Hidden Costs of Externalities
Charles Bayless recently retired as President and Provost of the West Virginia University Institute of Technology. Previously he was Chairman, President, and Chief Executive Officer of Illinova Corporation and its wholly owned subsidiary, Illinois Power Company. Prior to joining Illinova Corporation, he was Chairman, President, and Chief Executive Officer of Tucson Electric Power Company.
"It is a mistake to think you can solve any major problem just with potatoes."
—"A Hitchhikers Guide to the Galaxy," Douglas Adams
The electric grid has been described as the most complex machine ever. The National Academy of Engineering called it the supreme engineering achievement of the twentieth century. Yet we continue to rush towards a renewable future without considering overall system design, the costs that various renewable scenarios impose on grid operation, and the operation of the grid with these scenarios.
When the externalities of climate change and ocean acidification create an overwhelming mandate to move away from fossil fuels, we have no choice but to go forward. Shouldn't we try to pick the cheapest path?
Externalities
The clash of opinions in the energy industry today is not caused by regulated versus free market economics. Rather, it's between the utility industry and new free market entrants. The utilities have historically considered reliability and stability to be vitally important and designed the overall system for the lowest overall cost. The new free-market entrants are concerned with profit optimization and growth in their particular segment of the industry, but ignore overall system costs.