010

Power Industry State of the Art that Emerged from The Network Grid (TNG) Conference

Architecting evidence on the urgent need to simplify the power industry is based on the serious flaws of an ineffective and highly complex system-of-systems interoperability approach that keeps in place anticompetitive “Walled Gardens.” Unless there are smart markets with efficient and effective pricing, together with real customer choice, customers will not be able to be empowered with innovative technologies to be smart. Retailers will participate in retail and wholesale markets, developing business models to help balance the resources of the supply side and the demand side as much as it is viable, feasible, and desirable. Competitors do not need to wait for a homogeneous infrastructure to be in place. As the demand side risk management tool, demand response is here to stay. The killer application on the residential retail market will emerge as a one stop integrated service.

Power Industry State of the Art that Emerged from The Network Grid (TNG) Conference

By José Antonio Vanderhorst-Silverio, Ph.D.

Creator of the EWPC-AF

Systemic Consultant: Electricity

First posted in the GMH Blog, on May 23rd 2010.

Copyright © 2010 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.

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Highlights from the Networked Grid Conference in Palm Springs, May 18-19 2010 is a very timely post written by Niall McShane in his Smart Grid Seeker Blog. This is a comment in response.

Hi Niall

Thank you very much for a valuable witness report on what evolved on the state of the art at The Networked Grid (TNG) conference. You have done a real Smart Grid Seeking job, mainly from the telecom networks perspective.

As a remote witness, I was also virtually there before and now after the presentations (also with your timely help), with contributions about the emergent Electricity Without Price Controls (EWPC) Architecture Framework (EWPC-AF). I understand that TNG conference had a great positive impact on the EWPC-AF as I now discuss the contributions from our perspectives. That I was there can be seen from the comments I posted on the discussions (which are an integral part of this article) under the following four articles:

Discussions (taken from a web page of Greentech Media, every line ends with the articles’ date and the number comment on Saturday May 22):

#1. The Networked Grid: Does the Residential Smart Grid Have a Killer App? 05 19 10 11

#2. Smart Grid Trends: Deja Vu All Over Again? 05 17 10 11

#3. The Networked Grid: 5 Trends to Watch 05 18 10 3

#4. How EVs Will Save the Smart Grid 05 11 10 3

The articles of the discussions #1 and #3, which start with TNG and which you mentioned in the post Highlights from the Networked Grid Conference in Palm Springs, May 18-19 2010 were written after the conference, the other two were posted before the conference. As a result of the discussions before the conference, I wrote the EWPC post Does ElectriNet(SM) Provides an "Walled Garden"? Then I integrated discussions #2, #3 and #4 into the EWPC post Adding Smart Markets to Smart Customers and the Smart Grid at The Networked Grid.

To get a more complete picture of the state of the art in the Networked Grid, I strongly recommend reading all four articles and their comments, the two related EWPC post and this EWPC article. Here I will concentrate on placing under perspective the key aspects of the EWPC-AF and responding some of your sharp observations in the initial summary of TNG, quoting also other EWPC posts (right now there more than 200 posts, more than 800 comments discussed and more than 600,000 views in the EWPC Blog).

As a common thread on all four discussions, the emphasis is centered the EWPC article State Governments Need to Unleash the Benefits of the Next Big Thing, whose summary says: “As the utility business model has outlived by many years its useful economic life, state legislatures need to produce as soon as possible emergent regulations that enable the Next Big Thing - business model innovations - under a market-based approach.”

By the way, your comment about IOUs rate of return, on the presentation of Stephen Johnston, CEO of Smartsynch, is covered in a comment I posted under Jesse Berst’s Smart Grid News commentary Smart Grid Technology: Cellular Emerges As Viable Communications Choice, where I used the above EWPC article to say that “…it is essential for state governments also to be aware of the following quote of your article: "On the financial side, the cost of using a public network is treated as an operations expense. The cost of building your own custom network is treated as a capital expense. Investor-owned utilities have the potential to earn a regulated rate of return on capital expenses, hence their preference for that route."

As seen in the next paragraph, from a system architecting point of view, the idea of the “… numerous comments about the need for a system-of-systems approach to implementing the Smart Grid and making sure that all the integration points that will enable the maximum integration of intelligence across the enterprise are being realized” is completely flawed. It is not sufficient to introduce interoperability, before you have the necessarily effective operability.

Under a systems architecture approach, the subsystems of the whole system should be the result of systems architecting, as can be seen in the EWPC article A Single System & the Enterprise War, where it says: “…In response to the suggestion to change to system-of-systems, the synthesis of the response was that to optimize the architecture, subsystems will result from the enterprise architecting job.” In fact, that is how the EWPC-AF itself emerges. Please take also a look at the EWPC-AF article, which is already quoted on discussion #2.

The summary of the EWPC-AF articles states that: “A new approach to power energy policy design, based on system’s architecting heuristics, has led to an emerging simplified synthesis of the power industry regulatory policy. Instead of undergoing business as usual regulatory proceedings, the approach to the Electricity Without Price Controls Architecture Framework is poised to replace the Investor Owned Utilities Architecture Framework and its incremental extensions that have evolved by analytic patchwork as a extremely complex system.”

About your “…concern that the emergence of distributed generation technologies that are affordable at the upper echelon of the homeowners marketplace could lead to more affluent homeowners and communities separating from the grid and leaving the utilities to service only the less affluent, creating a differentiation between the haves and the have-nots in energy,” please take a look at the EWPC post The ‘Genius’ of the Macrogrid ‘And’ Truly Fair Microgrids, which is also addressed in discussion #2.

I agree with you that “Terry Vardell of Duke Energy Company … statement to the effect that demand response [DR} was a temporary solution… is very far fetched.” As can be seen in my 2005 article An Alternative Business Case for Demand Response, “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.”

Finally, you repeat the questionable assumption that “The killer apps will emerge only when the infrastructure is in place and innovators can begin to see the possibilities to create those applications.” Please take a look at the complete discussion #1, from which I take out of context that “… as the killer application on the residential retail market is foreseeable, and will emerge as a one stop integrated service, to be provided by competitive Second Generation Retailers (2GRs). An early version of the description of 2GRs can be found in the Internet link.

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