Agents invade real-work consumer electricity market

[Robert Holmes-2]

Yes it could, indeed that's what the UK's National Grid have done with the
Dinorwig pumped storage hydro station: it fills the top reservoir at night
(low demand, low price) and releases it during daytime peaks (high demand
high price). Now just how much of this saving get's passed on to consumers
is another question...

However once you centralize you have to address a bunch of regulatory
issues, not least who owns the wires. If my local community bands together
and invests in one of these devices to buy cheap electricity from PNM, could
we reasonably expect to use PNM's wires from the device to our houses for
free? Or would we have to start laying and (even worse) maintaining cable?
Either way, the economics would get even more unattractive.

Robert



On 5/1/06, Rogers, Raymond <raymond-rogers at idexx.com> wrote:

>
> What I don't understand is the advantage of having one in every house.
> Couldn't the same function be centralized; if you don't  trust commercial
> entities a Grange type of centralization might do.
>
> RayR
>
>  -----Original Message-----
> *From:* Robert Holmes [mailto:rholmes62 at gmail.com]
> *Sent:* Monday, May 01, 2006 10:33 AM
> *To:* Charles Gieseler; The Friday Morning Applied Complexity Coffee Group
> *Subject:* Re: [FRIAM] Agents invade real-work consumer electricity market
>
> Interesting - though I'd be surprised if their domestic model took off
> ($10k to save their 15% on you electricity bill means a long time before
> breaking even).
>
> Now what would be really exciting would be if your little eTivo was
> allowed a great deal of autonomy: rather than just choosing when to buy it
> could decide who to buy from, maybe collaborate with other eTivos in the
> neighbourhood to get a bulk discount, maybe start selling back to the power
> company. And I'm sure there'd be some really interesting dynamics if you
> programmed your eTivo to tell lies....
>
> Robert
>
> On 4/29/06, Charles Gieseler <charles_gieseler at yahoo.com> wrote:
> >
> > Hi everybody,
> >
> > A story came across slashdot last week about a device for businesses and
> > households that takes advantage of dynamic pricing to buy and store
> > electricity on behalf of the owner. It uses "a built-in computer powered by
> > a Pentium chip [that] will make intelligent purchase decisions, buying when
> > prices are low, then storing the electricity for later use."
> >
> > My favorite quote: "Think of it as a kind of TiVo for electricity."
> >
> > If such devices become prevalent, I wonder what impact we might see on
> > market patterns. Might there be rolling off-peak hours as all agents try to
> > buy at the "right time" or are the likely to reach some kind of equilibrium
> > where the price remains relatively stable? Sounds like an interesting
> > situation to model.
> >
> >
> > Here's the slashdot blurb:
> > http://hardware.slashdot.org/article.pl?sid=06/04/27/2117240
> >
> > Cheers,
> > Charlie
> >
> >
> >
> >
> >
> > ============================================================
> > FRIAM Applied Complexity Group listserv
> > Meets Fridays 9a-11:30 at cafe at St. John's College
> > lectures, archives, unsubscribe, maps at http://www.friam.org
> >
>
>

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[Parks, Raymond]

Robert Holmes wrote:
> Yes it could, indeed that's what the UK's National Grid have done with
> the Dinorwig pumped storage hydro station: it fills the top reservoir at
> night (low demand, low price) and releases it during daytime peaks (high
> demand high price). Now just how much of this saving get's passed on to
> consumers is another question...

   I know of at least two utilities in the US that use pumped hydro
stations, one of which had an accident earlier this year in which the
upper reservoir dam failed, washing away a park ranger and his family.
This is practical for utilities but not for individuals (unless you have
a really big cistern in your attic.  I'm not sure how either one passes
on the savings, if any.

> However once you centralize you have to address a bunch of regulatory
> issues, not least who owns the wires. If my local community bands
> together and invests in one of these devices to buy cheap electricity
> from PNM, could we reasonably expect to use PNM's wires from the device
> to our houses for free? Or would we have to start laying and (even
> worse) maintaining cable? Either way, the economics would get even more
> unattractive.

   Wheeling will become a necessity in the future, as distributed
generation facilities expand.  Wind farms (not owned by a utility) will
need to wheel their output to customers via utilities' transmission
systems.  This isn't a new requirement for utilities - they already
transport electricity across their transmission systems.  Some of this
comes from generation facilities that sell to metropolitan areas with
which they have no connection.  There's a daily and hourly bidding
process that manages the supply, including the transport.  There are
regulatory entities, called balancing authorities, that exact fines if a
utility fails to provide the necessary transport capacity (or uses some
of the electricity in transit).  In some areas, the transmission grid is
managed by an independent system operator (ISO) that makes this easier.
  Last year, I reviewed a security requirements document for distributed
generation facilities to connect and work with transmission systems.  As
long as the volume of electricity flow does not exceed the capacity of
the transmission system, the economics are relatively simple.

> On 5/1/06, *Rogers, Raymond* <raymond-rogers at idexx.com
> <mailto:raymond-rogers at idexx.com>> wrote:
>
>     What I don't understand is the advantage of having one in every
>     house.  Couldn't the same function be centralized; if you don't
>     trust commercial entities a Grange type of centralization might do.

   In many places, either voluntarily or mandatorily (in the case of
California), utilities are implementing Advanced Metering Infrastructure
(AMI) to let residential consumers manage their demand (or allow the
utility to manage their demand).  Programs like this have been in place
for some time for C&I (commercial and industrial) customers.
Demand-side management has been used for over 15 years in some places.

   AMI demand response depends on the consumer to see how much
electricity is costing them and choosing to use less when it costs more.
  The approximate lag is about 15 minutes, so it is relatively
real-time.  The response can be automated, either by triggering at a
threshold or all the time, to allow the utility to turn off certain
high-demand pieces of equipment remotely.  For example, during the
hottest day of the summer, the utility would turn off 25% of the
air-conditioners for 15 minutes every hour.  This would probably mean
that units which have just been turned on would start operating and
demanding energy, but the demand will not be greater than 75% of the
potential peak if all the air conditioners turned on at once.

   This whole system stems from the fact that electrical infrastructure
has two elements that make up its cost - the (relatively) fixed cost of
reaching all consumers and the variable cost of the "bandwidth" of that
connection.  The cost of generating and delivering the average amount of
electricity used by C&I and residential customers is the relatively
fixed cost.  However, the variance from average is relatively high.
During some times of the year, electricity usage is much lower and at
other times much higher.  The transmission and distribution
infrastructure needs to be built to supply the bandwidth for the high
points.  What's more, the generation needs to be variable, with the
ability to efficiently supply the smallest amount of electricity and the
highest peak usage rate.  Incrementing the peak usage rate is very
costly - new electric lines must be run, interconnections made,
transformers placed.  What's worse, generating plants are wasted if they
don't run at maximum capacity.  The base level of electricity required
is supplied by big, efficient power plants running at nearly their
maximum capacity.  The variance is made up of smaller, less efficient
plants that can be brought on-line quickly.  Thus the peak is reached by
using smaller and smaller (and increasingly expensive) generation
plants.  Bringing down the peak usage can provide economic benefits all
out of proportion to the apparent difference.

In think we're back to Robert Holmes:

>         Interesting - though I'd be surprised if their domestic model
>         took off ($10k to save their 15% on you electricity bill means a
>         long time before breaking even).
>
>         Now what would be really exciting would be if your little eTivo
>         was allowed a great deal of autonomy: rather than just choosing
>         when to buy it could decide who to buy from, maybe collaborate
>         with other eTivos in the neighbourhood to get a bulk discount,
>         maybe start selling back to the power company. And I'm sure
>         there'd be some really interesting dynamics if you programmed
>         your eTivo to tell lies....

   We at Sandia believe that distributed energy is where we are all
going.  And you've just brought up one of the key issues involved -
security.

>         On 4/29/06, *Charles Gieseler* <charles_gieseler at yahoo.com
>         <mailto:charles_gieseler at yahoo.com>> wrote:
>
>             Hi everybody,
>
>             A story came across slashdot last week about a device for
>             businesses and households that takes advantage of dynamic
>             pricing to buy and store electricity on behalf of the owner.
>             It uses "a built-in computer powered by a Pentium chip
>             [that] will make intelligent purchase decisions, buying when
>             prices are low, then storing the electricity for later use."
>
>             My favorite quote: "Think of it as a kind of TiVo for
>             electricity."
>
>             If such devices become prevalent, I wonder what impact we
>             might see on market patterns. Might there be rolling
>             off-peak hours as all agents try to buy at the "right time"
>             or are the likely to reach some kind of equilibrium where
>             the price remains relatively stable? Sounds like an
>             interesting situation to model.
>
>
>             Here's the slashdot blurb:
>             http://hardware.slashdot.org/article.pl?sid=06/04/27/2117240
>
>             Cheers,
>             Charlie
>
>
>
>
>
>             ============================================================
>             FRIAM Applied Complexity Group listserv
>             Meets Fridays 9a-11:30 at cafe at St. John's College
>             lectures, archives, unsubscribe, maps at http://www.friam.org
>
>
>
>
> ------------------------------------------------------------------------
>
> ============================================================
> FRIAM Applied Complexity Group listserv
> Meets Fridays 9a-11:30 at cafe at St. John's College
> lectures, archives, unsubscribe, maps at http://www.friam.org

--
Ray Parks                   rcparks at sandia.gov
IDART Project Lead          Voice:505-844-4024
IORTA Department            Mobile:[phone]
http://www.sandia.gov/scada Fax:[phone]
http://www.sandia.gov/idart Pager:800-690-5288