We Need the Creative Destruction of the Electric Power Industry

Jose Antonio Vanderhorst-Silverio | Sep 9, 2010

        

SmartGridCity and energy policy's secret critics is a critical article by Phil Carson on the Intelligent Utility web site. This is my contibution: 

Hi Phil,

Thank you very much for identifying a key source of the very powerful energy industry lobby that has for many years opposed the creative destruction of the electric power industry. In contrast to trying "to derail state and national energy policies that encourage modernization of the grid," I have been working for an emerging global energy policy to replace today's unsustainable one.

In that light, please take a look at the post A Message to US Senator Harry Read About a Minimalist Energy Bill,  whose summary says:

"Federal and state governments should take the leadership to initiate the transformation of the electric power industry, instead of developing individual symptomatic energy policies, for example, on energy efficiency, on the smart grid, and on Feed-In Tariffs, that are easily water dawn by the powerful energy industry lobby. The shared vision can enacted as a fundamental minimalist, holistic and emergent energy policy, based on the Electricity Without Price Controls Architecture Framework (EWPC-AF). Such policy will reduce the likelihood of The Third Depression by attracting private funding and creating green jobs from coast to coast."

In support of the initiation of the above mentioned transformation, I am copying the whole EWPC post The Huge Positive Side of SmartGridCity for the Global Market:
 

Under the timely article The Positive Side of SmartGridCity: Despite all the controversy and negative press, good things are coming out of the project, says Xcel Energy, by Michael Kanellos, posted on September 3, 2010, I will add the following comment:
 Hello Michael,
 I strongly agree that your timely article “The Positive Side of SmartGridCity” provides “data likely won't completely reverse many opinions.” However, I borrow your phrase “good things are coming out of the project” to highlight the huge benefits for the global market, that should create great public opinion, as can be seen in this update of the EWPC post 2 Smart Grid Lessons Learned: Increasing Stimulus Grant was Mistaken. Utilities Must be restructured.
As with any lateral thinking insight goes, the first lesson should have been known all along. In fact, item “6.4 Recommendations to the Energy Industry - Roadmap to a Deployed Industry Architecture,” in “Volume I: User Guidelines and Recommendations” of the “Integrated Energy and Communication Systems Architecture (IECSA),” suggests an “Incremental approach: Start small and learn lessons,” which most utilities (not just Xcel Energy) so far did not follow.

As for the second lesson, in “Table 7: Areas beyond the scope of IECSA,” is “Industry Organizational Changes,” being a huge architecting error that had a negative impact on SmartGridCity and is bound to affect must other smart grid initiatives. I will recall my posts under your article The Biggest Green Market? Seven Reasons Why It’s Green IT, where I showed the importance of restructuring the electric power industry into a T&D Grid side and an Enterprise side. 
In that post, I gave you convincing evidence of the benefits that enable me to write the EWPC post 3rd Smart Grid Lesson Learned: in the Enterprise side‘Everything Dies a Quick Death.’ As a result, the sense of urgency to restructure the electric power industry should be at an all time high. 

yyy

The Huge Positive Side of SmartGridCity for the Global Market

Jose Antonio Vanderhorst-Silverio | Sep 3, 2010

        

Under the timely article The Positive Side of SmartGridCity: Despite all the controversy and negative press, good things are coming out of the project, says Xcel Energy, by Michael Kanellos, posted on September 3, 2010, I will add the following comment:

 

Hello Michael,

 

I strongly agree that your timely article “The Positive Side of SmartGridCity” provides “data likely won't completely reverse many opinions.” However, I borrow your phrase “good things are coming out of the project” to highlight the huge benefits for the global market, that should create great public opinion, as can be seen in this update of the EWPC post 2 Smart Grid Lessons Learned: Increasing Stimulus Grant was Mistaken. Utilities Must be restructured.

 

As with any lateral thinking insight goes, the first lesson should have been known all along. In fact, item “6.4 Recommendations to the Energy Industry - Roadmap to a Deployed Industry Architecture,” in “Volume I: User Guidelines and Recommendations” of the “Integrated Energy and Communication Systems Architecture (IECSA),” suggests an “Incremental approach: Start small and learn lessons,” which most utilities (not just Xcel Energy) so far did not follow.

 

As for the second lesson, in “Table 7: Areas beyond the scope of IECSA,” is “Industry Organizational Changes,” being a huge architecting error that had a negative impact on SmartGridCity and is bound to affect must other smart grid initiatives. I will recall my posts under your article The Biggest Green Market? Seven Reasons Why It’s Green IT, where I showed the importance of restructuring the electric power industry into a T&D Grid side and an Enterprise side.

 

In that post, I gave you convincing evidence of the benefits that enable me to write the EWPC post 3rd Smart Grid Lesson Learned: in the Enterprise side‘Everything Dies a Quick Death.’ As a result, the sense of urgency to restructure the electric power industry should be at an all time high.

yyy

3rd Smart Grid Lesson Learned: in the Enterprise side “Everything Dies a Quick Death.”

Jose Antonio Vanderhorst-Silverio | Sep 3, 2010

        

Michael Kanellos, one of the greentechmedia.com editors, responded a comment that became the EWPC post The Enterprise Side of the EWPC-AF as Integrated to the Biggest Green Market, with: “ah. I may have confused you. Quick death refers to the unusually short life of IT equipment. Servers and desktops get replaced at a somewhat rapid rate, which is great for vendors. They love the recurring revenue from refresh cycle. In solar, LED and smart grid, the refresh cycle takes place over decades. In fact, you can even argue there is no refresh cycle.” Next is my response which is a follow up to the EWPC post 2 Smart Grid Lessons Learned: Increasing Stimulus Grant was Mistaken. Utilities Must be restructured:

Thank you Michael,

You have given me a great opportunity.

 I was certainly not misled by “Everything Dies a Quick Death.” On the contrary, I architected the Enterprise side of the emerging power industry to follow the existing high tech marketing culture of the communication sector that includes IT. In the description of the EWPC-AF you will find that:

“An important part of the value creation of the EWPC-AF … comes from changing the managing by averages in retail markets to managing by “discovering new sources of profitability in a network economy… when the events are interconnected and interdependent (Hax and Wilde, the delta project)” through the development of Business Model Innovations by Second Generation Retailers (2GRs)… The second level architecture is reserved for proprietary architectures for open systems under the leadership of 2GRs. Most value creation will be the result of an architecture competition centered on the Silicon Valley Model, which will lead to the final architecture of the EWPC Smart Grid, which is just one of the disruptive components of the whole.”

The current smart grid development that starts with the Big-Bang Advanced Metering Infrastructure (AMIs), based on the utility oriented concept of Demand Side Management, is obviously a dead end when you read my above post. Part of the problems that BG&E had with the Maryland PSC were related to early obsolescence of AMI. The PSC must have based that conclusion on the large number of AMR meters that were to be replaced very early with the AMI system.

Under the EWPC-AF the obsolescence concern is replaced by “Everything Dies a Quick Death,” as many of the product-services that 2GRs will try to bring to market will die in Geoffrey Moore coined as The Chasm, “by far the most formidable and unforgiving transition in the in the Technology Adoption Life Cycle, and it is the more dangerous because it typically goes unrecognized.”

In that light, please take a look at the EWPC article Forget Demand Side Management (DSM); Think Demand Side Innovation (DSI), whose summary say: “To make the emergent power industry smarter, there is a need to restructure the power industry to enable Second Generation Retailers integrate the require demand side innovations to power system planning, operation and control.”

While looking at the EWPC article you will find a comment by Gale Horst, an inventor of smart devices, now working for EPRI, that starts with “Your concept of DSI as opposed to DSM seems to be quite on-track in my opinion.”

yyy

The Enterprise Side of the EWPC-AF as Integrated to the Biggest Green Market

Jose Antonio Vanderhorst-Silverio | Sep 2, 2010

        

The Biggest Green Market? Seven Reasons Why It’s Green IT: Solar, wind and biofuels are all fantastic technologies, but to make money, stick to IOPS, is an article that Michael Kanellos posted on September 2, 2010, in greentechmedia.com . Next is a comment that I added under the article.  

The conventional wisdom that “Everything Dies a Quick Death” does not apply to the whole electric power industry is the result of an architecting “mistake.” That mistake was driven by considering that “industry organizational changes” was one of the “Areas beyond the scope of IECSA,” which stands for the “Integrated Energy and Communication Systems Architecture.”

 

The result is not only a technological oriented smart grid that considered the customer as an afterthought, but one that has serious security problems as well, as can be seen in the EWPC post A Message to US Senator Harry Reid About a Minimalist Energy Bill, whose summary says:

 

“Federal and state governments should take the leadership to initiate the transformation of the electric power industry, instead of developing individual symptomatic energy policies, for example, on energy efficiency, on the smart grid, and on Feed-In Tariffs, that are easily water dawn by the powerful energy industry lobby. The shared vision can [be] enacted as a fundamental minimalist, holistic and emergent energy policy, based on the Electricity Without Price Controls Architecture Framework (EWPC-AF). Such policy will reduce the likelihood of The Third Depression by attracting private funding and creating green jobs from coast to coast.”

 

The above mentioned mistake is in perfect agreement with “Utilities and state governments have not been as active in the rebate department as they could be.” The agreement involved is an obsolete energy policy directed to the development of the resources of the supply side which made a lot of sense when oil was cheap and rates could be lowered year after year under a virtuous circle.

 

It is only with the EWPC-AF high leverage energy policy that enables “industry organizational changes” that we will get back to a virtuous circle. The EWPC-AF restructures the industry into two highly cohesive systems that are lightly coupled among them: the primary regulated T&D Grid system and the complementary competitive Enterprise system. Being part of the Green It, in the Enterprise system “Everything Dies a Quick Death.”

yyy

Handling Risk Management and Living System Smart Grid Stillborn Threats

Jose Antonio Vanderhorst-Silverio | Aug 31, 2010

        

SmartGridNews.com has a video and an article of the security expert Andy Bochman about two Smart Grid Stillborn Threads. To handle those threats, the electric power industry needs to be restructured with an EWPC-AF based Energy Policy Act.

 

A few days ago, I posted a comment under the video Smart Grid Security Standards May Be Asking the Impossible of Utilities, with a title "Was Whole Power System Architecting Bypassed?" Today, I read his blog post "Security isn’t the Biggest Threat to the Smart Grid," and I will show that those two threats have to do with the architecture of the whole electric power industry, on risk management and its living system aspects.

 

The reason the security (risk) threat is greater than necessary is explained in the section “Transportation Ultraquality is the Province of Engineers Not Politics,” of the 2007 EWPC article Demand Integration is NOT the Province of Politics. System security and system adequacy risk management requirements were not fully addressed in the explicit high level architecture act of “The Integrated Energy and Communication Systems Architecture (IECSA)” design work, which concentrated on interoperability.

 

Based on his article, I agree with Andy that "... it’s a potential public perception that promised Smart Grid benefits aren’t nearly worth the costs that could kill it before it's born." He "... want to focus on the security challenges facing the Smart Grid, but won't be able to do that for long if we don't get the thing fielded in the first place." Architecting evidence in support of the urgent need to restructure the electric power industry can be found in the EWPC articleShould the Smart Grid be a Technological Project to Address a Challenge Faced by Utility Executives?.

yyy

2 Smart Grid Lessons Learned: Increasing Stimulus Grant was Mistaken. Utilities Must be restructured

Jose Antonio Vanderhorst-Silverio | Aug 25, 2010

        

“SmartGridCity Too Costly To Duplicate: Xcel To Ask Customers To Pay High Cost Of Pilot Program,”is a news report  written by Tyler Lopez, a 7NEWS Reporter at TheDenverChannel.com. Next is a comment that I posted under it:

Although the SmartGridCity project did not apply for Smart Grid Stimulus BillI funding, there are two very important lessons to be learned. In the April 2009 EWPC post DOE's WISE NOI for an FOA,  I wrote that "I believe that the small grant size is well thought out. Like IBM with the PC development, IOUs need to set up independent units if they want to be funded and to stay in the game."   

However, borrowing at text intended as a forecast, that Jesse Berst wrote, DOE raised "the ceiling 'after major electric utilities complained that the proposed $20 million-per-grant limit was too low to encourage commercial-scale deployment of advanced technologies."   

In the Next three paragraphs, taken from the news report of TheDenverChannel, there is a clear lesson learned relative to the “commercial-scale deployment of advanced technologies:”  

 

Pomerance said the pilot program with 23,000 customers should have been tried with 500 to 1,000 customers.  

 

"As a pilot program, this was way, way too big," Pomerance said. "It was Xcel's failures, not the idea's failures. Quite to the contrary, this is where things are going to have to head if we're going to shift out of fossil fuels into renewables."  

 

Pomerance believes Xcel shareholders should bear the costs.

 

In addition, as a general lesson learned for both utilities and regulators, I too suggest that Xcel Energy should bear the cost. That is in sharp contrast to the following two paragraph quote from the same report:  

 

Gov. Ritter approves of Xcel's attempt to recoup its costs.  

 

"While we acknowledge the challenges and costs associated with the project, the development of the Smart Grid is a critical market transformation for the future of utilities. We need a 21st century grid for a 21st century society; these investments will build energy security by reducing peak demand, balancing conventional and renewable energy, and save consumers money as their homes, appliances and devices use electricity in a vastly more efficient and responsive manner," wrote Todd Hartman, media relations manager for the Governor's Energy Office. "It’s important to understand that the rate increase associated with Smart Grid City is a very small portion of a broader rate request, the bulk of which is tied to costs associated with the Comanche power plant in Pueblo."  

 

Especially because it “is a very small portion of a broader rate request,” the reason of my suggestion as a strong lesson to other Smart Grid projects, can be found in the EWPC article Answering “What Energy Business Are You In?” As the Way Out of The Third Depression,  whose summary and conclusion are as follows:  

 

During a similar time of great change, railroads and utilities have defined their business incorrectly, by ignoring several insights, like the one Theodore Levitt gave us in his 1960’s Marketing Myopia manifesto. A quote on the 1982 book Megatrends explains utility investors why the attempt to keep a monopoly on the customer relationship, with an ineffective old economy Big-Bang Advanced Metering Infrastructure will further extend the uneconomic overexpansion of the resources of the supply side. To reduce the odds of the return of the depression, we need policies for the new economy, like power industry transformation and boring banking, which mutually reinforce each other with the coming communications’ boom to enable innovative value creation and long term jobs.  

 

I conclude that any forward looking utility savvy investors, based on the above insights, will now be able to answer without distractions the question “What business are you in,” as either the T&D Grid or the Enterprise side of the EWPC-AF. Hence, I further predict that the opposition of state governments and the special interest utility lobby that aims to disallow the emerging creative destruction of the power industry will fade, in order to decrease the likelihood of The Third Depression.

yyy

What Impact on Utiliities Investors May Have a Reduction of 30 to 70 Percent in Home Energy Use?

Jose Antonio Vanderhorst-Silverio | Aug 24, 2010

        

Katherine Tweed reported on greentechenterprise, on August 24, 2010, that a General Electric Partnership Could Slash Home Energy Use by 70 Percent. She adds that "GE is part of a pilot project to show that homes can drastically cut their energy use with retrofits."

The impact on utilities investors is explained in the conclusion of the EWPC articleAnswering “What Energy Business Are You In?” As the Way Out of The Third Depression, that says "

... that any forward looking utility savvy investors, based on the above insights, will now be able to answer without distractions the question “What business are you in,” as either the T&D Grid or the Enterprise side of the EWPC-AF. Hence, I further predict that the opposition of state governments and the special interest utility lobby that aims to disallow the emerging creative destruction of the power industry will fade, in order to decrease the likelihood of The Third Depression."

yyy

The New California Capitalist Model to Initiate the Transformation of the Global Power Industry

Jose Antonio Vanderhorst-Silverio | Aug 17, 2010

        

Kate Rowland has set a challenge in her Intelligent Utility article Smart meter reflux continues of August 16, 2010, which I respond to below. The challenge is based on a quote made by Peter Darbee, CEO and president of PG&E Corporation, which says: 

As we go forward, I think the stakes are very great because once again, California is in the position to serve as the model for the rest of the United States when the United States has said it's not ready to move forward. And the challenge that we have is, are we going to be a good model, or a bad model, or an indifferent model

Hi Kate,

Thanks you for the challenge. 

PG&E and Its Discontents is an article written by Michael Kanellos, on August 12. At this moment it is the most popular discussion in greentechgrid 2010, to which I have added several comments. Next is a comment on two paragraphs:

“PG&E and Its Discontents,” signals a very old backward looking discontent with utilities all over the place. As customers have been unable to articulate their discontent, they follow a leader who gives then something to fight the utility, when the opportunity presents itself, with data that may seem to be convincing, such as the health issues ...

In that line of though, I respond the article Avoiding an Epic Smart Grid Failure, by Christopher Perdue, with the EWPC post An Epic Smart Grid Failure is in the Making, starting with the forward looking sentence “The smart grid is a transformation process of the global power industry. A transformation is not a trivial change. It is a big and complex change process that will satisfy ongoing customer needs, which they are not able to articulate yet.”

Using the same evidence of the above post, I added a comment with the title “A GIANT STOP SIGN! Let's Initiate the Transformation,” under Jesse Berts’ SmartGridCity Meltdown: How Bad Is It?, that says, “I am very sorry to respectfully tell you, and all the other intelligent and important persons, that this is not just the result of skipping the business case. This is A GIANT STOP SIGN, which Jesse saw as one of the alternatives.”

This is also under the article “PG&E and Its Discontents.  My general prediction is that the emergent smart grid is intended to be a shift away from a regulated Investor Owned Utilities Architecture Framework (IOUs-AF) based socialistic AMI monopolistic system, in place now for the retail market, to a capitalist AMI competitive system, which without any loss of generality can be defined under the minimalist, emergent, holistic Electricity Without Price Controls Architecture Framework (EWPC-AF).

 

The above prediction is based on the text Creative Destruction written by W. Michael Cox y Richard Alm. I like to know if the intention of the California government is to not allow once again the emerging creative destruction of the power industry to preserve the preexisting order. To make the meaning absolutely clear, I select a quote from that text:

 

“Over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.”

 

“Herein lies the paradox of progress. A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. Schumpeter’s enduring term reminds us that capitalism’s pain and gain are inextricably linked. The process of creating new industries does not go forward without sweeping away the preexisting order.”

yyy

The BGE Domino is Down

Jose Antonio Vanderhorst-Silverio | Aug 14, 2010

        

On page 15 of ORDER NO. 83531, issued by the PUBLIC SERVICE COMMISSION OF MARYLAND, on the 13th day of August, 2010, I found that "BGE acknowledges, however, that the Company’s response was designed primarily to mitigate risks, rather than to allocate them. And, indeed, the Company does not believe it should share in the risk:”

On page 17 it adds that “… the Company expects full cost recovery, with no risks or contingencies, whether or not the benefits materialize.

On page 45, it further adds “BGE expresses genuine enthusiasm throughout for the opportunities the “smart grid” offers for the Company and its customers, but continues to argue that the Company should not be expected to bear any of the risk that the costs to customers might fail to yield benefits… But BGE concedes, as it must, that the Company’s responses are designed primarily to mitigate the risks to customers, not to allocate them between the Company and its customers."

On page 47, we find the key response of the PSC “… one way or another, customers must achieve some level of supply-side benefits –perhaps only a fraction of what BGE projects – or they risk paying in full for something they have not received.”

The conclusion of the ORDER has denied BGE full recovery, as it states that "... at the time that the Company has delivered a cost-effective AMI system, the Company may seek cost recovery into base rates."

This is in accordance with my Prediction #1: Recognizing the emerging global power industry in the complete context around the Intelligent Utility Inside article Baltimore G&E: AMI Comeback? and that of this EWPC article, the Maryland PSC “No so fast” decision on the BGE proposal is highly likely the 1st domino of the chain reaction that is going to start “knocking over the next” state regulator’s utility case, “which upsets the next one, and so on.” See the EWPC article Three Smart Grid Predictions for Initiating the Global Power Industry Transformation. 

yyy

An Epic Smart Grid Failure is in the Making

Jose Antonio Vanderhorst-Silverio | Aug 12, 2010

        

Avoiding an Epic Smart Grid Failure is a timely article by Christopher Perdue, a Vice President of the Sierra Energy Group, under which I added the following comment:

 

Hi Christopher,

 

The smart grid is a transformation process of the global power industry. A transformation is not a trivial change. It is a big and complex change process that will satisfy ongoing customer needs, which they are not able to articulate yet.

By following closely the AMIs of BGE and Hawaii, and the Smart Grid of Xcel Energy's cases, it is evident that state regulators are legally bound to conduct a regulatory process to make sure utilities manage their projects efficiently. But those are the business-as-usual procedures for things that are easily articulated.

However, transformations need a different regulatory environment, as John P. Kotter described in his article What Leaders Really Do, "They don't make plans; they don't solve problems; they don't even organize people. What leaders really do is prepare organizations for change and help them cope as they struggle through it." The new regulations must precede the initiation of the transformation of the power industry. In that light, please take a look at the EWPC article Three Smart Grid Predictions for Initiating the Global Power Industry Transformation, whose summary offers:

 

Prediction #1: Recognizing the emerging global power industry in the complete context around the Intelligent Utility Inside article Baltimore G&E: AMI Comeback? and that of this EWPC article, the Maryland PSC “No so fast” decision on the BGE proposal is highly likely the 1^st domino of the chain reaction that is going to start “knocking over the next” state regulator’s utility case, “which upsets the next one, and so on.”

 

Prediction #2: Rethinking the old utility compact with an obligation to serve to an emergent compact on the T&D Grid side of the EWPC-AF with an obligation to deliver, the end-to-end “smart grid” will play out as part of the Enterprise side of the EWPC-AF.

 

Prediction #3: Repositioning the utilities that missed the opportunities to learn the lessons of other industries is bound to be in a restricted T&D Grid space that will sooner or later be "painfully consolidated."

yyy

Forget Monopoly Feed-In-Tariffs to Start Learning About Competitive Buy-Back Spot Prices

Jose Antonio Vanderhorst-Silverio | Jul 31, 2010

        

This comment completely supersedes the www.greentechmedia.com articleFeed-In Tariffs Can Spur Disruptive Growth: California is studying a new incentive that could grow renewables—and change everything about the state’s energy supply in the process, written by Herman K. Trabish, on July 21, 2010.

The key insight of the news article “Feed-In Tariffs Can Spur Disruptive Growth,” is “Feed-in tariffs can work,” SCE’s Marelli acknowledged, “but they require a lot of work to make sure they remain current with what is going on in the market.” I am happy to tell everyone, that all the conceptual work is already available under the Electricity Without Price Controls Architecture Framework (EWPC-AF). By reading and integrating with the EWPC-AF all 63 comments posted up to July 30, 2010, I have the following synthesis:

 

Through discussions with many important, intelligent and smart persons, in the professionals’ disciplines of electric power, economic, legal, you name it, during the past 15 years, I have designed and tested what has emerged as the EWPC-AF. This is in line with Wisdom2See (W2S) wrote that “I have a saying that when we see social conditions change we must learn to create knew forms of economic positioning or new forms of economic leveraging to address a 21 century problem with energy.”

 

That EWPC Architecture Framework is a simple, emergent, and holistic extension of the theory and practice develop by M.I.T. professor Fred C. Schweppe and his colleagues, among which Michael C. Caramanis, Richard D. Tabors, and Roger E. Bohn, co-authered the 1988 book Spot Pricing of Electricity (SPoE). The aim of that framework is to increase such leverage with the purpose of maximum social welfare.

 

I have a mixed agreement/disagreement with Gertsen (GS). I disagree that “The silicon valley venture capital mentality does not work here,” as the EWPC-AF divides the power industry in two systems that are highly cohesive and lightly coupled among them. The Open market Enterprise system is designed to follow the Technology Adoption Life Cycle, which is inextricably linked to Silicon Valley. The other system (more below) is the regulated T&D Grid. By including an architecture at the energy policy level, the EWPC-AF strongly agree that “In the real world competition among different energy technologies is crucially affected by the regulatory framework … Sometimes … these are more important than the single technological advantages.”

 

As W2S suggest, the EWPC-AF is also designed to consider that “… new competition and innovations is the answer for the free market from an old [in]adequate energy systems models that represented for years an monopoly that did not want true competition.” That can be seen from my … Personal Vision Waiting to Become a Shared Vision About Global Power Industry Leadership, which has an example of the California monopolies behavior.

 

Trying to become a politically possible shared vision, distinct from the status quo that Kevin Christy (KC) expects, my vision seems to be somewhat in agreement with the personal visions of Guillermo Jones (GJ), JoeJoe (JJ) and many others, which are calling for market based prices (GJ), based on avoided costs (JJ). Dying just before the SPoE book was published, Schweppe (and colleagues) wrote that “… the PURPA legislation stated that buy-back rates should be based on avoided costs without clearly defining what avoided costs are. Hourly spot prices provide such a definition.”

 

Under such a definition it isn’t necessary to pick winners and losers (JJ), while increasing transparency, which will enable PV suppliers to “jump into the end-user market… If they put their weight behind end-user focused legislation and regulation we’d all be a hell of a lot better off (JJ) …” in accordance with the EWPC-AF. However, if as Bill Wood (BW) say that “a subsidy program which specifically targets solar” is adopted by the legislation, I suggest that end-customers should receive a proportional increase above the spot price.

 

Skywise (SW) says that “The US seems to be stuck in the centralized power gen mindset. As a result the whole process is overly complicated and overly expensive.” The main objective of centralizing distributed generation is to extend, much, much, beyond the useful life of the already 20 years old obsolete investor Owned Utilities Architecture Framework(IOUs-AF) and their increasingly complex incremental extensions, to keep in operation the business model of winning customer related cases to a regulator. Instead, what we need is to open the power industry to business model innovations by Second Generation Retailers (2GRs) that operate in the Enterprise side.

 

As greenowl (GW) says that “… if we utilize all the different real estate on existing buildings, streamline the paperwork we have a lot of the problem liked,” 2GRs will be able to coordinate (end-user) customers demand side solutions to integrate them to power system planning, operation, and control, making it a lot easier to solve the “Transmission and congestion issues and the biggest problems facing renewables in the coming decade,” that Grandpa (GP) identified.

 

At the same time, GJ argument that “… there is little incentive to invest in transmission lines because investors are uncertain about being able to charge adequate fees to merchant generators and utilities which would seek access to the lines,” disappears by forbidding the T&D Grid compact to operate in the Enterprise side, while they expand the delivery system at minimum costs, based on an obligation to deliver in exchange for reasonable T&D rates.

yyy

Avoiding the Big-Bang Advanced Metering Infrastructure

Jose Antonio Vanderhorst-Silverio | Jul 30, 2010

        

Are We Building the Grid @$$ Backwards? is a very timely and excellent article written by Jesse Carson, under which I posted the following comment:

 

Hi Jesse,

 

According to the EWPC article Three Smart Grid Predictions for Initiating the Global Power Industry Transformation, which “update the comprehensive white paper written by… [you, but] named by the Edison Electric Institute as The First Push: How a utility positions itself for success as smart technologies transform markets means seeing what domino falls first,” this excellent piece is well is in synchronicity with a strategy based on Prediction #3: Repositioning the utilities that missed the opportunities to learn the lessons of other industries is bound to be in a restricted T&D Grid space that will sooner or later be ‘painfully consolidated.’"

 

Before making that specific prediction, in the comment Let's Initiate the SG Transformation While T&D Jobs Comeback, posted under the Intelligent Utility Inside article Baltimore G&E: AMI Comeback?, by Phil Carson, my conclusion was “For all of the above reasons, I suggest that DOE should shift the stimulus funds to BGE’s T&D construction investments. I think BGE should try to get DOE consent for filing construction projects to the Maryland PSC to meet the July 30 deadline. Those projects may generate many jobs and serve to stimulate the economy. Other states all over the world should follow the suggested shift.”

 

S&C Electric President and CEO John Estey critique that “You don’t need a big-bang solution. You can put it where you need it the most and then grow from there,” applies such big-bang perfectly well to what I named as the smart grid that is being pushed. As can be seen in the EWPC postSynchronicity of the Emerging Whole Power Industry, under the EWPC-AF you don’t need a big-bang solution either:

 

“Instead of using a regulated standard (not smart but) brute meter attack to force customers, well in line with your affirmation and with the three predictions mentioned above, in the (architecture competition) market approach customers will end up behaving like a herd, where ineffective whole (that is what customers need) products and services are weeded out (maybe together with their meters) in The Chasm of the Technology Adoption Life Cycle (TALC). ..To make it truly effective, it is only those smart customers that lead the herd that need complete education to be able to exert full free choice…”

 

Best regards,

 

José Antonio

 

 

yyy

Synchronicity of the Emerging Whole Power Industry

Jose Antonio Vanderhorst-Silverio | Jul 23, 2010

        

Smart Energy Practices, Customer Engagement, is a timely article written by Phil Carson, Editor-in-chief of the Intelligent Utility Daily. Next is a comment I posted under said article:

High again Phil,

Peter Senge, C. Otto Scharmer, Joseph Jaworsky and Betty Sue Flowers, in their book “Presence: human purpose and the field of the future,” write about "synchronity" by saying that "Perhaps the most important aspect of crystallizing intent and prototyping is one that people rarely talk about. When people connect with their deeper source of intention, they often find themselves experiencing amazingly synchronistic events. In his classic Syncronicity: An Acausal Connecting Principle, Carl Jung defined synchronicity as "a meaningful coincidence of two or more events, where something other than probability of chance is involved." They add “Intel’s David Marsing told Joseph that “Synchronicity is about being open to what wants to happen.”

Well in synchronicity with the simple, emerging and holistic EWPC-AF and this article your wrote (and another one you wrote that is mentioned below), I wrote two comments in what I see as a generative dialogue (to learn about the emerging future whole) in the LinkedIn Smart Grid, AMI, HAN group, under the heading Smart grid dynamic pricing: consumer behavior change?

As a response to a group member, the first comment included:

“Instead of using a regulated standard (not smart but) brute meter attack to force customers, well in line with your affirmation and with the three predictions mentioned above, in the (architecture competition) market approach customers will end up behaving like a herd, where ineffective whole (that is what customers need) products and services are weeded out (maybe together with their meters) in The Chasm of the Technology Adoption Life Cycle (TALC). ..To make it truly effective, it is only those smart customers that lead the herd that need complete education to be able to exert full free choice. … that is my response to ‘… assert that persuasion and education is not as challenging as some may think - how about turning this assertion into something more - with examples - if you have any.’ There is nothing richer than the TALC for examples on architecture competitions.” 

In the next comment, and also in synchronicity with an EEI whitepaper, I made a summary of the emerging dialogue by writing that:

As far as I can tell, the right question about the unpredictable human behavior is being answered in three general ways, with their associated pricing systems: 1) US-Centric brute force highly complex (see most of the 99 posts above) education approach [this is where I see Jack Ellis comment fits]; 2) EU-Centric brute force Spartan approach; and 3) the EWPC-AF TALC effective herd approach. For the emerging organization, please read my response to Jesse Berst.

Hi Jesse,

I have borrowed some insights from your comprehensive whitepaper The First Push, which was named by the Edison Electric Institute, to write the EWPC article Three Smart Grid Predictions for Initiating the Global Power Industry Transformation. The summary answers in a more generalized way the specific question, posed by the Intelligent Utility Inside Editor in Chief, Phil Carson, “predict how the Aug. 5 hearing and subsequent decision will go?:

Prediction #1: Recognizing the emerging global power industry in the complete context around the Intelligent Utility Inside articleBaltimore G&E: AMI Comeback? and that of this EWPC article, the Maryland PSC “No so fast” decision on the BGE proposal is highly likely the 1st domino of the chain reaction that is going to start “knocking over the next” state regulator’s utility case, “which upsets the next one, and so on.”

Prediction #2: Rethinking the old utility compact with an obligation to serve to an emergent compact on the T&D Grid side of the EWPC-AF with an obligation to deliver, the end-to-end “smart grid” will play out as part of the Enterprise side of the EWPC-AF.

Prediction #3: Repositioning the utilities that missed the opportunities to learn the lessons of other industries [I add in accordance with Max Planck!] is bound to be in a restricted T&D Grid space that will sooner or later be "painfully consolidated."

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D. - LinkedIn

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