The next 10 to 15 years will see major changes - perhaps even classified as upheavals by future historians - in the distribution of electricity to businesses and households throughout the United States. The exact nature of these changes and their long-term effect upon the economic well-being and security of the country are difficult to predict. But a consensus already exists among those working within the industry, politicians and regulators, economists, environmentalists and, increasingly, among the general public, that fundamental changes are inevitable.
The existing paradigm of nationwide grid interconnection – brought about primarily by the deregulation movement of the late 1990s – emphasizes the generation of electricity at large plants in various parts of the country and then distribution effectively nationwide. There are two reasons why this paradigm is failing. First, the transmission/distribution system was not designed as a nationwide grid; it is aged and is marginally stable. Second, political/regulatory/social movements are making the construction of large generating plants increasingly difficult, expensive, and eventually infeasible.
The previous, historic paradigm made each utility primarily responsible for generation, transmission and distribution in its own service territory; this had the benefit of localizing disturbances and fragmenting responsibility and expense. With loose interconnections to other states and regions, a disturbance in one area, or a lack of resources in a different one, had considerably less effect on other parts of the country, or even other parts of service territories.
For better or worse, we now have a nationwide interconnected grid, albeit one that was not originally designed for the purpose, and which it serves inadequately. It could be improved, but the expense would be massive and probably cost prohibitive. Knowledgeable industry insiders calculate that it would cost more than the current market value of all U.S. utilities combined to provide the upgrades necessary for the modernization of the nationwide grid and replacing its large generating facilities over the next 30 years. Obviously, the paradigm is going to have to change.
The reasons these changes are going to continue to accelerate and that various tipping points have been reached are fairly easy to see. They include:
The entire U.S. transmission/distribution system is aging and becoming less stable. Because of virulent environmental and NIMBY (not in my back yard) resistance it is very difficult to site new transmission that will be needed to deal with supply/demand issues.
While the problems are clear-cut, the solutions are not yet set in place. At best, smart grids and smarter consumers are only portions of the answers. They will help reduce demand, but probably not enough to make up the projected generation shortfall. And the development of these two concepts still is evolving. While most utility executives see the problems, they continue to be fairly uncertain about the solutions and have considerable distance to go to have them in place, as seen in the Sierra Energy Group survey conducted reporting January and February.
According to that survey, more than 90% of utility executives now feel the Intelligent Utility Enterprise and Smart Grid (IUE/SG) are an inevitable part of their future. This finding was true of all utility types supplying electricity. While utility executives understand the problem and the IUE/SG approach to solving part of it, they are somewhat behind in planning on exactly how to get the pieces in place. That “planning lag” for the vision is shown in the following graphs:
Part of the planning lag can be attributed to forces outside the utilities themselves. While politicians and regulators have been emphasizing conservation and demand response, guidelines for how this will work have been lacking. While a number of states have established mandatory green power percentages -- most of which cannot reasonably be met with existing technology, according to most experts -- Congress failed to do so in an Energy Policy Act (EPACT) adopted in December. And, while the EPACT of 2005 “urged” regulators to “urge” utilities to install smart meters, it was not required and regulators have moved at different speeds in different areas on this “urging.”
Getting from where utilities were (and in many respects still are) in the last century, to where they need to go by 2018 isn’t a problem to be solved overnight. Utilities traditionally have evolved slowly. Executives know there is a need for the technological evolution to accelerate rapidly, but, as mentioned earlier, there still are a lot of questions about what you do first. Do you install AMI as rapidly as possible? Do you emphasize automating the grid and adding artificial intelligence? Do you continue to build out mobile systems to push data (and more detailed instructions) to field crews who soon will be younger and less-experienced? Do you rush into home automation? Do you build windmills, solar farms? There just isn’t enough money to go around, at least not at electricity rates that won’t bankrupt the nation and most citizens.
A “Smart Grid” implies that it will become increasingly self-operating and self-healing. The technology for a lot of that already has been developed, though not widely deployed. Utilities have been working on basic distribution automation (DA) -- being able to operate the grid remotely -- for a number of years.
Several Steps
Several steps are involved in getting from the current state to the IUE/SG. These include pushing information all the way from the individual meter to the executive suite -- or wherever vital business decisions can be made. We asked utility executives how they’re doing in this area, with the following results:
Once the information is available, utility executives will need business intelligence systems to help analyze and support those decisions. In this year’s survey, we took a benchmark of how well they believe they are doing. Those results are show in this chart:
The final area the IUE/SG concept is expected to envelop is at the residential level. Residential home automation will enable utilities to control usage directly -- through adjusting thermostats or compressor cycling, or other techniques. Again, the technology for this is well advanced, but there are very few installations nationwide. A number of experiments were conducted with home automation in the early- to mid-1990s. Some homes were automated and even some subdivisions were built under the mantra of “Demand-side Management.”
“Demand Response,” the current term used by politicians is considered more “politically correct,” though the net result will be the same. Home automation will enable regulators, through utilities, to “ration” usage at need. They don’t use the term, but if Global Warming concerns continue to seriously impact the ability of utilities to access adequate generation, that is going to be the effect.
In the distant future, as technology continues to advance, electric generation in the U.S. likely will include a mix of energy sources, many of them distributed and green. However, in the next 10 years -- the window of most concern to NERC on the generation/reliability side -- there is no way green energy will be ready in sufficient quantities to forestall a significant shortfall within that period. Right now, green energy supplies less than 3% of U.S. demand, nuclear about 20% and coal 50%. The rest comes from hydroelectric dams. Nuclear is the only viable option that is possible, but sufficient nuclear energy likely will not be built in time because of on-going environmentalist and other opposition.
The NERC Reliability report of Oct. 15 points strongly toward a significant shortfall of electricity about 10 years out that could lead to rolling blackouts and brownouts in parts of the country that have not experienced them before, plus mandatory "demand response" at the residential level, which -- to call a spade a spade -- is rationing.
So what are utilities to do? They are going to have to get much smarter (IUE/SG) and they are going to have to prepare for rationing (AMI/Demand Response). As seen in this study, they still have quite a way to go in these areas, but this at least is something that can be -- in large part -- in place within 10 to 15 years. The technology for IUE/SG already exists, it is relatively inexpensive (in comparison with green energy and building nuclear plants) and it is something the utilities can do with relatively little regulatory oversight. In fact, regulators are encouraging it.
The future seems to be getting clearer, just scarier. IUE/SG is a major bridge to getting there. And, even if the apocalyptic scenarios fail to develop -- Global Warming is debunked, or new generation sources develop much more rapidly than expected -- being an intelligent utility with a smart grid probably is a very good idea anyway. Utilities are working on it, and at an accelerated rate, as shown in this study.
Meanwhile, many vendors, especially on the T&D side, still are delivering individual pieces of the puzzle -- they’ve worked within those utility silos for long, they sometimes have difficulty seeing the big picture. But utilities see it and they’re going to be increasingly looking to vendors to fill gaps in the technology to make the IUE/SG effective in dealing with the impending problems.
Comments
You make it sound so scary. Tell us, why should a residential customer prefer A) a system where consumption peaks exceed consumption averages by 150% resulting in heavy usage of expensive and inefficient short-run peaking plants, as say current California, over B) a system where the customer gets paid by the utility an amount equivalent to the difference in cost between B1) generating with simple-cycle gas turbines which operate only a few hours per month and B2) generating with continuously running high-efficiency baseload units?
Ease of implementation will depend entirely on the approach taken and the level of equitable sharing of the financial rewards. If a large part of the rewards are to be confiscated by the utility, or re-distributed to free-loader customers who contribute nothing to the solution, then, perhaps there might be a lot of opposition.
Check out this link on demand response and energy efficiency. I'm curious if you think the main topics are covered in this one.
I think the main point of this article is utility companies tending to divorce themselves from the growing need for generation sources, and focusing instead much more on T&D automation and customer rationing with DR and EE. I can understand their apprehension to dealing with generation if efforts for any new generation sources are being blocked at every political turn, for whatever reasons. Their natural response is to batten down their hatches and make T&D as reliable as possible, and prepare for DR rationing and EE if / when generation falls short in future.
Your comment about innovative simple-cycle gas turbines along with marketing reforms that incent consumers (alluding to your IMEUC market proposal) is precisely what SHOULD be talked about.
A big problem is our utility companies are accustomed to uniform billing for every customer. Adopting market reforms and handling lots of distributed generation sources would necessarily require them to provide targeted billing and services to consumers like we already see in Cable-TV and telephone companies. There is hope they will be forced into this mode of operation if they adopt widespread DR programs with consumers, since by its nature it will get deployed in a targeted manner i.e. not all consumers will have the same DR technology, and there will be big differences between utility-controlled versus consumer-controlled in-home technology as to how they work and are paid for.
Heath, the design of DR and EE programs as in your conference's discussion topics might also consider generation side planning and how energy markets might handle them. DR and EE cannot efficiently be planned in isolation of it, nor in isolation of engaging the consumer side much more with targeted billing and consumer incentives.
The critical issue is the "incentive vectors" which a company percieves. Trying to make an investor-owned entity both an efficient energy producer AND a conduit for convincing customers to reduce consumption is simply dumb, or some less polite adjective.
Hint: "... it provides regulators with ALL the tools needed to do customer incentive programs for efficiency and DR through the distribution monopoly."
You have written another timely article about extending the life of the obsolete power utilities business model of winning rate cases to the regulator. In response to it, I have written the article Leadership Answers What to do First, concentrating on the need to avoid costly and risky high technology investments, many of which will fail with a high probability, ending up unnecessarilly in the customer's rate based. Those high tech projects should compete as business models in the open market, under the EWPC market architecture and design paradigm.
The summary of the EWPC article goes as follows: "The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty."
Best regards,
José Antonio
In attempting to explain your EWPC proposals on this website, you are claiming system reliability has two sides. System crashes can be mitigated by a least cost mix of supply and demand risk management tools applied in time and space, which becomes your 'Ultraquality Transportation" requirement. This begs the questions WHO would be using these risk management tools and WHAT exactly are these tools? It is a well know fact of engineering that to make anything become ultraquality comes at a cost, and if the mix of tools your refer to need to be developed yet, then WHO will bear their development and commercialization costs.
You also state that using DR to achieve segmentation of customers would provide supply security, which becomes your Retail Competition. This begs the questions WHO would bear the cost to develop DR technologies, and WHO will control DR, consumers or the industry players? Among other concerns, there will be massive public opposition if industry players are allowed to control DR.
From what I can tell, Len's IMEUC proposal is the only proposal that provides the economic incentives to industry to bear these development costs to achieve all the above, while giving consumers full control over DR and enjoy competitive retailing.
The vertically integrated utilities paradigm developed those risk management tools for the supply side to operate at ultraquality. The transportation only utility will arrange to update them, to include the demand side. They will use them, with inputs from generators and retailers. Yes they come at a cost that like all software development purchase by utilities, in this case transportation only utility.
The obvious first means of segmentation is the wide range of customers' reliability requirements. 2GRs will invest to develop that and other market segments in the second phase of company vs. company competition. Some customers will agree to DR (contractual agreement to respond) others to DD (contractual agreement to interrupt) and others might be just price takers, etc.
No opposition will develop if customers have choice of 2GR and choice of service plans that satisfy their needs. Opposition will certainly develop if customers have no market choice, like having to purchase an IMEUC, one size fits all system that many don't need. The California PCT example is a precedent of such opposition developed under public pressure.
False Fact #24: "IMEUC proposal is the only proposal that provides the economic incentives to industry to bear these development costs to achieve all the above, while giving consumers full control over DR and enjoy competitive retailing."
Go ahead "enjoy competitive retailing" and read carefully the other 23 IMEUC False Facts - the link is above. If you are in a hurry, don't forget to check the EWPC article behing FF#18.
False Fact #1: "The obvious first means of segmentation is the wide range of customers' reliability requirements. 2GRs will invest to develop that and other market segments in the second phase of company vs. company competition."
2GR's will never be able to develop market segmentation based on various customer reliability requirements because any given customer will have dynamic reliability needs - some uses of energy in a home for example may be need reliable service while others at other times may not. 2GRs would have to be able to dynamicly change their service reliability for any given customer on demand from the customer. IMEUC specifically offers to do just this however.
Furthermore demand response technology for consumers must be developed and commercialized for it to work with and be part of DR or DD contracts. Its development hinges on the intimate involvement of players in the electricity industry, particularly the owners of the smart meters to bridge the communication between in-home DR technology and the electricity system. Expecting 2GRs or any other company to do this development is wishful thinking because no one is going to bear the huge cost to replace smart meters already deployed in the field to upgrade them for handling new capabilities. IMEUC puts smart meter ownership into the hands of the consumer where the consumer controls upgrading it or changing its functionality over and above basic metering. EWPC does not allow for this.
Before responding your post, first I like to characterize your interventions as ineffective first level mode of communication, as explained in the highly recommended article EWPC’s Tipping Point. I believe we can go to the third level.
Second, what you though was religious stuff earlier on EWPC, is now stuff that is better explained in the most read GMH post Many Market Matters to Change the Status Quo, where I repeated what Jim Beyer wrote to Len several months ago: “I think people concerned with replacing the status quo would be concerned about many other matters as well [like those that Bob calls “Len's IMEUC market reforms,” which are totally absent].” To grasp the whole discussion, I humbly recommend that we change to the 3rd level mode of communication and align our efforts to change the status quo.
That said, I suggest that you need to shift your deterministic paradigm to a probabilistic one, like that of the insurance industry. Reliability is a probabilistic concept based on long term performance. Hence IMEUC False Fact #25: "2GR's will never be able to develop market segmentation based on various customer reliability requirements."
I know that marketing to 100 percent of customers (which have widely different perceptions) will not work with the message: "IMEUC puts smart meter ownership into the hands of the consumer where the consumer controls upgrading it or changing its functionality over and above basic metering."
EWPC is not a physical solution: it is a breakthrough market architecture and design paradigm that allows all business models to compete for customers' market share.
(QUOTE) I think people concerned with replacing the status quo would be concerned about many other matters as well [like those that Bob calls “Len's IMEUC market reforms,” which are totally absent].” (/QUOTE)
I want and I will rephrase and enhance the message while at it. All bracketed expressions above are mine. They were meant to pinpoint my opinion while quoting, which may lead to unintended and clearly unnecessary confusion, especially with Jim's "I think."
Please change the message to the following paragraph:
"I think people concerned with replacing the status quo would be concerned about many other matters as well.” I add, that the many other matters quoted are those that Bob calls “Len's IMEUC market reforms,” which are absent to a great extent in Len and Bob's opionions of IMEUC, which they may change.
As you can see, I prefer to use "opinions" instead of Len's IMEUC or Bob's IMEUC, but I was first quoting Bob.
But, as time has already made EWPC the wining paradigm, as IMEUC doesn't even qualify, as a robust, technology neutral, and wide open (to any future business models) market architecture and design paradigm, you need not worry nor keep fighting anymore.
If you and Bob don't respond to the utilities status quo and would like to change it, I strongly recommend that both of you should concentrate on shifting from a win-lose level 1 communications mode to a level 3 win-win mode by helping push for the new EPAct. Now is time for real entrepreneurs to support a leadership move to expect a new EWPC EPAct that removes the legislative and regulatory uncertainty that will kick off company vs. company competition.
Once the public opinion is on the move, you and Bob may start to redesign the IMEUC system for a market segment on the EWPC market architecture and design paradigm to try to get a piece of the global competitive market.
We already have Transportation only utility companies in Ontario. There is no ultraquality requirement and there are regulated price controls, so it is not your EWPC as such. But even if the regulated price controls were lifted, the fact remains the residential billing meters are owned by the utilities, and they have zero economic incentive to add more DR or DD functionality to them, even if the government demanded they must adopt an "ultraquality" transportation system, unless the utilities passed on the costs to all rate payers.
The meters are crucial here because they are a direct measure of instantaneous demand and past energy consumption, and the two-way AMI smart meters provide a direct communication link into the electricity grid. They legally belong to the utility companies, and no visionary preaching by you about EWPC will be able to change this. Your refusal to acknowledge the central importance of AMI smart meters is also a clear indication of your lack of understanding of the technical AND economic issues.
Len's IMEUC proposals specifically require customer-owned smart meters, and it would give consumers the freedom to upgrade them with new functionality of their own free choice. Without similar proposals for the meters by you, EWPC is nothing more than a scam perpetrated by you, with the only possible intention to block revolutionary changes in the industry. Is it perhaps there are vested interests in the industry who want to block changes paying you to do this Jose? I don't expect you to admit to this, but it wouldn't surprise me one bit.
Keep on dreaming Jose.
You write that “There is no ultraquality requirement and there are regulated price controls, so it is not your EWPC as such.” The EWPC market architecture and design has a tightly integrated T&D transportation utility. Those new transportation only utilities can be though to arise from a restructuring of the old vertically integrated utilities (vintage 1970), that had a responsibility to serve, into one with a responsibility to transport under regulated price controls. Wholesale and retail sales go to a completely open market without price controls for the customers, which have demand response (in a wide sense, including DR, DD and EE) as a condition of service. False Fact #27: EWPC has transportation without price controls.
You write that “But even if the regulated price controls were lifted, the fact remains the residential billing meters are owned by the utilities, and they have zero economic incentive to add more DR or DD functionality to them, even if the government demanded they must adopt an "ultraquality" transportation system, unless the utilities passed on the costs to all rate payers.” As regulated price controls need not be lifted for distribution (as part of transportation), the integrated T&D transportation utility will receive tolls (controlled prices) as part of their regulated compact. However, one very most important fact is that under EWPC there are no incumbent retailers, as structural separation is forbidden.
It doesn’t make any sense at all for the utility to keep their meters and customers to take the risk to buy duplicate smart meters (many of them don’t need IMEUC as they invest in DD and EE instead under a 2GR contract) than can become obsolete in a few years or result in early system failure. Standards interfaces will resolve all hardware and software difficulties mentioned. Legal problems will be resolved by legislative and regulatory decisions. False Fact #28: “Your refusal to acknowledge the central importance of AMI smart meters is also a clear indication of your lack of understanding of the technical AND economic issues.”
In response to my suggestion “If you and Bob don't respond to the utilities status quo and would like to change it, I strongly recommend that both of you should concentrate on shifting from a win-lose level 1 communications mode to a level 3 win-win mode by helping push for the new EPAct. Now is time for real entrepreneurs to support a leadership move to expect a new EWPC EPAct that removes the legislative and regulatory uncertainty that will kick off company vs. company competition,” I received False Fact #29: “Without similar proposals for the meters by you, EWPC is nothing more than a scam perpetrated by you, with the only possible intention to block revolutionary changes in the industry. Is it perhaps there are vested interests in the industry who want to block changes paying you to do this Jose? I don't expect you to admit to this, but it wouldn't surprise me one bit.” Don’t forget to read very carefully the EWPC article Leadership Answers What to do First.
Keep on dreaming Jose. Thank you. Please read the EWPC article I Have a Dream Too.
You say that it doesn't make sense for utility companies to keep their meters, and the legal issues with ownership of utility meters will be resolved by legislative and regulatory decisions. This can only mean massive government intervention will take the ownership of the meters away from utility companies, and allow emerging 2GRs under your EWPC proposal to provide them to consumers with contracts that adopt DR and EE.
I have news for you Jose. Many large utility companies in North America are currently entertaining or have in some cases accepted proposals for AMI smart meters already. The new meters and their supporting AMI systems will soon be deployed without any standards for interfaces in place yet. There is indeed a very big risk of system obsolescence and system failures because the current meters will not satisfy future needs of DR, DD, and EE, and smart grids.
It’s reasonable to assume AMI systems and their smart meters will over time require replacement and / or future upgrades to handle emerging DR, DD, and EE, and smart grid requirements.
Let's say your predictions come true and governments force utility companies to give up ownership of the meters. As a consumer, suppose I had a choice whether to pay a 2GR under contract to get my upgraded meter as in your EWPC, or pay for one and own it myself under IMEUC. Under EWPC a 2GR is effectively a middleman that will profit from selling (or renting) me new AMI smart meter capabilities under a retailing contract. Under IMEUC I would buy and own a new meter myself at any time I choose to buy one.
It's clear to me that buying and owning meters myself under IMEUC will in the long run cost me less than EWPC’s middlemen 2GRs selling or leasing them to handle emerging requirements.
Bob,
Thank you for suspending False Fact #23: "EWPC is made obsolete by the utility tech revolution," when you wrote "Let's say your predictions come true and governments force utility companies to give up ownership of the meters."
I suggest that meters should be standard commodity items that will replace today’s meters. One meter gets installed and changes should not involve replacing the meter later on for quite some time. So, in the interim, all meters installed by "many large utility companies in North America [that] are currently entertaining or have in some cases accepted proposals for AMI smart meters already," will generate a waste of resources because of the uncertainty and the costly risks of obsolescence and systems failure. Those risks and system failures will go into the base rates of the states and provinces where regulators make those silly mistakes.
With the introduction of a new EWPC EPAct, as described in the articleLeadership Answers What to do First, the legislative and regulatory issues resolution is the key to reduce the great uncertainty in the power industry and the costs of the above risks and failures.
EWPC is an open market architecture and design paradigm that gives costumers choice of middleman. Your statement (suspending for the moment False Fact #8. The utility enterprise and the utility grid separation will never "get ever implemented politically" and False Fact #5. 2GRs are not needed. ) “… suppose I had a choice whether to pay a 2GR under contract to get my upgraded meter as in your EWPC, or pay for one and own it myself under IMEUC,” is not a proper statement regarding EWPC. 2GRs (or any middlemen for that matter that wants to compete with 2GRs) under EWPC will develop business models, which could include customers paying and owning a metering system. The critical point is those customers don’t have choice of middlemen under IMEUC. If that is not a case, then several middlemen will be able give customers’ choice, meaning that we are talking about the EWPC open market.
The statement “Under EWPC a 2GR is effectively a middleman that will profit from selling (or renting) me new AMI smart meter capabilities under a retailing contract,” is incomplete because EWPC operates at the (Control and) Economic Level (False Fact #4: IMEUC operates on the Economic Level.). The contractual relationship between a customer and a middlemen involves (Economic Level) investments and operating costs of the customer and the middlemen (see the EWPC article The Sixth Disruptive Technology), no just “selling (or renting) me new AMI smart meter capabilities.”
FACT #1: IMEUC and EWPC are both energy market reform proposals at this point in time, and not adopted by anyone yet. Ontario's paradigm has similarities to the EWPC model, but not entirely.
FACT #2: EWPC has not been proven by anyone to be a "breakthrough" market architecture design paradigm. (If some jurisdiction has adopted EWPC, please let us know who it is.)
FACT #3: Many utilities in North America are plunging forward with investing huge dollars in AMI systems and smart grid technologies, but none are appearing to even consider adopting EWPC. They are surely not telling us about it on this website forum if any are.
FACT #4 : Len Gould's IMEUC in my opinion has the best chance of being adopted some day by some jurisdiction in North America. Why? As I write this there is a new affordable consumer residential smart metering technology being developed that will be marketed directly to consumers, not utility companies. It will be a wireless technology that one can retrofit on a house WITHOUT installing meter sockets for a traditional utility meter, and it will have the capability to record specific energy transactions like for future PHEV type of applications etc. This technology will be sold directly to consumers as real-time in-home energy use monitoring and bill tracking for consumers, and potentially also to appliance manufacturers for measuring energy efficiencies. Our utility regulators may even take notice of it and want to access it as a practical means to acquire consumption data for specific residential uses of electrical energy. And, they might just view it as a practical way to implement IMEUC.
And guess what Jose, I am personally involved in developing it.
FACT #4. That's an unfeasible dream. Unless the utilities and regulators let you, by taking down the barriers on the demand side, your have nothing. The only way new business models will replace the utilities business model of winning rate cases to the regulators is by separating the utility grid and the utility enterprise, opening the latter to the competitive market.
EWPC emerged for the world of the third industrial revolution, where demand is no longer an externality and there is a need for a power system that should operate at ultraquality, with the help of demand response, in a wholesale, retail, customer value chain.
The essence of EWPC is "the generic market model paradigm: Retail Competition, Active Demand, and Ultraquality Transportation," which includes wholesale competition, as 2GRs link both markets.
Such essence is the basis for a breakthrough, which is the tipping point that shifts paradigms permanently. The breakthrough is … the epitome of the 'AHHA!' moment bringing absolute clarity and direction… that now … comes to the power industry for both the open (retail and wholesale) market (with competitive incentives for the development of business model innovations) and the closed (transportation) market (the new utility, with a responsibility to transport).
I agree that the new smart metering technology I am developing to market to consumers may not necessarily be adopted by regulators or utility companies. But I disagree with you saying that unless the utilities and regulators let me, I will have nothing without the barriers being taken down on the demand side. In essence I don't care whether the electricity industry or regulators adopt it or not because consumers want this technology and are willing to pay for it, making it a potentially commercially viable technology.
What I have learned about regulators and the utility industry is most are all generally risk averse, meaning most avoid participating or investing in the development of any new technology concepts. They much rather prefer to let technology suppliers bear all the risks in new technology development, and then go shopping for what has been perfected and is ready for commercial use.
If my technology becomes commercially successful by selling it to consumers and possibly appliance manufacturers, then and only then will it have a chance to even be CONSIDERED by regulators and utility companies to be adopted. Sure they may not want it, and there may be a whole host of vested interests that may want to block it from being used by the electricity industry, but its commercial success will not depend on it being adopted by them is my whole point.
When Len's IMEUC market reform proposals are recognized by the utility industry as being a desirable path to take, which you will surely disagree with, regulators and industry players will only consider adopting it if they can see practical ways to implement it. Regulators will not force anything on the industry that has not been demonstrated, or has no practical means to implement it. I could potentially resolve this with my technology.
Also, your definition of a "breakthrough" is a change in traditional ways of thinking. In the world of engineering, breakthroughs must be proven technically and economically before anyone will agree that a new way of thinking is a breakthrough, because without proving it practice, it is nothing more than an idea. Remember Jose, for every breakthrough idea that is proven successful in practice, there are hundreds that are failures because they are flawed.
Good luck with your EWPC Jose, you're going to need it.
I have invested many posts trying to patiently explain myself. I have been writing about market architecture and design, and getting technologies responses. I am sorry to have made the mistake to accept a comparison between EWPC and IMEUC, but they are not at all comparable. EWPC is about market structures and rules. EWPC development is about consulting work, not about technology design.
I am assuming that a shift from today’s regulated markets (where utilities win cases to the regulators) to competitive markets is bound to occur at the global level. The market bridge between supply and demand can filled up by one of many business models. That is what the EWPC architecture is all about. As simple as that!
One of many market bridges (a switchboard business model) is IMEUC that needs to have all customers on board. There are also switchboards that don’t need to have all customers on board. In that case what’s needed is a market design that doesn’t allow free riders. The resulting market rules are very important for the required transition period, where some customers remain under the old rules modified to eliminate cross-subsidies.
There are many other alternative business models that retailers can develop to bridge supply and demand and which customers have choice to select. I contend that today’s 1GRs will be replaced by 2GRs that operate at the Control Level and the Economic Level to integrate demand to power system planning, operation, and control. That is the market breakthrough, not a technology breakthrough.
To make progress, please avoid a technology oriented response.
If your EWPC proposal is meant to be totally independent of technology design, it is a very admirable proposal indeed, and would certainly be a desirable concept. However few markets in any industry are totally independent of technology design, or totally independent of society culture and political forces. In my world of the electronics industry it has been commonplace throughout its history to open whole new consumer markets with new technology introductions.
Technology design intimately affects everything old and new in the electricity industry, from power generation, distribution, electricity system information systems, to how consumers use electrical energy. The use of electrical energy is a commercial activity, as is also the commercialization of new technology, and their courses are / will be deeply rooted in economics as opposed to any idealistic vision of how commercial markets should be structured.
If you believe that a 'market design' is possible that will work and will have longevity in the electricity industry without considering new technology design and its trends Jose, best of luck to you.
The response to Bob can be found on the reference of the GMH post, where repeated the same post.