And if disaster strikes? You’ll live

Consider if  electricity prices quadrupled over night.  How disastrous would that be? The people of Juneau, Alaska found out.  The place is still on the map.

Juneau, the state capital is geographically isolated from the rest of the state with a population of 30,000.  It was supplied with hydropower until a recent avalanche knocked out pylons and the city became dependent on back up oil generation.  At today’s prices,  definitely a case of being in the wrong place at the wrong time.

Security of supply itself wasn’t an issue.  What was doubtful was public reaction to high prices.  But guess what?  Demand has been cut by over 40%.

The epilogue to this story, what happens once prices revert to hydro prices will be interesting.  Demand will bounce back for sure, but to what level?

Key paragraph here :  Energy conservation is a hard sell in much of the U.S., but the situation in Juneau seems to be evidence that people will change their ways if the financial incentives are big enough.

An aside:  How come energy customers of all levels, in what  can only be kindly described as the ass end of the middle of nowhere,  get automated meter readings and never an estimated bill, a luxury that the UK government says would cost too much even for business consumers?

Not so Energy Intensive User’s Group

From The Economist  a quick glance at Energy Intensity per Unit of GDP, which is falling worldwide.  As regards the UK, this is interesting as the rate of decrease is far slower than that in the US and Denmark for two examples.   Some of the  US figure is based on export of smokestack industries, but what’s the UK’s excuse?  The US would appear to have embraced the idea of efficiency, and Denmark is reaping the benefits of it’s wind industry.  The UK, as usual, is just muddling along.

We can never pass up an opportunity to highlight the counter-intuitive  and here is a big one:   despite a common perception that China is enveloping itself in coal smoke while causing the current price spike by slaking an insatiable thirst for oil and gas,  China is far more successful in lowering energy output per unit of GDP than all the others, and is more energy efficient on that standard than the UK.

Negawatts, not Kilowatts

AP article on smart metering in Pennsylvania gives a balanced account of smart metering on the domestic side.

Note how the cost is $200 as opposed to the UK’s estimate of £300+.  Two Way Metering, where a householder can export  power as well as respond directly to price signals from wholesale markets, is  more problematic in markets where supply and distribution and metering have  been separated (as in the UK).   

Where distribution and supply are from the same provider,  SM gives an incentive for the electric utility to truly innovate, as opposed to mere financial engineering in the UK model.   Enabling and incentivising customers to use peak shaving models themselves makes more sense to the supplier than building more power stations.  In effect, installing SM is installing negawatt capacity as opposed to megawatts.  A rather zen concept, where doing nothing is as valuable as buying or selling something, but it’s the conceptual root of carbon trading as well as the future of energy supply.

Why is the UK so Dumb on Smart Metering?

After months of hemming and hawing, BERR said this week that smart metering would cost too much.  BERR did a classic framing trick.  They came up with a figure of over £16 billion as the cost of SM introduction.  But that is about £340 per meter based on 45 million meters, whereas any meter provider will give you a rate of £100 today.  Assume they are right and amortise that cost over the 20 year average meter life and it’s a far less scary £17 per year.  Almost any study says that a minimum of 5% reduction can be anticipated producing a net saving on a £1000 average domestic bill is £33 per year.  All of a sudden BERR have some holes in their figures.  A giant hole is why the high cost:  The California Public Utility Commission is mandating the roll out of 10.1 million meters at a cost of $165 per meter.  Italy rolled out 30 million two way electric  smart meters in five years at €70 each.  On the subject of time frames,  BERR thinks it will take at least 10 years, despite 40,000 obsolete meters being replaced every week in the UK with…obsolete meters.   

If BERR ran Weight Watchers, they would throw out those tiresome scales.  They think the best way to reduce costs is through competition.  Out in the real world, there is a natural human response to feedback, and that is where SM will, one of these decades, work best.

UK based but with a global scope, No Hot Air provides information on various energy issues but especially in the global implications of shale gas.