Contrary to conventional wisdom, electricity demand isn’t immune to price elasticity, and rate designs can encourage conservation. In particular, inclining block rates coupled with dynamic pricing...
Don't Choke: How to Transform Technology
Infrastructure investment has been on a starvation diet. Here’s how to feed the need.
In October, the North American Electric Reliability Council (NERC) issued its first long-term reliability assessment report in its new role as the nation’s federally mandated reliability organization. The report found that under current trends the U.S. electric power system may not be able to meet customer demand in much of the country 10 years from now.
While this estimate made headlines around the country, it was hardly shocking news to those of us in the field. What should be alarming, however, is the continued belief that we can incrementalize our way out of this impending crisis by installing more of the same outmoded technology.
Because of its life-support investment diet, the electricity infrastructure has grown dangerously vulnerable to all manner of reliability, security, and service infirmities. The 2005 Energy Policy Act provides an important initial stimulus for this transformation.
Transformative change will require massive shifts in every aspect of the electricity sector, from how we define reliability to how electricity is regulated and sold. It will require a working consensus that electricity is more than just another form of commodity energy, but is instead the underpinning of our modern quality of life and the nation’s indispensable engine of prosperity.
A transformed electricity enterprise confidently and sustainably will provide the nation’s most essential platform for technical innovation, productivity growth, global competitiveness, and continued economic prosperity. In hard numbers, a conservatively estimated $2 trillion per year in additional revenue could be available to both the private and public sectors by 2020 if the electric-power system were transformed wholly into one that is substantially more efficient and totally reliable. This would enable the nation to generate the additional wealth necessary to deal with the growing societal, security, and environmental challenges of the 21st century. It stands to reason, then, that the flip side of this equation could choke our economy in the global marketplace.
The Growing Need for Technology Transformation
With that understanding, we can then take the first step in this transformation process: accepting that we must do more than just react to a greater number of consumers in the future. Instead, we need to meet fundamentally different needs—needs that exist in subsets of society today but will become nearly universal in the next decade or two.
Today electricity can benefit from a healthy spirit of discontent with the status quo. The fundamental principle is that “quality always saves.”
The Galvin Electricity Initiative— a nonprofit, public-interest project founded by former Motorola chief Robert W. Galvin—recently released a report that considered consumer needs for electric service in the year 2025.
Using scenario-planning techniques, the Galvin team of technological and electricity experts and futurists first sorted through current trends to discern the fundamental factors driving what consumers will need from their