Lowest Cost Electricity Generation is Just Intuitive

Jose Antonio Vanderhorst-Silverio wrote on 9.3.07

To all readers Part III

"Lowest cost electricity generation" is a good statement to get many readers on the same page. It is also good for Joseph, because his "reality check" that I quoted above is mistaken and it also stresses even more that he might not be representing ordinary folks well. I repeat, Joseph Rosenthal said before: "It is better to just do one big thing, in my view, like build a nuclear plant, and then do your best to regulate the cost using traditional rate principles. If you try to do 10 good small things, you'll wind up doing 90 bad small things for campaign contributors. That's the reality check."

The idea of a system with just one big thing is very, very costly, because the parts are unreliable and the load is variable. That is why peaking units are required and they are the marginal units.

Lowest cost electricity generation does not make any sense to a system engineer, nor to the end customers that pay for it. As an old system planner, I will tell facts and the origin of the idea.

Under vertical integration, systems engineers made long run least cost expansion plans and as a result came up with a generation mix adapted to the forecasted long term demand. Such optimization was to minimize the costs of investments, operation, maintenance and outages to produce reliable electricity.

To produce reliable electricity is a property of the whole system not of the parts. To have 24 hours of loss of load probability - as many systems were designed - generation reserves of 20 or 25 percent resulted for many systems.

I read that PJM had recently more than 30 percent reserves. That is one of the main reasons that demand response is not attractive, because it makes obsolete a lot of generating units.

That is also why retail customers get rates which are way above the cost of base load generation. They have a lot of coal units, but ask what is the retail rate residential customers are paying for.

Hydro and nuclear seems a good mix. However, with a very uncertain future demand and with a lot of climate changes working out, I would not bet on it and have some gas installed. Or better yet, I would develop the resources of the demand side to integrate it as active demand, or said in other words develop an effective rationing system or still in another way change demand from inelastic to elastic.

Sorry for the class. But I fell it was needed for some of the people posting their ideas without sufficient understanding of electric power system planning.

Don Giegler reply to the above post on 9.3.07

Seems like a pretty close-minded lecture, Jose....

Jose Antonio Vanderhorst-Silverio responded to Don Giegler on 9.4.07

Don and anybody else that might perceive my Part III post as closed-minded.

It seems, but the post is not closed/minded. It is just that a power system is a very complex system that cannot be planned and designed by debate, among stakeholders groups. The system should be design by a system planner leading to ultraquality transportation.

Some highly respected professionals in the IEEE said that an electric power system is the most complex machine ever built. One of the greatest mistakes done in deregulation was the lack of leadership that the engineering community had at the outset of deregulation. Any one that needs more details please read EWPC: People Coordinating and Cooperating with Electrons Part
2.

The conclusion is that since market architecture and design, like EWPC, was not considered in the decade old debate, a lot of value destruction has resulted. With EWPC the deregulation debate should be over. Ohio's re-regulation process is great opportunity for the whole world, because the utilities already recovered deregulation costs. European Union authorities might also be very interested in looking deeply into the issue, as the July 1st deadline is over.