Tuesday, March 08, 2005
The authors go into detail about the technical, political, and regulatory factors that have led to, and that maintain, the obsolete paradigm of central production of electrical power. They build a case for changing the regulations that govern the power industry, arguing that a shift to distributed generation could lower costs, increase efficiency, and decrease pollution:
Critical Thinking About Energy
The Case for Decentralized Generation of Electricity
Highly centralized generation of electrical power is a paradigm that has outlived its usefulness. Decentralized generation could save $5 trillion in capital investment, reduce power costs by 40 percent, reduce vulnerabilities, and cut greenhouse gas emissions in half.Thomas R. Casten and Brennan Downes
[...]Eventually a huge grid was developed and the power industry built all-new generation in remote areas, far from users. All plants were specially designed and built on site, creating economies of scale. It cost less per unit of generation to build large plants than to build smaller plants. These conditions prevailed from 1910 through 1960, and everyone in the power industry and government came to assume that remote, central generation was optimal, that it would deliver power at the lowest cost versus other alternatives. [...]
Full reliance on DG [decentralized generation] for expected U.S. load growth would avoid $326 billion in capital by 2020, reduce incremental power costs by $53 billion, NOx by 58 percent, and SO2 by 94 percent. Full DG lowers carbon dioxide emissions by 49 percent versus total reliance on new central generation.The authors go on to argue that deregulation would lead to improvements in these areas, in part by promoting the use of distributed power generation.
Putting on my Perpetual Sophomore hat, I have only two things to add. For one, I am in favor of distributed power generation. One reason for this is something they did not consider. Decentralized production is more resilient to terrorist attacks and natural disasters. Therefore, a move away from centralized production would improve national security. And it would do so without compromising civil rights.
Second, I am doubtful that deregulation would work. Deregulation is what brought us the Enron scandal. The problem with deregulation is, in some ways, analogous to the problem with Communism.
At first, this seems paradoxical: Communism is the extreme form of regulation; it is the opposite of deregulation. So, what is the similarity?
The central notion of Communism is that you take from people according to their ability, and give to them according to their needs. Sounds good, except for one thing: it is impossible to accomplish. People always find a way to distort and corrupt the process.
I would argue that the same is true for deregulation. I suppose that in a perfectly deregulated system, industries would always seek the most efficient solutions. But how likely is that, in actual practice? Not very. It assumes that "industries" will act in accordance with the best interest of the industry. But industries do not think or act; individual people do. And those individuals will do what is in their best interest. That is not necessarily the same as the interest of the industry as a whole. People always find a way to distort and corrupt the process.
The fact is, all systems that include life will have parasites. It doesn't matter whether the system is capitalist or socialist, or some mix of the two.
The only solution is to accept that parasites exist, and understand that they will feed upon you if they have the chance. Then, you design a system that functions despite the parasites. The system has to be able to evolve, in response to the changing tactics of the parasites. A system that is bound to one ideology or another does not have the capacity to adapt; therefore, it always will be vulnerable to parasites.
Choosing one ideology -- right wing, left wing, west wing, whatever -- and sticking to it, no matter what, is a strategy that is guaranteed to fail. It is like going to war with a strategy that is known to the enemy, and sticking to that strategy, even while the enemy changes theirs.
Thus, I agree with the engineering types who wrote the article: distributed power production is a good idea. I also disagree with them: deregulation is not going to work. It would work if, and only if, everyone played by the rules.
That will never happen.
Instead, we have to come up with an adaptable set of rules. When the parasites figure out how to take advantage of the strategy, you put them in jail and change the strategy. The absolute worst thing you can do is to keep going back to the same strategy, out of some sort of ideological compulsion.
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