lunes, marzo 21, 2016

The Electric Power Industry is Missing a Vibrant Retail Market

Jose Antonio Vanderhorst-Silverio | Dec 22, 2009

Under the blog post On the Evolution of Technology, by Jason Pontin, the Editor in Chief and Publisher of Technology Review, I posted the following comment:
Hello Jason,

Thanks for a very good article that beg me to read Rotman's three page article as it fits with the work I have been doing on the electric power industry. Following your lead that "New technologies are missing many things, but especially their markets," I will tell you my story on the missing retail market for the power industry. Readers will get more details by hitting the hyperlinks of three references below.

This is someting I started in 1995. Almost four years ago, in the article An Alternative Business Case for Demand Response , I said (see the next two long paragraphs with updates within brackets) that the late M.I.T. Professor Fred C. 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 is an example of the airline industry that will help explain the importance of DR. The DC-10 [it was actually the DC-3] initiated commercial air travel at the time of the Great Depression, it happened when all required technologies became available, and were tightly integrated. [that is the underlying idea about basic innovations, taken from Peter Senge's Fifth Discipline, 'the leader as designer' which seems close to Brain Arthur's new theory]

In that same sense, electric power systems will also “fly” reliably (a very low frequency and duration of crashes) and experience commercial quality electricity under complete deregulation [instead of complete deregulation, the Electricity Without Price Controls Architecture Framework (EWPC-AF) began to emerge three years ago], when Demand Response gets tightly integrated with AMI and other existing technologies under a proper market design. DR will enable the system to operate within the Normal Operating State, returning back as soon as possible from the Alert and Emergency States with Demand Response actions. This is poised to be the End-State of the electricity industry for the long run.

I first applied Brian Arthur's insights when I made the presentation A Generative Dialogue to Reach the End-State of the Power Industry at Carnegie Mellon University, in March 2007. In the 7th slide, entitled "Small Chance Events Leading to An Inferior Path," I wrote two bullets:

The death of Fred Schweppe in 1988 and a misunderstanding by William Hogan in 1992 of Schweppe’swork on the energy marketplace were "small chance events early in the history of' deregulation that "tilt[ed] the competitive balance," to an inferior solution path, as W. Brian Arthur explained in general in his Scientific American, February 1990, article "Positive Feedbacks in the Economy.”

The events, were naturally pulled by strong vested interest community, by neo-liberalization, by the debating system approach, and by the regulatory design, which self reinforced each other.

To make the story short, I recently wrote the post States that Implement a Heterogeneous Grid are Poised to be the Winners to introduce the emergent holistic EWPC-AF, which I claim is a basic innovation for the power industry.