Winds of Power

After reading all the comments left after this latest round, I decided that I have nothing subatantively new to say, that people (M. Simon in particular) are leaving comments without reading or thinking about what I have written. So therefore endulge me if you will, as I quote myself over and over again to refute the sometimes rude and disparaging comments being made here about what I’ve written.

Engineers have a rotten tendency to take things, sometimes quite selectively, way too literally. This appears to be the case with regards to the “packetizing” of electricity that I “suggested”. Allow me to quote myself:

What’s needed is for each “packet” or grouping of electricity to be inventoried and numbered, in a manner of speaking. This will facilitate the construction of large backhaul networks, much like the Internet currently has, which will carry electricity by means of the most efficient route available, from the place you’re buying power from to your home or business. And if some freak in Canada blows up his own power plant, no worries. Not only will everybody else remain unaffected, but even those Canadians within range of teh original problem could quickly and easily be routed power from someplace else, minimizing the downtime for everybody.

That is, IN A MANNER OF SPEAKING!!!!! Learning how to read isn’t just a matter of being able to enunciate the words in front of you, but being able to comprehend their meaning. In this case, it’s to say that I was speaking metaphorically. The use of quotes around the word “packet” should have also clued the reader in. The solution I suggest is not to literally create packets. Allow me to continue quoting from myself:

The metaphor often used to describe the way the current system works is that of a lake, where you have a number of “water providers” pumping water into the lake, and lots of consumers siphoning water out of the lake. And so long as the two remain at equilibrium, everyone is happy. A consumer can buy his water from any one of the providers, and even if the individual molecules of water he consumes didn’t come from his provider, since every drop is the same as every other drop, it shouldn’t matter.

This metaphor is, of course, currently correct. Electricity, like water, cannot be inventored on an electron by electron basis any more than water can be inventoried on a molecule by molecule basis. As a result, the metaphor ends there. Better routing, preferably among multiple private providers who can know how much power they get and from what source, would be inordinately valuable in creating a better, more reliable system, with multiple, redundant, and private long-haul providers. We don’t have that today.

Others have pointed out (politely, and offline), that for real routing to occur that better storage is required, that the routers will need to be able to store electricity in order to effectively route it. For this, things like Simon’s flywheel make some sense (no link intentional). But it shouldn’t exactly be necessary. And we can start working on those processes today.

Local Generation:
Simon asserts that physics get in the way of local generation, that producing electricity in bulk using less costly fuels will always beat out cost of generating electricity. Sure, efficiencies of scale will generally beat out smaller turbines on a per kilowatt/hour rate, and small local users will likely never want to shovel a dirty fuel like coal into a furnace to generate their power locally. HOWEVER, this type of analysis entirely ignores the ECONOMIC costs associated with periodic power outages. For some, most notably, Oracle, the OPPORTUNITY COST (that’s an economic term, look it up people) of having the power unexpectedly drop is too high, and drives the overall economic cost of power higher than it would be were they to generate it locally and reliably. It is, in fact, a recent technological development that enables companies to generate their own power at a rate that is less than the total economic cost of power delivery via the grid.

I could say that any old engineer who can quote ohms law thinks he’s an expert in economics, but I won’t. What I will say is that arguing from authority is a very basic loigical fallacy, and that writing cell phone manuals does not make one an economist.

Landscape Analysis:
Let me begin by again refuting the argument from authority that Simon engages in, and state for the record that we did in fact vett our work by power industry executives, including the head of utilities consulting for one of the (then) big five consulting firms (and no, it wasn’t Andersen).

The Landscape Anaysis document was designed to be a starting place for someone who was unfamiliar with the policy discussions surrounding electricity deregulation could get caught up and learn about the industry. Stranded costs are one such issue. Stranded costs, for those unaware, are those costs which utilities incurred under a regulated environment, but which may not be recoverable in a deregulated environment. The utilities argues that they should have their stranded costs paid for by the public. Real free market types, such as those at the Cato Institute, have made the argument that they should be borne by the utility and its shareholders. It’s a debate, and the document doesn’t take sides in the debate. Nor, incidentally, does it present a business plan of any sort, but rather outlines what may have been some opportunities for an Internet business in the deregulated utilities market.

Someone truly in the know would be aware of such debates. And a real free marketeer wouldn’t sneer at the notion that the company who had benefited at the public trough in a government mandated monopoly for so many years deal with their own stranded costs. Regardless, you can read an example of that debate here.

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To conclude, with all due respects to Winds of Change, a respectable blog that has published Simon’s articles in the past, Simon’s comments are questionable and rude. He calls himself a “Free Market Green,” but seems to hold views antithetical to the free market, and the only green I can see there is envy, over the fact that this analysis has recieved the attention it has and who the fuck knows what the Sierra Times is even (it’s published in Africa).

This is the last I’ll probably speak about this, as I’ve devoted too much energy to this topic to my liking already. And I have much more polite emails sent to me that are more deserving of my attention.



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