Grid2.0 – electricity as commodity

Paul Raven @ 31-03-2009

electricity pylonsMuch attention is currently (arf!) focussed on making our energy grids cheaper and more efficient, with lots of new ideas being batted around. Here’s a proposal which already appears to be working in one region: start treating electricity as a commodity as well as a utility.

Treat electricity like a commodity—something for which you can gauge demand and set a price in advance. That’s what New England’s independent system operator started doing last year. In its Forward Capacity Market, the ISO projects how much power the region will need three years ahead and then runs a descending-clock auction for the right to provide it. The ISO doesn’t care whether it gets its power from increased production of megawatts or from efficiencies added to the system, so-called negawatts. The agency simply sets the starting price.

Result: money saved in power plants and wires, more stable electricity bills, and a homegrown incubator for getting bright green ideas off the drawing board.

Anything that can prevent my quarterly electricty bill from doubling in cost as it did over the winter just past sounds like a good plan to me, though I’m never astonishingly keen on introducing middleman agencies into an already costly system.

Furthermore, I’m not sure how much protection the commodity trading of electricity would grant us from the civilisation-smashing power of solar weather[image by aloshbennett]

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One Response to “Grid2.0 – electricity as commodity”

  1. Tomas Martin says:

    The industry term is ‘decoupling’. I don’t it neccessarily needs to be treated as a commodity, more that utilities can make similar amounts of money per ‘consumer energy use saved’ as they do per energy generated. This move would greatly help a system currently biased so that utilities want us to be wasteful. Enacting a country or worldwide decoupling system would move the energy efficiency movement forward a huge amount, whether funded by commodisation or government subsidies.