Re: [Pen-l] smart grid question

[ehrbar <ehrbar@xxxxxxxxxxxxxxxxxxx>]

Gene and I see the issues quite differently.  The possibility of such
opposite views shows how complicated the issues themselves are.  I see
our local utility here in Utah implement ad-hoc solutions which give a
few of the benefits of smart grid, exactly in order to pre-empt having
to implement the needed structural reforms.  They are installing
meters which can be read by drive-by vehicles but which do not allow
two-way communication between the electricity consumer and producer,
and they have a program which allows to turn off the air conditioner
by a special radio signal.  This creams off some of the economic
benefit which could also be provided by the smart grid, thus making it
more difficult to install the smart grid itself.  But they are also
getting more comfortable with using demand side measures instead of
spinning reserves, i.e., hot boilers ready to generate electricity if
needed.  PacifiCorp has decided not to build new coal plants for the
next five years, because of regulatory and cost uncertainty, and long
delays due to legal action by Sierra Club and others, therefore they
need such demand-side measures.

Redistributing the time profile of demand in order to shave the peaks
is not the same as saving energy, but a large portion of generating
capacity is only needed for peak demand, and shaving the peaks allow
the power companies not to bring more capacity on line for a while,
until renewable capacity is ramped up.  They much rather have excess
capacity in their rate base than the complicated smart grid equipment.
Those energy companies have very little research and development, they
use tried and proven technology.  Regulation has favored this in order
to keep energy prices low.  The smart grid suddenly requires them to
become technology pioneers.  A few see this as an opportunity and jump
on, for instance the North Western States (Oregon) want to become the
Silicon Valley of Smart Grid technology.  But most utility companies
don't like this and it also needs a new regulatory framework.

Disclaimer: I haven't spent a life time of research on this, this is
just my hunches and impression from observing the process for about 3
years now, and from being very suspicious of the motivations of firms
who finance global-warming deniers etc.

Hans.

Hans G. Ehrbar   http://www.econ.utah.edu/~ehrbar ehrbar@xxxxxxxxxxxxxxxxxx
Economics Department, University of Utah     (801) 581 7797 (my office)
1645 Campus Center Dr., Rm 308               (801) 581 7481 (econ office)
Salt Lake City    UT 84112-9300              (801) 585 5649 (FAX)
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