The California Energy Commission, using technology to steal a march to the past, has proposed that all new buildings have thermostats under mandatory control by the power companies. It is hinted that there will be some exceptions, perhaps for health reasons. Look for the exemptions to be applied as a new source of patronage, with the occasional widow and orphanage puff piece in the press to cover up a highly politicized allocation process. In the 1930’s, central societal control of models were all the rage among the cognoscenti, and the only models that technology could support. Today, such ill considered efforts that the liberating power of modern technologies make me ashamed of my native state.
As bad as it is to train the populace to surrender autonomy to their technocrat overlords, it is worse that such regulations will hamper the development of new solutions that could save much more energy. Zero net energy buildings (the 2030 challenge) require active participation and involvement . New markets in energy will drive new savings and efficiencies. California is about to misuse technology to shed load badly, just as they misused regulation to create bad energy markets (Enron).
Buildings and Businesses will participate in active energy management when the transactions look like business, not like control. Markets preserve human autonomy while providing incentives to develop new solutions. Technology, when properly applied, enables energy use to be driven by markets.
Last spring, I wrote about Peter Kelly-Detwiler’s Option Calls on Customers as an improved way to sell demand response to owners and tenants. This approach is far superior to control operations for 3 reasons. (1) It makes energy management into a benefit rather than a burden, moving it out from the Maintenance Back Yard (behind the Back Room), and into the C-level suite. (2) It focuses energy control on the times of scarcity, rather than all the time, when its affect will be greatest. (3) It leaves the customer with the greatest range of behaviors to respond to a shortage.
Business options will always be larger than mere control options. Assume that I get a day ahead forecast. Tomorrow will be a scorcher and electricity will be scarce. Under a control model, all I can do is move up the thermostat. Under the business model, if the price is right, I can cancel all meetings and declare a telecommuting day and shut off the building.
One potential problem with the Options model is that the failure to execute an option, the lack of follow through on an accepted deal, can push a system into a crisis of or cause the utility to incur great expense to buy on the spot market. Real business markets will require real penalties for non-execution. Which leads me to my thought for the day; what to do if I short my energy needs for tomorrow?
Without execution penalties, not much. Without execution penalties, the utility company will have to somehow swallow the problem, perhaps by turning down all thermostats. With penalties, financial penalties, the problem becomes that of the owner who made the commitment.
Perhaps I can meet 85 percent of my commitment at an agreed upon price. I might be willing to buy, on the spot market, the remaining 15% at an double that price to preserve the overall deal. This price, far higher than the utility is offering, might make market participation attractive for the smaller business across the street. At that price, that company might have its own strategies that it is willing to use.
Energy Arbitrage is just one of the markets that might develop when we have an intelligent grid negotiating with intelligent agents in each building. It is also another market that won’t develop in California…