Discussing Energy Economics on the Internet

Google, Microsoft Drop Home Energy Products

Posted in Demand Management,Smart Meters by Cheryl Morgan on the July 5th, 2011

Last week Google announced that it would be discontinuing its PowerMeter product, which allowed users with access to the requisite data to monitor their home energy use online. Within days Microsoft followed suit, announcing the end of their Hohm product.

Lack of customer interest was cited as the primary reason for the death of both products but, as Tom Raftery at Sustainable Business explains, that lack of interest was primarily a result of being unable to get access to the data that the applications needed. Even if suitable meters were available, the level public disquiet over smart meters must have deterred take-up.

Christine Hertzog at The Energy Collective suggests that what is needed is some sort of loyalty scheme that would somehow “gamify” the process of saving energy. I’m not entirely sure that would work. Most such schemes concentrate on encouraging the consumer to spend more in order to get yet more things cheaply. A system that encouraged people to consume less in order to save money would need a rather different dynamic. And if it resulted in the saved money being spent on more consumer goods, would that really reduce energy use?

The other problem, of course, is that the amount of money that can be saved has to be worth the effort. One of the reasons that retail competition has been such a damp squib is that the effort required to switch supplier has been quite large given the relatively small amount of money that can be saved by doing so.

Still, I don’t even have the option of installing a smart meter here in the UK. When I do, I shall be interested to see what energy management tools and incentive schemes I am offered with it.

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Save Energy, Grow Trees

Posted in California,Demand Management by Cheryl Morgan on the January 5th, 2009

California has come up with yet another way to reduce energy consumption, and it has solid green credentials. The idea is simple. If you grow trees on the south side of your house then they will shade it against the sun, and you’ll need less air conditioning.

Hint: please don’t plant redwoods. Beautiful as they are, you really don’t want one of those giants next to your house. Eucalypts are also not a good idea, because they are very fond of burning.

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Greening Energy Centers

Posted in Demand Management,Papers by Cheryl Morgan on the December 11th, 2008

There is a new paper available in UCEI Berkeley’s Energy Development and Technology series. Written by Arpad Horvath and Arman Shehabi, it looks at ways in which those energy-hungry server farms can do their bit towards reducing our carbon footprint. Here’s the abstract:

Data centers greatly impact California’s natural environment and economy. These buildings host computer equipment that provide the massive computational power, data storage, and global networking that is integral to modern information technology. The concentration of densely packed computer equipment in data centers leads to power demands that are much higher than those of a typical residence or commercial office building. Data centers typically consume 15 times more energy per square foot than a typical office building and, in some cases, may be 100 times more energy intensive (Greenberg et al. 2003). Nationally, data centers consumed 61 Terawatt hours in 2006; equivalent to the practical power generation of more than 10, 1 Gigawatt nuclear power plants (Brown et al., 2007). This is approximately equal to annual electricity consumption for the entire state of New Jersey (EIA, 2006). California has the largest data center market in the U.S., indicating that a significant portion of this energy is consumed within the State (Mitchell-Jackson, 2001).

This research project focused on identifying how data centers are currently designed and exploring potential energy saving associated with alternative building design options. The energy savings were quantified to understand when design changes resulted in significant benefits and when the benefits from alternative designs were minimal. The potential energy savings benefits were juxtaposed against changes to the environmental conditions in data centers and evaluated within the context of computer reliability concerns. The objective of this research is to provide data center designers and other decision makers with a better understanding of the benefits and concerns associated with data center energy efficiency, thereby reducing the unknown consequences that may hinder attempts to shift away from conventional design practices.

And you can read the whole paper here.

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USAEE 2009 – The Rosenfeld Curve

Posted in California,Demand Management,Papers by Cheryl Morgan on the December 5th, 2008

Time to be nice to Stanford for a change. The best paper I have seen here was delivered by Anant Sudarshan, a PhD student studying under Jim Sweeney. It was about the Rosenfeld Curve. For those of you from outside California, this is all about the fact that while most of the US has high and ever-increasing electricity use per capita, the usage levels in California have been steady since the 1970s are are currently similar to those of responsible Scandinavians such as the Danes. Many people want to know why this is so. Some excuse it on the basis of California’s balmy climate, lack of heavy industry and very high prices. Others give credit to the state’s progressive demand reduction policies.

At Sweeny’s suggestion, Sudarshan set about testing various variables to see which ones had actual explanatory value. You can read the whole paper here. I haven’t had a chance to do so yet, but here are some key points I got from the presentation.

  • The lack of heavy industry is not a major explanatory factor
  • California’s commercial sector uses significantly less floor space per capita than the rest of the country (possibly due to high property costs)
  • The average size of families in California is rising, while it is falling in the rest of the country (large families use less energy per capita due to economies of scale)
  • California has a higher proportion of poor families than the rest of the country
  • Around 23% of the reduced usage can be ascribed to policy effects (high prices were counted as a policy, but policy also included things such as buildings and appliance standards)

While the California Energy Commission will doubtless be disappointed not to be able to take the entire credit for the Rosenfeld effect, 23% is still a significant proportion of the savings and California’s policies might therefore be usefully adopted by other states wishing to reduce electricity demand growth.

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USAEE 2009 – Thursday Evening

Posted in Climate,Conferences,Demand Management,Louisiana,Market Design by Cheryl Morgan on the December 4th, 2008

I caught a plenary session on demand management and renewables that was quite interesting. Brandi Colander of NRDC gave a lightning fast presentation on demand reduction starting from the fact that DR is apparently much cheaper than generation, but no one puts any money into it. There are many reasons for this, but one that I hadn’t thought of before is rental property. If a property is rented and the tenant pays the energy bills then the landlord has no incentive to improve the property, but if the landlord pays the energy bills then the tenant has no incentive to manage usage. Regulatory issues play a part too, and Brandi was very hot on the need to decouple utility profits from the process of selling more energy.

The session on restructured markets majored on issues regarding whether consumers are better off under deregulation. Jay Zarnikau revealed that in Texas prices had risen much more in the areas of retail competition than in areas where prices are still regulated, but the market is young and that could simply be a matter of private companies passing on costs more quickly than regulators. John Kelly of APPA claimed that prices in the PJM have risen much more sharply than prices in neighboring regulated states, but it is one thing to say that this has happened and another to prove that it is the result of anti-competitive behavior.

The Japanese are apparently worried about their nuclear industry because no one wants to work in it. This is a story that the UK can probably relate to.

The winner of the student paper contest was Derek M Lemoine from Berkeley for a paper using real options to value plug-in hybrid vehicles. Go Bears! (And yes, one of the other finalists was from Stanford.)

The after dinner speaker was Brent W. Dorsey, the Director of Corporate Environmental programs at Entergy. It is perhaps unsurprising that the company whose systems have been wrecked by hurricanes Rita, Katrina, Gustav and Ike believes in global warming, but it was still a pleasure to hear a senior utility executive not only say so, but quote The Onion to make his point. Of course Entergy’s money is not in the coal business, but Mr. Dorsey recognized the plight of his colleagues in the industry and made an impassioned plea for the US to become a world leader in technologies such as clean coal and carbon sequestration, which it could then export to China and India.

We have another full day of program tomorrow.

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New CSEM Paper on Daylight Saving

Posted in Demand Management,Papers by Cheryl Morgan on the November 7th, 2008

UC Berkeley’s Center for the Study of Energy Markets has released a new paper on the energy-saving benefits, or lack thereof, of clock changes. It is by Matthew J. Kotchen and Laura E. Grant of UC Santa Barbara. Here is the abstract:

The history of Daylight Saving Time (DST) has been long and controversial. Throughout its implementation during World Wars I and II, the oil embargo of the 1970s, consistent practice today, and recent extensions, the primary rationale for DST has always been to promote energy conservation. Nevertheless, there is surprisingly little evidence that DST actually saves energy. This paper takes advantage of a natural experiment in the state of Indiana to provide the first empirical estimates of DST effects on electricity consumption in the United States since the mid-1970s. Focusing on residential electricity demand, we conduct the first-ever study that uses micro-data on households to estimate an overall DST effect. The dataset consists of more than 7 million observations on monthly billing data for the vast majority of households in southern Indiana for three years. Our main finding is that­ contrary to the policy’s intent­ DST increases residential electricity demand. Estimates of the overall increase are approximately 1 percent, but we find that the effect is not constant throughout the DST period. DST causes the greatest increase in electricity consumption in the fall, when estimates range between 2 and 4 percent. These findings are consistent with simulation results that point to a tradeoff between reducing demand for lighting and increasing demand for heating and cooling. We estimate a cost of increased electricity bills to Indiana households of $9 million per year. We also estimate social costs of increased pollution emissions that range from $1.7 to $5.5 million per year. Finally, we argue that the effect is likely to be even stronger in other regions of the United States.

You can read the whole paper here. And here is the Wall Street Journal’s take on the subject.

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FERC Gets Busy

Posted in Demand Management,Regulation,USA Federal by Cheryl Morgan on the October 28th, 2008

October has been a busy month for FERC, with a lot of major rulings on electricity market operation being issued. Part of the activity has been regarding the role of the demand side, and Michael Giberson at Knowledge Problem has a long post addressing the various issues. Other rules, summarized by Tracy Davis at Energy Legal Blog, touch more directly on market power issues.

Something that is likely to result in a good deal of head scratching around California is that FERC now believes that long term contracts are a good thing. If only someone had been able to explain that to California legislators before things got ugly.

FERC has also insisted that market monitoring departments be responsible directly to RTO/ISO boards, not to management. Hopefully that will put an end to any silliness about market monitors being muzzled because their findings reflect badly on the market they are monitoring. FERC has even given market monitors the power to report directly to them if they believe that an RTO or ISO is guilty of misconduct.

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California Issues Conservation Alert

Posted in California,Demand Management by Cheryl Morgan on the July 8th, 2008

With a heat wave building up and wild fires already affecting many areas the California ISO has issued a “Flex Alert” warning to consumers for today, tomorrow and Thursday. The ISO does not expect power to be interrupted, but voluntary demand-side management agreements may be called into play. Californians had a lot of practice at power conservation during the infamous energy crisis, and the systems developed then are now used to encourage responsible energy use during times of nature-induced shortages. CA ISO’s press release can be found here, and consumers are being directed to the special Flex Your Power web site that gives tips for reducing energy use.

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