Flit

The nature of electrical markets

Markets set price, but the question is how often and how well? If someone has fluctuating demand that changes by the day but can only contract for power by the month, what happens to that fluctuating demand information? In reality, that information dies. In the discussion of a smart electrical network, one thing that is critically important is the ability to transmit pricing information more widely and quicker.

In a true smart market, you would be able to price electricity down to the individual circuit, perhaps even the individual electricity using device. The reason for this is you might be willing to pay 1x for a light in your bedroom but the electricity running your dialysis machine might be worth 10x and the respirator might be worth 10000x. Right now such pricing information is impossible to transmit in all its complexity. Without a smart grid it will remain impossible to transmit or route. With a smart grid, the capability will grow until eventually, all of it can be captured and prioritized real time. If price rises can happen in real time, all of a sudden unreliable power systems create incentives for distributed generation because taking advantage of the blackout price spikes gets you much better ROI.

But how will such a grid be built? In a country with a static or shrinking population, the only mechanism is through replacement. Every year, meters go bad, lines exceed their lifetime and are replaced, and transformers die from various reasons and are also replaced. Replacing as you go is one realistic method. That might get you 1%-3% in yearly smart grid rollout. But in a growing country like the US, this is not the only mechanism. Every time a new subdivision is built, the electrical grid is extended. There is no reason that you couldn't make a central skeleton of a market and subdivision by subdivision, create smart grid subdivisions. Realistically, add another 1%-3% depending on housing conditions (and the US mania for destroy and rebuild).

The good news is that computing cycles are cheap and growing cheaper and thus an imperfect market can be created that will improve things even at a small scale. At first, trading could occur within the subdivision. As information spreads about the benefits of the smart grid more and more people would want to join to gain the benefits. Early adopters would be environmentalists who would want to do it for mother earth, tinkerers who like the engineering aspects (the geek value of taking part in such a project is off the charts), and power entrepreneurs who think they can make a bit of extra cash flow a month.

As the network grows it will reach a tipping point where network effects will explode into the national consciousness and it will become the next hot bubble. Like the Internet, the ultimate crash will also have virtually no effect on the positive engineering effects of that future bubble.

A few things about the smart network. The smart network is already partially here. For large industrial users, it's been here for some time. For mid sized businesses, they've come on board a bit more recently. This isn't a matter of subsidy but of simple business sense. If you have a need to generate power, there's simple sense in selling that power when the spot price exceeds your generation price.

But remember, market conditions have changed. It's no longer just about economic value. There are those who want to create panic, despair, and terror among us to achieve their goals. It's no longer acceptable to have a system that fails in such a stupid way, giving relatively small attacks the ability to create large effects.

How much money we invest in infrastructure improvements to get around this right now is a separate question but simultaneous to all the power improvements that need to be put into place to scale our dumb network out of its present crisis we need to start putting into place a smart network that will have smart failure modes. With smart failure modes we end up getting small attacks creating small effects. A resilient system will actually create a disincentive to attack at all.

Defining the energy problem

Steven Den Beste has decided to take me to task over my power ideas. First of all, I think we're looking at different problems.

As a pure engineering problem, there is no reason that we could not have solved the grid issues long ago. Engineers aren't stupid and after 1965 and the first great NE blackout, they knew they had a major problem to solve. The interesting question is why they didn't solve it. The short answer is that they were put under artificial constraints that didn't let them solve it.

Thus, all of SDB's graphs and hard engineering data are somewhat beside the point (not that he was 100% correct on the engineering aspects either). The problem is a military techno-political problem. In other words, it's very cross disciplinary. Be patient, this is likely to be long. [edit: it's also likely to be multi-part]

First of all, having a day or two holiday from electricity every couple of decades or so is actually not that bad a record. If that were our actual problem, we wouldn't be in such bad shape. But the real problem is having terrorist teams taking down major, multi-state grid sections every few days and likely not getting caught for a long time.

But what are these hypothetical terrorists looking to do? To some extent, they want to hurt our economy. I think that even more than that, they want us sitting in the dark, afraid. Demoralizing us, terrorizing us, is the heart of their strategy. So a system change that made the lights stay on at home would significantly reduce the terrorist impact and make the regular blackout strategy less attractive.

But let's get back to those frustrated power engineers. Who and what is frustrating the engineers and keeping our electrical systems vulnerable?

The coalition to keep us in the dark is formed of several parts. There is the environmental component who believe if we only had enough wind farms, solar cells, tidal generators, or geothermal pipes we could get rid of those nasty fossil fuel and nuclear plants that provide massive generation capabilities. Then there are the NIMBY (Not In My Backyard) activists who don't want a powerplant near them, don't want to see high tension wires ruin their scenic views, but don't care beyond their local area. That wouldn't be so bad if NIMBYs weren't so widespread that any significant power project is likely to draw them into active opposition. Finally there are the luddites who believe in going back to a more primitive existence. They want an end to industrialization, low power usage, if any, and certainly no major transmission wires.

All three of these groups have their own moderate versions who qualify their opposition to new power plants and transmission lines but still form important sections of the coalition to keep us in the dark.

Love them or hate them, they have been successful in keeping power generating reserves at low levels to the point where we got the great NE and Canada blackout of 2003.

So a successful strategy to build a bulletproof grid has to not only take into account the engineering challenges, the terrorism challenges, but also the political challenges. All three are necessary conditions to solve the problem.

Out of the three, the terrorism challenge is actually the easiest to solve. Blowing up towers or shorting out lines is something that functionally looks like very bad weather. Add some booby trap clearing personnel training to repair crews and you've got the situation fairly well in hand from the mechanical perspective of recovery.

The engineering solution is also easy, add more power plants, preferably large ones that are cheap to run, build lots of new lines so it's difficult to take enough down to create a cascading failure, and create better communication between parts of the power systems so that you can adjust to point failures faster and more accurately.

The political solution is our real problem because we have a durable coalition that frustrates both powerplant building and transmission line building enough to land us in our current sad state.

The conventional strategy is to periodically let our reserves fall, have a massive blackout, and use the crisis atmosphere that follows to ram through plant and line construction quickly. This reactive, crisis driven deployment schedule does not serve society well as each crisis is costly and the rush to approve while the anti-forces are in disarray will lead to bad decisions being made.

The better solution is to break off at least one of the three coalition partners and create a durable political solution which will allow plant and line construction to proceed on a normal schedule as needed. But who can be peeled off?

The Luddites are the core resistance. They will always be in favor of less power, less technology. Getting rid of that problem is missionary work, not coalition building. The luddite grouping, unfortunately, has the disadvantage that it generally falls a false flag and luddites claim to be NIMBYs or environmentalists.

The easiest way I've found to tell a luddite flying a false flag is to discuss fusion. A luddite will be opposed to clean, safe, plentiful energy because it will enable us to indefinitely continue in our 'sinfully wasteful' ways. When an environmentalists says not to build a fission plant but to wait for fusion which will be clean and safe, the luddites grimace and groan.

NIMBY and environmentalist concerns are much more straightforward. NIMBY factions arise because of health, safety, and aesthetic reasons. A power plant that is not seen and not felt is a powerplant that has no NIMBY opposition to it. Property value drops are their core motivation and if you can create a non-visible power infrastructure that raises property values, they'll swap sides.

Environmentalists are clean energy fetishists. There's no problem with energy solutions which don't pollute and their major objection to power transmission lines is that you have to cut down trees to safely maintain the lines. These unnatural meadow corridors make many environmentalists unhappy.

A smart energy network tears at the internal cohesion of the anti-energy coalition Local generation through neighborhood based microturbines reduce the need to shift power into residential neighborhoods while they would keep the lights on during grid-wide blackouts. This reduces the attractiveness of a blackout terrorist strategy by creating islands of light that can be replicated at will. Individual options are wider than the inefficient solar that SDB allows.

SDB is in error when he says that there is no way to store electricity. You store via conversion (as he admits in his own example of pumping water uphill) and there's a relatively new contender for storage he doesn't examine.

As any veteran of the hydrogen debates quickly finds out, a big rap against hydrogen is that it's not found free in nature so hydrogen power is, essentially, a highly efficient battery replacement. You have to spend energy to make hydrogen energy. But this negative is turned into a positive when the problem is electricity generation time shifting. Power that is surplus can be converted into hydrogen and the hydrogen shifted back to electricity at peak demand or piped elsewhere for fuel cell use (perhaps to fuel the cars that will be coming down the road using this power source). It's quite likely that power line loss will be greater than hydrogen loss for similar distance hauls.

The smart power market I advocate would provide supply and demand contracts in real time. The engineers would be able to monitor the market and adjust their own efforts much more quickly without having to guess at aggregate trend lines as SDB informs us is the current system for independent individual power producers. Markets operate very fast and there are very well developed swystems for dealing with the problem of drowining in data.

I'm on the road right now and will probably take up this subject further as I have time.