AMI Services Solutions for Deregulated Markets Part 2

Len Gould and Prof. Banks added comments to the article AMI Services Solutions for Alberta’s Deregulated Market, to which I responded as follows:

Hello Len and Prof. Banks,

Thanks Len for the reference to my comment.

I have not referred any comment to Prof. Banks for quite a while, as he decided no to dialogue with me. (I don't believe debate is productive in such a complex matter). It seems that has change today. Knowing that Prof. Banks leans towards the skeptics’ space on the technology adoption life cycle, I will write for the enthusiasts, visionaries, and pragmatics. Conservatives will only join later. Skeptics maybe never join.

Electricity market share of the energy pie seems to be growing in the future. Economic efficiency of the electric power sector is and will be of the utmost importance.

The old paradigm of electricity - the vertical utility industry - will fade out and a new paradigm will take its place. The new paradigm is emerging as the customer becomes an active element of the power system. That is why the development of the resources on the demand side becomes important. As transaction costs become lower and lower, efficient pricing in time and space replaces average prices. As customers learning experience increase the need for a regulator to purchase electricity for him disappears. A complete market develops on a value chain wholesale, retail customer.

Most electric power reforms are unstable. For example, European market liberalization will run into a wall if distribution is kept separate from transmission and let generators exercise and abuse market power. Market power is neutralized by keeping a T&D only wires monopoly that assures long run and short physical risk management. In the new paradigm center stage changes from generation to the T&D infrastructure.

The result will be a robust, complete and fully functional non-real time market that does not interferes with real time power system operation, as the T&D (engineering) system operator takes charge of committed resources on the supply and demand side. This is a short comment on some of the elements of EWPC. There is no need to cover-up, as the intrinsic logic is powerful. I like to see competing paradigms that are also emerging.

For more details on EWPC see the posts Will Cheaper Oil Burst the EWPC Bubble?, Worthy of Repeating - Dr. Hyde Merrill, and their links.