How would you feel if someone PUBLICLY wrote …
Very eloquent James and a bloody good read. Thank you.
Can I have your permission to quote you in my technology lecture series James?
Lawrence Coomber made me day, so I thought I would share the whole story here.
I like being part of LinkedIn — yes, there is the occasion when someone is transparently trying to drum up business, but that is understandable — it’s like hitch-hikers, you can always drive by! On the flip side, one can meet fascinating people, and learn a great deal … I have taken the liberty of lifting a few elements of a discussion between myself and Lawrence Coomber, the CEO of Flowtech Water Wind Energ. Lawrence is a true gentlemen (and I mean that in EVERY sense of the word) — I have color coded the exchange (I could say for ease of reading, and I suppose it does that — I like color, too!)
The discussion came from
Will utilities prosper or perish?
and it was initiated by Tobias Engelmeier, the Managing Director and Founder, Bridge to India Pvt. Ltd.
I asked a question about the hub-and-spoke model of electrical distribution — Lawrence wrote …
Well James electricity distribution by its nature, has always been visualized and depicted in diagrams in various ways similar to a “hub and spoke format” as you describe it, and this will continue to be so forever I imagine. We refer to this as an electrical circuit and as long as we use electricity this term circuit will remain. That is electron flow physics dealt with.
The Utilities contribution to the chain has been to “add some value” to the raw base electricity generation science by distributing electricity to those of us who can through transformation and innovation make something useful that takes us all forward in life incrementally. This can reasonably be referred to as a “distribution network of electricity circuits”, which of course vary in both scale and complexity and efficiency.
So what in the near future will be different from the early distribution pioneering days? Conceptually not much really, except new age “base generation technologies” can/do/will pack a much bigger punch in a smaller and more portable package, providing for localised efficient scale distributed networks and mini networks that will satisfy the “low cost and abundant” energy model required to service the next phase of global technology deployment.
Utilities like any other business are simply the coming together of a group of people with particular expertise to make things happen. I must reiterate; Energy Utilities are in the energy production/sales/distribution business, and new age technologies are in the energy consumption business.
It still looks like a good business to be in from my perch James.
Then I responded …
@Lawrence — yes, of course being a large-scale (or even small scale) utility is now and will continue to be a good business. I don’t mean to be a jerk, but ‘Duh!’ 2003 Gross US sales of electricity = $259 Billion, 2010 = $370 Billion. A mere 44% in seven years while product delivered in kWh increased by just south of 9%. [Source: USEIA]
Hmm … is there something at work here? Let’s tear off the covers and have a look-see!
Yes, I will grant you that the utilities add value to the grid — engineers, scientists, and even accountants know the inefficiencies and losses in the system itself, so to maintain quality of service, they must invest, invest, invest! Oh well … does this cloud have a silver lining? Why yes … this is kind of a good news / bad news conundrum
BN? It costs LOTS of money to build out the infrastructure. Read “Capital Investment.”
GN? Many State PUCs allow utilities to earn an agreed upon rate of return on total asset value. When asset value goes up, rates go up! Wow.
They are publicly granted monopolies … and there are no sure things in this world. Is that footsteps I hear? Can you say, “Baby Bell”?
That’s just in America — it is interesting to hear Utility Economists discuss the impact a nation’s feedstock subsidies (like on coal or NG) have on per kWh rates. We’ll save that discussion for another day.
Here’s another point to ponder … some developing nations (a) do not have access to sufficient capital (or may have better ways to invest what they do have) than to string hundreds of billions of dollars worth of copper (or whatever) from settlement to settlement; and (b) are wondering if the ‘Yankee” grid architecture is the absolute best way to do things. They persist in a desire to do something better — perhaps they can discover a less expensive, less wasteful/perhaps even more efficient way of delivering the same or comparable benefit. They would like that!
I am not talking about hanging up a few solar panels and calling it Distributed Generation. I recall when Rocky Mountain Power (formerly owned by Scottish Power, now in the Berkshire Hathaway portfolio), employed a Vanadium Redux battery (which resided in a good sized building) to provide sufficient power (as measured in both KW and kWh) to a community that did yet warrant a high voltage transmission upgrade. RMP (then Utah Power) employed the battery for a decade or so, and then did the build out. More than one way to skin a cat.
My point is this — it is not a foregone conclusion that our hub and spoke model is necessary in all cases — perhaps a corollary can be found in telecommunications — there are regions in the world that skipped wired telecommunications infrastructure and went straight to wireless — I note with no small satisfaction that the indigenous peoples were not impoverished or suffering — poor things, they seemed wholly content with their lives, as slow paced as they were — perhaps they were blissfully unaware of the joys associated with the constant drive to be “the fattest, fastest rats in the race” — or maybe, just maybe, we still have something to learn … from them! Perish the thought.
Will the utilities always have a place? Of course they will. Everywhere … like we do here? Umm … maybe not so much.
So, friend Lawrence, from my aerie, I see a vast, uncharted and incredibly exciting wilderness that lies before us. As the unknown poet wrote …
I am old, I am bent,
I am cheated of all that youth urged me to win,
But count me not among the defeated,
For tomorrow again, I begin.
I will do my best to soar out, and see what is there. Stay warm on that there perch partner, and I’ll send a pigeon with a message if anything exciting happens. After all, some folk are settlers, others are pioneers.
In the meantime … Happy trails!
P.S. I love a good squabble … don’t you? No hard feelings, yes?