On the End-State of the Power Industry Part 6

Reference: Divorcing Electricity Sales from Profits Creates Win-Win for Utilities and Customers

Thanks Len for bringing again a theme in which we disagree: metering as a natural monopoly. Metering is only one element of the interface between customers and retailers, as can be read from the comments under Energy Bill 2005 - A Waste of Time?. The development of the resources on the demand side - which has barriers today in most states - is the key to business model innovations, where AMI is a differentiating element.

Making incremental changes is a way to extend the useful life of an outdated business model. What is needed is "tunneling through the cost barrier" to avoid altogether unnecessary expenses. I copy a comment I made last year on the New York Times.

Nukes vs Energy Efficiency and Demand Response

The argument that nuclear power is green needs to consider nuclear waste costs to be complete. Natural Capitalism, the book written by Hawken, Lovins and Hunter Lovings, has enough insights about waste reduction to develop different and solid arguments, even without considering nuclear power. Performing whole-systems engineering of the electric power system will lead to the preservation of ecosystem services through the integration Energy Efficiency (EE) and Demand Response (DR) to other existing technologies to sharply increase economic efficiency. The book recommends starting to solve the problem from the demand side with EE, in such an aggressive way as to avoid capital investments, in generation, transmission, distribution and utilization, by what they name as "tunneling through the cost barrier". DR is a risk management tool, based on information technology and advanced metering, which leads to fully functioning, and the integration of, wholesale and retail markets. DR is like the glue to integrate distributed generation and storage resources, and the means to mitigate short run price volatility, and long run boom-bust behavior. Just as the DC-3 designers had to integrate 5 technologies, to ushered in the era of commercial air travel (see The Fifth Discipline of Senge), the last of which was wind flaps, so are DR and EE the needed technologies to start the era of reliable and cost effective commercial electric power system.